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The Great Recession, Jobless Recoveries and Black Workers

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The Great Recession, Jobless Recoveries and Black Workers unemployment rate remains elevated at 9.5 for at least six months. The latter is a more The Great Recession, percent and many economists worry that the expansive measure that includes officially country is, at best, in a jobless recovery similar unemployed workers, discouraged workers Jobless Recoveries to what occurred after the 1990 and 2001 who have stopped looking for work and those recessions. At worst, we may be heading working part-time who are unable to find and Black Workers into a dreaded double-dip. For the black full-time employment. community, the Great Recession has been Sylvia Allegretto, Ph.D. and Steven Pitts, Ph.D. catastrophic, and the prospect of a jobless Using these three measures, a portrait of the recovery or further recession will extend the current state of black workers can be drawn. widespread economic and social woes in In July 2010, the official unemployment rate The economic downturn, which began in which much of the community is now mired. for black workers was 15.6 percent. When December 2007, aptly has been called the disaggregated by gender, one finds that 17.8 Great Recession. The trough of job losses The State of Black Workers percent of black men were unemployed occurred in December 2009, by which time since the Beginning of the Great and 13.7 percent of black women were 8.4 million or 6.1 percent of all non-farm Recession unemployed. For black youth (ages 16- jobs were lost. This represented the largest 19), unemployment stood at 40.6 percent. decline of jobs (in either absolute numbers or The most oft-cited measure of labor market (Comparable figures for whites were 8.6 percentage terms) since the Great Depression distress is the official unemployment rate. percent, 9.4 percent, 7.6 percent and 23.5 of the 1930s. While this figure captures the proportion of the labor force which is officially out percent, respectively.) One disturbing In response to this ongoing crisis, Congress of work, it is lacking as a measure of labor feature of this recession is the increasing passed the American Recovery and market distress because marginally attached number of long-term unemployed. During Reinvestment Act of 2009—a spending and and discouraged workers who have stopped the first half of 2010, 49.1 percent of the tax relief package that totaled $787 billion. looking for work due to their inability to find black unemployed were jobless for at least six While the ARRA provided much needed employment are not counted.1 Recently, two months. The comparable figure for whites relief and stimulus, the size and scope of other key labor market indicators have gained was 42.4 percent. The broader measure of the package was not in proportion to the prominence: the long-term unemployed under-utilized labor during the first quarter enormity of the crisis. Too much of it was and the broader measure of under-utilized of 2010 showed that approximately one in geared to ineffective tax cuts instead of direct labor we call the underemployment rate. four blacks, compared to one in seven whites job creation, and the crisis proved to be much The former is expressed as the share of the was underemployed. The recession continues worse than originally thought. Today the unemployed who have been out of work to be especially hard on the black community. 1. The Bureau of Labor Statistics calculates unemployment from Current Population Survey data. Persons are classified as unemployed if they do not have a job, have actively looked for work in the four weeks prior to the survey, and are currently available for work. Receiving benefits from the Unemployment Insurance (UI) Program has no bearing on whether a person is classified as unemployed. JOINT CENTER FOR POLITICAL AND ECONOMIC STUDIES 3 The State of Black Workers bad economic times. Examining the period Prospects for Black Workers before the Great Recession from 2005 through 2007, the median wage during a Jobless Recovery for black men was 74.3 percent of that for As the nation continues to grapple with white men, while black women earned 85.4 Current sluggish economic activity has raised persistently high levels of unemployment— percent of what white women earned.2 Five the specter of a jobless recovery: prolonged levels that were unexpected by most industries employed 70.6 percent of all black anemic economic growth that won’t produce economists when the Obama Administration workers: Public Administration; Education sufficient jobs to re-employ unemployed began—it is important to realize that for the and Health Services; Wholesale and Retail workers or satisfy the needs of a growing black community, simply returning to the Trade; Manufacturing; and Professional workforce. One way to measure the duration pre-recessionary labor market outcomes is and Business Services. Table 1 presents of a jobless recovery is to examine how long insufficient. Even before the Great Recession, a comparison of median wages in these it takes for employment levels to return to racial inequalities were a key feature of the industries. what existed prior to the recession. It took economy. In 2007, the height of the last 30 months after the 1990 recession and 46 economic expansion, black unemployment Examining the distribution of black workers months after the 2001 recession to return rates averaged 8.2 percent compared to within industries reinforces this picture to pre-recessionary job levels. July 2010 3.9 percent for whites. Approximately of racial inequality. In our research, we marked the 32nd month since the beginning one in four unemployed blacks was jobless segmented wages into thirds (wage terciles) of the Great Recession. Early in 2010, there for at least six months, and that rate was for each industry, identifying wage cutoffs was some positive job growth, (much due to considerably higher than the long-term for the determination of the highest paid temporary Census hires), but job declines unemployment rate for whites, which was third, the middle third and the lowest paid resumed in June and July leaving the level one in six. The broader measure of economic third. Next, we calculated the proportion of employment 7.7 million jobs below what stress captured by underemployment rates— of black workers in each industry wage they were in December 2007. 13.4 percent of blacks and 6.8 percent of tercile. In a world of racial parity, one third whites—also indicated substantial racial of black workers would be in each wage It is difficult to precisely predict how black disparity during good economic times. tercile. What we found was that blacks were workers would fare during a jobless recovery. disproportionally represented in the lowest What is known is how black unemployment These disparities in joblessness only partially paid segments of each industry. Table 2 rates changed during the previous jobless capture the racial inequities in the labor presents data for the five principal industries recovery. We present data on the 2001 market. Among jobholders, significant racial where blacks are employed. recession and subsequent jobless recovery to wage inequalities exist in good as well as in provide some insight and expectation should another ensue. There are four key dates in this period: the beginning of the recession Table 1 Black Median Wages as a Proportion of White Median Wages (March 2001), the official end of the recession (November 2001), the month that job growth Industry Men Women became positive (September 2003), and the month that employment levels returned to Public Administration 80.0% 89.1% their November 2001 levels (January 2005). Education & Health Services 68.1% 77.9% Table 3 presents data on black and white Wholesale and Retail Trade 74.0% 91.2% unemployment rates at each date. Manufacturing 72.0% 79.7% What is clear is that black and white Professional & Business Services 56.9% 79.2% unemployment continued to rise even after the official end of the recession and even Table 2 when job growth became positive. In January Proportion of Black Workers in the Lowest Wage Terciles 2005, when recessionary jobs were finally (parity would be represented by a figure of 33.3%) recouped, the black unemployment rate (10.7 percent) was still greater than what it was at Industry Men Women the official end of the recession in November Public Administration 40.5% 46.5% 2001 (9.5 percent)—this was not the case for Education & Health Services 40.2% 51.0% whites. If this pattern is replicated now, black unemployment will remain at catastrophic Wholesale and Retail Trade 39.5% 54.6% levels for the foreseeable future. Chart "Black Manufacturing 46.3% 60.1% and White Unemployment Rates" presents Professional & Business Services 51.1% 53.3% 2. The 2005-2007 timeframe captures the last economic expansion as the onset of recession was in December 2007. 4 JOINT CENTER FOR POLITICAL AND ECONOMIC STUDIES data on black and white unemployment rates Table 3 during this decade with markers for dates of Unemployment Rates during Key Months from the 2001 Recession significance. and Subsequent Jobless Recovery Policy Recommendations Month - Importance Black White In the face of the persistent reality of racial March 2001 – recession officially begins 8.0% 3.8% inequalities in labor market outcomes and November 2001 – recession officially ends 9.8% 4.9% the prospects of a jobless recovery that would September 2003 – job growth trends positive 11.1% 5.3% perpetuate these disparate outcomes, what are January 2005 – employment returns to 3/2001 level 10.7% 4.5% potential steps that policymakers can take to address this problem? Below is a brief sketch of a broad set of possible solutions.
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