Job gains show signs of widening racial divide

The rising tide of the U.S. labor market is failing to lift all boats.

African Americans were largely left out of the surprising job gains in May, highlighting long-standing obstacles and new threats facing black workers amid the pandemic recession.

The national unemployment rate dropped from 14.7 percent in April to 13.3 percent in May, stunning economists who largely expected another month of massive job losses. Joblessness among black workers, however, rose to 16.8 percent, the highest level in more than a decade, while the unemployment rate for white workers declined to 12.4 percent.

Not all economists were completely shocked by the Labor Department figures, though.

“Many of us who work in racial disparities were predicting that white workers would be absorbed at a faster rate, and therefore we would start to see the gap between black and white unemployment increase again,” said Dania Francis, an economics professor at University of Massachusetts Amherst.

But Francis acknowledged that the suddenness of last month’s divergence surprised her and reflected the unique ways African Americans are suffering from the pandemic and the economic downturn it caused.

“I don’t think, myself, that I expected that to necessarily happen to the extent it did already in May.”

The quick pace also poses political challenges. Before the recession, President Trump regularly touted how the unemployment rate for African Americans hit a record low of 5.4 percent in August, just 1.7 percentage points above the national jobless rate of 3.7 percent.

But with the white unemployment rate going down and the black jobless rate going up, especially as the economy shows signs of recovery, drawing attention to the record low would likely invite questions about the current divergence.

African Americans have long suffered higher rates of unemployment than their white peers. Centuries of racism, discrimination and a widening racial wealth gap have robbed generations of African Americans from the same economic opportunities available to whites, including the programs that fueled the post-World War II economic boom.

More recently, people of color generally make up a disproportionate number of COVID-19 cases and deaths, according to state and federal data, a divide public health officials attribute mostly to decades of discriminatory policies, not genetic health defects.

The risks are even greater for African Americans, who account for 13 percent of the U.S. population but nearly 24 percent of American COVID-19 deaths where the race is known, according to the COVID Tracking Project.

“The economic fallout from the coronavirus and the recent civil unrest have placed an uneasy spotlight on the disparity in employment opportunities among ethnic groups in the United States,” wrote Joe Brusuelas, chief economist at tax and audit firm RSM, in a Friday research note.

“The people whose ancestors were forced to help physically build this country and lay the foundations for free enterprise and the wealth that followed suffer from more than systemic racism or the degradation of their basic human rights.”

Black people also make up a disproportionate number of workers deemed essential, hold a higher rate of jobs in industries that can’t accommodate work from home and have far less financial flexibility to miss work. And the number of black small-business owners fell by 44 percent between February and April, according to a study from University of California, Santa Cruz economics professor Robert Fairlie, compared to a 17 percent decline in white small-business owners.

“COVID-19 certainly laid bare some of these disparities,” said Lisa Cook, an economics professor at Michigan State University. “The wealth gap for the nation between white families and black families is orders of magnitude different, and that’s something else that has to be addressed.”

The decline of black-owned businesses is one of several reasons for the increase in African American unemployment. The May jobs gain was driven almost entirely by 2.7 million workers returning from temporary layoffs, a surge that many economists attributed to the success of the Paycheck Protection Program (PPP), which provided emergency loans for small businesses.

“We know from some of the data that black small-business owners were much less likely to receive [PPP] funds,” Francis said, “so the benefits from that were going to disproportionately benefit white small-business owners.”

While the lack of access to PPP funds is an issue unique to the coronavirus crisis, it’s one of countless ways that African Americans have been harmed by financial and economic discrimination.

Economists and historians regularly point to how the social insurance programs passed through the New Deal in the 1930s largely excluded domestic and agricultural workers, many of whom were African American. Black families were also locked out of the post-World War II housing boom, a major driver of U.S wealth, due to housing segregation, redlining and other policies that stunted black homeownership.

While 73 percent of white households owned their homes in the first quarter of 2020, according to the Census Bureau, only 41 percent of black households owned their homes in the first quarter of 2020, the lowest rate since the 1960s.

“Everything that’s going on right now is interconnected,” Francis said. “We can’t talk about decreasing inequality if we don’t talk about it in all of these spheres: criminal justice, health, economics — all of these things are intertwined.”