Opinion

Job Prospects for People of Color Remain Bleak

At some point in 2014, 1 in 5 black workers will be unemployed, along with about 13.6 percent of Hispanic workers. It’s time for new policies to stimulate demand.

Heidi Shierholz, with the Economic Policy Institute since 2007, researches policies that  affect middle- and low-income families. She has a bachelor's in math from Grinnell College, a master's in statistics from Iowa State, and a master's and doctorate in economics from the University of Michigan.
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Heidi Shierholz
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Heidi Shierholz
Feb. 25, 2014, midnight

AN OPINION ON POLICY AND CHANGING DEMOGRAPHICS?

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Each month, the of­fi­cial un­em­ploy­ment rate provides the share of the labor force un­em­ployed in that month. But this un­der­states the num­ber of people who are un­em­ployed at some point over a longer peri­od, since someone who is em­ployed in one month may be­come un­em­ployed the next, and vice versa.

There­fore, the of­fi­cial an­nu­al un­em­ploy­ment rate — which is ac­tu­ally the av­er­age monthly un­em­ploy­ment rate for the year — is much lower than the share of the work­force that ex­per­i­enced un­em­ploy­ment at some point dur­ing the year.

The av­er­age an­nu­al un­em­ploy­ment rate in 2013 was 7.4 per­cent, but we es­tim­ate that 12.7 per­cent of the work­force, or more than one of eight work­ers, was un­em­ployed at some point in 2013. Giv­en un­em­ploy­ment pro­jec­tions for 2014, it is likely that 11.3 per­cent of the work­force — more than one of nine work­ers — will be un­em­ployed at some point this year.

It is im­port­ant to keep in mind that ag­greg­ate labor-mar­ket meas­ures mask enorm­ous vari­ation by race and eth­ni­city. For ra­cial and eth­nic minor­ity work­ers, the em­ploy­ment situ­ation is sig­ni­fic­antly worse than it is for white non-His­pan­ic work­ers.

The 2013 un­em­ploy­ment rate for His­pan­ics was 9.1 per­cent, sig­ni­fic­antly high­er than the over­all 2013 un­em­ploy­ment rate of 7.4 per­cent. An es­tim­ated 15.3 per­cent of His­pan­ic work­ers were un­em­ployed at some point in 2013.

The 2013 un­em­ploy­ment rate for blacks was 13.1 per­cent, far high­er than the highest over­all an­nu­al un­em­ploy­ment rate over the last 70 years. An es­tim­ated 19.6 per­cent of black work­ers (nearly one in five) were un­em­ployed at some point in 2013.

Giv­en un­em­ploy­ment pro­jec­tions for 2014, it is likely that 13.6 per­cent of His­pan­ic work­ers and 17.4 per­cent of black work­ers will be un­em­ployed at some point this year. The labor mar­ket is im­prov­ing ex­tremely slowly for all ma­jor groups, but the em­ploy­ment situ­ation of Afric­an-Amer­ic­ans re­mains at something more akin to de­pres­sion-level con­di­tions.

In the cur­rent weak re­cov­ery, the lack of job op­por­tun­it­ies means that more than 35.8 per­cent of the un­em­ployed have been un­em­ployed for more than six months, so many of the mil­lions of work­ers who will be un­em­ployed at some point this year can ex­pect po­ten­tially ru­in­ous, lengthy peri­ods of un­em­ploy­ment. In Decem­ber, the ex­ten­sions of un­em­ploy­ment-in­sur­ance be­ne­fits passed by Con­gress dur­ing and in the af­ter­math of the Great Re­ces­sion were al­lowed to ex­pire. Al­low­ing ex­ten­sions to ex­pire when the labor mar­ket is still so weak is un­pre­ced­en­ted in the con­text of pre­vi­ous un­em­ploy­ment-in­sur­ance ex­ten­sions in down­turns pri­or to the Great Re­ces­sion: The share of the work­force that is long-term un­em­ployed is nearly twice as high today as it was in any oth­er peri­od when Con­gress al­lowed an ex­ten­ded be­ne­fits pro­gram to ex­pire.

It is im­port­ant to note that the root of today’s weak labor mar­ket is weak ag­greg­ate de­mand — busi­nesses have not seen de­mand for their goods and ser­vices pick up in a way that would re­quire them to sig­ni­fic­antly in­crease hir­ing.

This means that the eco­nomy needs policies that will stim­u­late de­mand. In the cur­rent mo­ment this can most re­li­ably be ac­com­plished through ex­pan­sion­ary fisc­al policy: large-scale on­go­ing pub­lic in­vest­ments, the rees­tab­lish­ment of pub­lic ser­vices and pub­lic-sec­tor em­ploy­ment cut in the Great Re­ces­sion and its af­ter­math, and the re­in­state­ment of fed­er­al un­em­ploy­ment-in­sur­ance be­ne­fits.

AN OPIN­ION ON POLICY AND CHAN­GING DEMO­GRAPH­ICS?

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