For Immediate Release: August 22, 2018
Washington, DC ― When overall unemployment — and unemployment for whites specifically — declines, black workers disproportionately benefit, according to an analysis published today by Kevin Cashman, Senior Associate at the Center for Economic and Policy Research (CEPR).
Cashman’s analysis, which confirms an economic model he outlined in 2015, demonstrates that if the white unemployment rate falls one percentage point, the rate for black workers will generally fall two percentage points, and the rate for black teens will generally fall six percentage points.
This analysis is important as the Federal Reserve considers today’s historically low unemployment rates as a trigger for inflation, which the Fed manages by raising interest rates. If the Federal Reserve slows the economy too soon with higher interest rates, the workers that lose out are those that face the most disadvantages in the labor market — and those who are finally seeing significant gains in the economic recovery following the Great Recession.
The Federal Reserve’s caution about raising rates since 2015 is part of the reason why there are over 1.5 million more employed black workers (89,000 of which are ages 16 to 19).
Given that inflation is low, it suggests that there is still room for the economy to improve if the Federal Reserve will let it, especially for these groups of workers.