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Monday, August 26, 2013

Good and bad news in black employment stats

The Black unemployment rate in July dipped to 12.6 percent, its lowest level since January 2009 according to the US Bureau of Labor Statistics.

The BLS also reported that since August 2012 the unemployment rate for adult black men (those older than 20) remains below its 14.4 percent level in January 2009 and was reported at 12.5 percent in July. More importantly, the share of black men holding jobs continues to rebound from its record low of 56.5 percent in 2011 to 59.2 percent, almost equal its level of 60.4 percent in January 2009. That was the good news.

The bad news was that the unemployment rate for adult black women (those older than 20) remained above its January 2009 level (though it did fall to 10.5 percent) and the share of adult black women holding jobs, at 55.5 percent, is not showing much movement to return to its January 2009 level of 57.9 percent. Since more than half the black workforce is female, it means the labor market news was mixed at best.

The Black labor force is older now than during past major downturns in the mid-1970s and early 1980s. In 1975, the black unemployment rate spiked to 15.4 percent. In 1982 and 1983, the black unemployment rate skyrocketed to above 20 percent for a nine-month period starting in October 1982.

The Great Recession downturn of 2008 was much more severe than both the 1975 and 1982 downturns, and the black unemployment rate reached 16.8 percent in March 2010. But the black labor force was much younger in the 1970s and 1980s, and younger workers have the highest unemployment rates (in July the unemployment rate for black teenagers was 41.6 percent).

Today, the labor force participation of young black workers is very low, so they do not influence the overall black unemployment rate as much today. Only 37 percent of black teens were employed or actively looking for work in July – that is, "in the labor force" and counted in the unemployment rate.

Among black men, in 1975 and 1983, about one in four of those in the labor force was between 16 and 24. Today, that age group represents about one in six. So, the group with the highest unemployment rate is a smaller factor in today's data. This downturn has driven the labor force participation of young people to all-time lows. Many have dropped out of the labor force for school (almost one in five African Americans 16 to 24 is not in the labor force but enrolled in school), but many have just dropped out.

A little more than one in four African Americans 16 to 24 is neither in school nor employed or looking for work. In 1975, 48 percent of the black men in the labor force were older than 35. The 1983 downturn chased older workers out of the labor force-many choosing to retire or file Social Security disability claims-so the share of black men in the labor force older than 35 fell to 45 percent.

Today, 60 percent of black men in the labor force (those employed or actively looking for work) are older than 35. This is the group with the lowest unemployment rate, suggesting the rate today is lower than would have been the case in 1972 and 1983 when younger workers remained a bigger share of the Black labor force. So this complicates comparing unemployment rates across time, making it a paradox that Black unemployment is high with such a high share of older workers.

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