January 25, 2024
Black America suffers from three distinct challenges in the labor market that require differing solutions. When these three problems are not distinguished and assumed to be one problem, the proposed solutions do not fully address the challenges.
Black America faces problems relating to (1) the number of jobs, (2) the quality of jobs, and (3) the types of jobs available to Black people. Too few prime-age Black people are employed in comparison to the rate of employment for prime-age White people. Thus, the number of Black people employed is too low. Among the Black people who have jobs, too many of the jobs are low-quality jobs, meaning that they have low pay, few benefits, and no avenue for workers to have a voice in improving their working conditions. The quality of Black jobs needs to be improved. The distribution of jobs held by Black people does not match the overall distribution of jobs in the economy. There is not enough variation in the types of jobs in which Black people are employed. This means that for many Black people, their talents and interests are not being fully utilized and developed in the economy. More Black people should be employed in more varied types of jobs. Solving any one of these problems does not completely solve any of the other problems. These three problems each need adequate resources to address their unique challenges.
The Struggle for a Greater Number of Jobs
§ (1) there should be subsidized employment programs along with economic development plans targeted to communities experiencing persistently high rates of joblessness,
§ (2) the Federal Reserve should be encouraged to focus on achieving maximum employment for as long as possible, and,
§ (3) policies against racial discrimination in hiring should be strengthened.
The Struggle for Better Quality Jobs
§ (1) there is an increase in the federal minimum wage,
§ (2) it is easier for workers to form unions and collectively bargain, and
§ (3) the Federal Reserve pushes for maximum employment via low interest rates.
The Struggle for More Types of Jobs
§ (1) providing Black people with the appropriate education and training;
§ (2) recruiting, encouraging, and mentoring Black people;
§ (3) and implementing policies and practices fostering racial inclusion and diversity.
Conclusion
To fully appreciate the jobs crisis facing Black America, one needs to look at the difference between the White and Black employment-to-population ratios, or employment rates, rather than the difference in the unemployment rates. The number of jobs needed to close the White-Black employment-rate gap is often more than twice that of the unemployment-rate gap.1
The unemployment rate undercounts Black joblessness for a variety of reasons. One major issue is that not all of the jobless are considered to be unemployed according to the official Bureau of Labor Statistics definition. When people encounter poor labor market conditions (e.g., high unemployment in their local community or repeated discrimination from employers), they tend to stop actively looking for work. Once they stop actively looking for work, they are no longer counted as unemployed by the Bureau of Labor Statistics, although they are jobless. They are considered not to be in the labor force.2 The fact that there are relatively fewer employment opportunities for Black people causes many Black people to meet the definition of being out of the labor force which causes them not to be counted as unemployed.
High rates of joblessness in Black communities also contribute to higher crime rates3 which leads to higher incarceration rates. Once an individual is incarcerated, the person is also no longer counted as unemployed even though the person may have lost a job and is no longer available for regular work.4 These individuals are not normally included in the population count for the employment-to-population ratio either.
It is important to note that a majority of incarcerated individuals have minor children5 as well as other family members who are disadvantaged by the incarcerated person’s lack of income. To fully appreciate the impact of joblessness in Black America, it is important to keep the incarcerated population in our accounting of joblessness. The employment-to-population ratios or employment rates discussed below are for the total Black population — including individuals in prisons, other institutions, and other group quarters.
Figure 1
The prime-age6 White employment rate can be used as a benchmark to estimate what the prime-age Black employment rate would be if Black America consistently had similar employment opportunities as White America. Figure 1 shows that in 1960, the White and Black prime-age populations had the same employment-to-population ratio. From 1960 to 1990, the White employment rate increased at a more rapid rate than the Black rate. In 2022, the Black employment rate was nearly eight percentage points behind the White rate. In terms of the number of jobs relative to White America, conditions in Black America have worsened since 1960.
Figure 2
To better understand the trends, it is useful to separate the data for men and women. Figure 2 shows the prime-age White and Black employment-to-population ratios for men and women. Of the four groups, in 1960, White women were the least likely to be employed. In 2022, White women’s rate had risen to the second highest employment rate. Black women have had the second strongest increase in employment, behind White women, but they still remain in the third position today. In 1960, Black men were much more likely to be employed than both White and Black women. While White and Black women have had strong increases in their employment rates over time, Black men’s employment rate declined strongly from 1970 to 2010. There has been a good increase in Black men’s employment rate since 2010, but it has not been enough to prevent Black men from having the lowest rate of employment. White men have had the highest employment rate from 1960 to 2022, but, like Black men, their employment rate declined from 1970 to 2010. The drop in Black men’s employment rate was twice as large as the drop for White men, however.
For most of U.S. history, Black women have been more likely to labor outside of the home because of enslavement, “the societal expectation of black women’s gainful employment,” and also because of “labor market discrimination against black men which resulted in lower wages and less stable employment compared to white men.”7 From the 1960s to the 1990s, women’s increasing participation in the labor market pushed the White and Black women’s employment rates up. The decline in manufacturing and other good jobs for men contributed to the decline in men’s employment rate since 1970.8 Additionally, by 1990, mass incarceration excluded a disproportionate share of Black men from employment.9 The good news on this front is that the decline in crime rates since the 1990s10 has led to a declining incarceration rate for Black men.11
Although the current macroeconomy is strong, a recent estimate suggested that Black America needs over a million jobs to close the employment rate gap with White America.12 Without adequate resources and focused policies, it will not be possible to create a sufficient number of jobs to substantially reduce this gap.
Three Policies to Create One Million Jobs for Black America
While creating one million jobs for Black America is ambitious, it is not impossible. To address the jobs crisis created by the Great Depression, the Works Progress Administration (WPA) created jobs for over 8 million people.13 In 1939, the WPA employed over 400,000 Black people.14 Given the growth in the U.S. labor force since then, 400,000 jobs would be roughly 1.4 million jobs today.15 This WPA Black jobs count does not include the young Black men employed by the other Depression-era jobs program, the Civilian Conservation Corps (CCC). The CCC employed roughly 200,000 young Black men over its history.16 The United States has had a jobs program on this scale before to respond to the Great Depression and, frankly, many Black communities can be considered to be economically depressed communities today.
To create one million jobs for Black America, (1) there should be subsidized employment programs along with economic development plans targeted to communities experiencing persistently high rates of joblessness, (2) the Federal Reserve should be encouraged to focus on achieving maximum employment for as long as possible, and (3) policies against racial discrimination in hiring should be strengthened. These three policies do not exhaust the list of beneficial policies, but they are important ones.
Subsidized employment is when the government (or some other entity) covers all or some of the labor costs of hiring an employee. It is the most effective way to get people working quickly, far better than providing tax incentives to the wealthy, which has a poor track record.17 A program targeted to communities facing persistently high rates of joblessness would benefit communities of all racial demographics while delivering disproportionate benefits to Black communities. Communities should combine the subsidized employment with broader economic development planning.18
Figures 1 and 2 show a jump in employment rates from 2010 to 2022. This jump is the result of a strong macroeconomy. The increase for Black men was the strongest, followed by the increase for Black women. The Federal Reserve can help to spur job creation by keeping interest rates low. For several years between 2010 and 2020, the Federal Reserve kept interest rates close to zero.
While low interest rates are very important to help increase Black employment rates, by themselves, they are insufficient. The years of near-zero interest rates were beneficial to increasing Black employment, but it was not enough to close the White-Black employment-rate gap.19
Audit or paired-tester studies where White and Black individuals or resumes with stereotypically White and Black names are presented to employers show that employers have a preference for White applicants over equally qualified Black applicants. This situation has not changed over time.20 There needs to be stronger enforcement of anti-discrimination policies in hiring, and, likely, new methods of uncovering this discrimination.21
There are many things that can be included in an assessment of job quality. A definition compiled by the Aspen Institute had 12 criteria.22 For ease and simplicity, this discussion will focus on just one thing: the wages of Black workers.
Black workers have lower wages than average. In 2022, the median or 50th percentile Black wage ($19.60/hour) was lower than the 40th percentile ($19.88/hour) wage for all workers.23 If the quality of Black workers’ jobs is improving overtime, Black workers’ median hourly wage should be increasing toward to the overall median hourly wage. Figure 3 shows that the Black median wage has hovered around 84 percent of the overall median wage since 1973. As far as wages are concerned, the quality of Black jobs has not improved over time.
Figure 3
Figure 4 shows that the median hourly wage for Black men in the late 1970s was basically equal to the overall median hourly wage. In recent years, Black men’s median wage is a little less than 90 percent of the overall median wage. Black men’s wages have fallen relative to the overall average.
Black women have had the opposite trend. In the late 1970s, Black women’s median wage was around 70 percent of the overall median. Black women’s wages grew relative to the overall median from the 1970s to 1990 and then stagnated. There appears to be a new uptick that has pushed Black women’s median wage to now a little over 80 percent of the overall median. There is still a need for more improvement in Black women’s wages, but its long-term trend has been in the right direction.
Figure 4
The economist Valerie Wilson conducted an analysis where she compared the Black wage loss from racial inequality and the wage loss from growing economic inequality overall. In a more class-equitable economy, the average worker’s wages would grow at the same rate as the growth in productivity in the economy.24 However, average workers have not seen their wages grow with productivity since 1979. Instead, “the fastest wage growth has been concentrated among the highest earners.”25 Black workers are overrepresented among the lowest earners.
Figure 5 illustrates this development. It compares percentage change in wages from 1973 and 2019. Over this period, the wage growth at the 90th percentile was $16.58 or 43.1 percent. The wage growth at the 95th percentile was $28.67 or 59.5 percent. Black women had a stronger growth in their median wage than the overall median and Black men’s median. Black women’s median wage increased $4.70 or 35.1 percent. Relative to the 90th and 95th percentiles, most workers have seen their wages fall behind.
Wilson showed that growing wage inequality between the highest-paid workers and middle- and low-wage workers negatively affects Black workers. She found that growing class inequality cost Black workers more than twice as much as racial wage inequality.26 To improve the wages of Black workers it is necessary to address both class inequality and racial inequality.
Figure 5
Three Policies to Increase Black Wages
Black wages will increase if (1) there is an increase in the federal minimum wage, (2) it is easier for workers to form unions and collectively bargain, and (3) the Federal Reserve pushes for maximum employment via low interest rates. These three policies do not exhaust the list of beneficial policies, but they are important ones.
Black workers are slightly more likely than workers of other races to earn the minimum wage.27 The more important point, however, is that an increase to the minimum wage increases the wage of many workers earning above the minimum wage. For example, the current federal minimum wage is $7.25 an hour — much less than its inflation-adjusted peak of $12.50 (2023$) in 1968.28 If the minimum wage were raised to $17 an hour, all workers earning less than $17 would experience and increase in their wage — not just those earning $7.25. Additionally, workers who were earning $17 an hour or a bit higher before the minimum wage increase would also likely see an increase in their wages after the lifting of the minimum wage. The Economic Policy Institute estimates that about 30 percent of Black workers would experience an increase in their wages if the minimum wage were raised to $17.29
Among the things unions fight for are good wages and benefits for workers. As the unionization rate has declined, income inequality has increased.30 Black workers covered by collective bargaining earn more than those not represented by a union.31 Policies reversing the decline of unionization would increase the wages of Black workers.32
Tight labor markets force employers to compete for workers by raising wages.33 The Federal Reserve can stimulate the economy and tighten labor markets by keeping interest rates low. Although the Federal Reserve has a dual mandate to control prices and achieve maximum employment, it has been more responsive to threats of inflation than to high unemployment.34 Campaigns to pressure the Federal Reserve to be attentive to high unemployment can be effective in preventing the Federal Reserve from unnecessarily increasing interest rates.35
Addressing the struggle for more types of jobs or Black occupational segregation is another important way to increase Black workers’ wages. But addressing Black occupational segregation alone would still leave many Black workers in bad, low-wage jobs. Thus, it is necessary to transform the bad jobs in the economy into good jobs, as well as address Black occupational segregation if one wishes to increase the wages of Black workers broadly.
Figure 6
Unlike with the struggle for a greater number of jobs and the struggle to improve the quality of jobs, there has been clear progress on the struggle for more types of jobs for Black people. Black men and women work in a wider variety of jobs today than in the past. In Figure 6, the lower the value of the segregation score, the more the distribution of Black workers matches the overall distribution of all workers in occupations. A value of zero would indicate a perfect match. The figure shows that Black men and women were much more concentrated in particular occupations, or occupationally segregated, in 1960 than today.
While there has been progress for both Black men and women, that progress has basically stalled since 2000. There is still significant occupational segregation of Black men and women and work to be done to fully eradicate this problem.
Figure 7 and Appendix Table A1 present the current occupational segregation of Black women and men in more detail. The 529 occupations captured in the American Community Survey are placed into 25 categories.36 The table shows the occupational over- and underrepresentation of Black men and women in these categories relative to the overall distribution of all workers, not just men or women. In Management occupations, Black men’s share is only 60 percent of the share for all workers. Black women’s share of Management occupations is 69 percent of that of all workers. Both Black men and women are underrepresented in Management occupations.
Figure 7 presents the same data as Appendix Table A1, but in a manner that makes it easier to quickly see in which occupations Black men and women are underrepresented and overrepresented. The ratios are converted into the natural log of the value. Using the natural log causes underrepresentation to be indicated with a negative value. For example, in healthcare-support occupations, Black men’s ratio is 0.54 — an underrepresentation. The natural log of this value is -0.62. Black women’s ratio is 3.34 — an overrepresentation. The natural log of this value is 1.21. In the figure, underrepresentation has a negative value and a bar going toward the left; overrepresentation has a positive value and a bar going toward the right.
Figure 7
Occupational segregation is still a significant problem for Black workers. If one considers the Black share in an occupational category between 90 percent and 110 percent of the overall share to be non-segregated, then Black men are segregated — over- or underrepresented — in 23 of 25 occupational categories.37 Black women are segregated in 21 of 25 categories.38
Three Policies to Reduce Black Occupational Segregation
Increasing the representation of Black workers in occupations where they are underrepresented will require (1) providing Black people with the appropriate education and training; (2) recruiting, encouraging, and mentoring Black people; and (3) implementing policies and practices fostering racial inclusion and diversity. The specifics and the relative importance of these three parts will vary by the particular occupation. These three policies do not exhaust the list of beneficial policies, but they are important ones.
Figure 7 shows that Black men and women are underrepresented in the occupational categories of Computer Science, Engineering, and Science to varying degrees. These STEM occupational categories can serve as an example for the policy discussion.
The work of the economist Raj Chetty and his colleagues at Opportunity Insight shows that, because of inequalities in the United States, children with a high level of potential for achievement in STEM are generally not able to excel unless they have a wealthy family.39 This fact about the United States lowers the representation of Black people in STEM fields. The Roots of STEM Project provides more details. The findings from that project show that Black high school students are less likely to have access to a high-quality math and science education which lowers their likelihood of choosing a STEM major in college.40 Racially unequal educational opportunity contributes to occupational segregation.
The conservation scientist, Corina Newsome had an interest in animals from childhood, but she only realized that she, as a Black female, could have a career as a biologist when she was lucky enough to connect with a very rare individual — a Black woman zookeeper.41 Without this serendipitous connection, Newsome might not have chosen a career in biology.42 Newsome’s path to an occupation in which Black people are underrepresented is of limited utility for reducing occupational segregation. While it is beneficial for Black people to see other Black people in a field, relying on this approach creates a chicken-and-egg problem. Someone has to be the first Black person in an occupation or occupational setting, or among the first few.
But it is possible for Black people to be supported and encouraged by people who do not look like them. The Black astrophysicist, Neil deGrasse Tyson has spoken of how he was inspired by the White astrophysicist, Carl Sagan, and of how much he appreciated that Sagan wrote to the 17-year-old Tyson and invited him to visit Cornell University where Sagan taught.43 Recruitment, encouragement, and mentorship across race lines is necessary if there is to be fast progress on reducing occupational segregation.
In addition to addressing overt discrimination, it is necessary to provide welcoming environments and equal opportunity. Findings from the Roots of STEM Project indicate that Black students often find themselves in unfriendly environments in STEM majors which discourages them from remaining in the field.45
Paula T. Hammond is a Black woman, a distinguished chemical engineer at the Massachusetts Institute of Technology, and a member of the university’s Institute for Integrative Cancer Research.46 Individuals with her credentials are often offered opportunities to serve on corporate boards, but it was only in the wake of the activism after the killing of George Floyd that she was first offered the opportunity.47 Hammond was not the only new Black corporate board member at the time. Black appointments to corporate boards increased dramatically.48 One possible reason that Hammond was overlooked is that the predominantly White and male boards may rely on predominantly White and male social networks for selecting board members.49 Using segregated social networks for hiring maintains occupational segregation. Actively working to create a racially diverse occupation is necessary to reduce segregation.
Figure 8
The National Equity Atlas has published an important analysis of White-Black wage-income inequality.50 Rather than restrict the analysis only to individuals who have jobs, it includes jobless Black adults, who are individuals with zero wage income.51 The researchers decomposed the wage gain from wage-income equity into the part that was due to insufficient work hours and the part that was due to lower wages. Figure 8 shows that 63.4 percent of the gain would be from equity in terms of work hours, which would include providing jobs for the Black jobless. The remaining wage-income gain would be from increasing the wages of Black workers who have jobs.
This analysis shows that addressing all three labor market problems facing Black America is necessary to achieve equity. Failing to increase the number of jobs will leave a large portion of the wage gap intact. But even if the Black jobs deficit is fully addressed, a substantial portion of the wage gap would remain because many Black people with jobs receive lower wages than their White peers. Black workers with jobs have lower wages because of low-quality jobs and because of occupational segregation. Addressing just one of these sources of lower wages will still leave Black America with a proportionally lower income. Full wage-income equity is only achievable when Black people have equity in terms of the number of jobs, the quality of jobs, and the types of jobs — all three are necessary.
Table A1
|
Ratio of Black Men's and Women's Share in an Occupational Category to the Share of All Workers in the Category, 2019, 2021, 2022* |
|||
|
Occupational Category |
Black Men |
Black Women |
|
|
Management |
0.60 |
0.69 |
|
|
Business Operations |
0.69 |
1.11 |
|
|
Finance |
0.56 |
0.96 |
|
|
Computer Science |
0.86 |
0.43 |
|
|
Engineering |
0.73 |
0.18 |
|
|
Science |
0.41 |
0.63 |
|
|
Social Services |
0.81 |
1.92 |
|
|
Legal |
0.39 |
0.77 |
|
|
Education |
0.42 |
1.08 |
|
|
Arts |
0.70 |
0.48 |
|
|
Healthcare |
0.38 |
1.35 |
|
|
Healthcare Support |
0.54 |
3.34 |
|
|
Protective Service |
1.97 |
1.02 |
|
|
Food Preparation |
1.08 |
0.97 |
|
|
Building and Grounds Cleaning |
1.26 |
0.84 |
|
|
Personal Care |
0.66 |
1.87 |
|
|
Sales |
0.72 |
0.85 |
|
|
Office Administration |
0.78 |
1.58 |
|
|
Farming |
0.38 |
0.16 |
|
|
Construction |
0.83 |
0.04 |
|
|
Extraction |
0.90 |
0.00 |
|
|
Installation |
1.22 |
0.08 |
|
|
Production |
1.48 |
0.71 |
|
|
Transportation |
2.65 |
0.64 |
|
|
Military |
2.00 |
0.55 |
|
|
Jobless |
1.38 |
1.19 |
|
|
Source: Author's calculations of American Community Survey data from IPUMS USA, University of Minnesota, www.ipums.org. * Because of the disruption in data collection and data quality caused by the COVID-19 pandemic shutdown, 2020 data is omitted. |
|||
Alonso-Villar, Olga, and Coral del Río. 2023. “Disentangling Occupational Sorting from Within-Occupation Disparities: Earnings Differences Among 12 Gender–Race/Ethnicity Groups in the U.S.” Population Research and Policy Review 42(45, 2023). https://doi.org/10.1007/s11113-023-09791-1.
del Río, Coral, and Olga Alonso-Villar. 2015. “The Evolution of Occupational Segregation in the United States, 1940–2010: Gains and Losses of Gender–Race/Ethnicity Groups.” Demography 52: 967–988. DOI 10.1007/s13524-015-0390-5.
