July 14, 2023
The historically low Black unemployment rate and the corresponding relatively high Black employment-to-population ratio or employment rate is welcome news. Overall, this good news about the current economy has not received enough attention. A recent corrective is the Washington Post’s article on how the tight labor market has improved the lives of some previously impoverished Black women.
However, it is also important for reporters to put the positive statistics about Black workers in the right context. Some observers (see the Washington Post and FiveThirtyEight, for example) are celebrating the closing of the White-Black employment rate gap, but that is misleading as they are not fully understanding the overall trends. One critical piece of the puzzle is that the Black employment rate has not surpassed its 2000 peak rate. In 2000, the Black employment rate (16 years old and over) averaged 60.9 percent for the year. In the first half of this year, it has averaged 59.7. It is great that the Black rate is approaching the 2000 peak, but it has not yet surpassed its historic high.
If the Black employment rate is not reaching new heights, why has the White-Black employment-rate gap closed? The answer is that the White employment rate has been having lower peaks since 2000. In 2000, the White employment rate (16 years old and over) was 64.9 percent. In the first half of this year, it was 60.1 percent – 4.8 percentage points lower – and very close to the Black rate of 59.7 percent. As the figure shows, the closing of the gap is not due to a historic high for Black employment, but rather a decline in White employment.
This decline in White employment is, to a significant degree, the result of the older White labor force retiring. Forty percent of the White population is over 54, but only 32 percent of the Black population is in this age range. A greater share of White retirees will depress the overall White employment rate.
Journalists should look at the prime-age (25 to 54 year olds) employment rates rather than the rates for 16 years old and over. The above figure shows that while the prime-age White-Black employment-rate gap has narrowed, it has not been eliminated. Black America still needs 640,000 jobs to close the prime-age employment gap. This is why, even in the current strong economy, there is still a pressing need for a subsidized employment program targeted to communities facing a high rate of joblessness. Our elected officials should create such a program in order to truly close the gap and build an economy that works for all.
This first appeared in CEPR.
