The puzzle of the Black unemployment rate
William Spriggs | OW Contributor | 8/22/2013, midnight
Part of the resolution of this paradox is that while older workers have low unemployment rates, they get stuck in the unemployment rut. Almost 40 percent of the 2.5 million unemployed African Americans in July have been unemployed longer than six months. This is another marked feature of the Great Recession. In 1975, the share of long-term unemployed among unemployed workers peaked at 21 percent.
In the 1982-83 downturn, the long-term unemployed got up to 26 percent of the unemployed. In this downturn, the share of long-term unemployed reached 44.9 percent.
Each month, the BLS also reports on the flow of workers into, and out of, unemployment. The employed can become unemployed or retire, and the unemployed can get a job, or quit and drop out of the labor force, or remain stuck looking for work another month. July continued the pattern that the unemployed were more likely to drop out of the labor force than to land a job, and the majority remained stuck looking for work. Of the almost 12.5 million unemployed Americans in June, 55 percent remained unemployed in July.
People are getting stuck because the hiring rate in the economy—the share of jobs that are from new hires—remains stuck at a low; near 3.1 percent. So, new opportunities are not being created to clear the backlog of people stuck in the unemployment line. Basically, the employment market is now like a still pond rather than a flowing river. Each month, few people who are employed are quitting and getting another job, and few firms are hiring new workers. In a normal market, things are more dynamic, with firms hiring and workers switching jobs. That “rolling” of the job market creates lots of hiring opportunities.
So while there was some good news in the numbers for African Americans in the July report, the labor market remains underperforming. At the current rate of job creation, we are still more than six years away from making up the backlog of unemployed and underemployed workers. For young people, that is six years too long.
Members of Congress are back at home in their districts. Republicans appear prepared to return to Washington in September so they can hold up any discussion of generating jobs in favor of cutting the Supplemental Nutrition Assistance Program (food stamps), and continuing the sequestration and its cuts to Head Start, housing assistance and extended unemployment benefits—programs that put money into the pockets of American workers struggling to survive the worse labor market since the Great Depression.
Despite a reversal in trend from the huge and ballooning deficits that the tax cuts to America’s richest 5 percent from the Republican tax agenda of 2001 caused and two unfunded wars and the greatest loss of jobs and American household income since the Great Depression, Republicans appear prepared to hold the government and the American people ransom to their fixations on “Obamacare” and the long-run cost implications of Medicare.
The president has been out to rally America so we can focus instead on the immediacy of the lack of jobs and income. Let’s hope Republicans hear the concerns of people outside Washington, not the wealthy lobbyists who want to avoid paying their fair share to clean up the mess of the economy.
William Spriggs serves as chief economist to the AFL-CIO and is a professor in, and former chair of the Department of Economics at Howard University. He is also former assistant secretary for the Office of Policy at the United States Department of Labor.