The African-American Labor Force in the Recovery
While the unemployment rate for African Americans fell substantially in January to 13.6 percent, it remains significantly higher than the 8.5 percent rate of November 2007, just prior to the recession. Aggregate numbers show that the African-American community as a whole has exhibited poorer labor market outcomes than other races even prior to the recession and during the recovery, demonstrating that they often face different and greater challenges. By breaking down the data by age, gender, education, and other criteria, this report examines in greater detail the trends in employment and unemployment among African Americans and shows how they have been faring in the economic recovery. The "Looking Forward" section at the end of the report discusses the President's 2013 Budget and highlights various ways in which Department of Labor programs have helped to address the challenges faced by African Americans in the labor market.
Blacks in the Labor Force at a Glance
African Americans made up 11.6 percent of the U.S. labor force — those employed or looking for work — in 2011.1 African Americans have comprised a gradually growing share of the U.S. labor force over time, rising from 10.9 percent in 1991. Overall, in 2011, 18 million Blacks were employed or looking for work, representing 61.4 percent of all African Americans, somewhat less than the 64.1 participation rate for all Americans.
In 2011, about half of Blacks aged 16 and older had a job, and 18.0 percent of those employed worked part-time.2 Blacks are the only racial or ethnic group for whom women represent a larger share of the employed than do men - more than half (53.8 percent) of employed Blacks in 2011 were women, compared to 46.0 percent among employed Whites. Nonetheless, employed black women still earn less than employed black men - black women earn roughly $0.91 to every dollar earned by black men. While the wage gap among Blacks is smaller than that for Whites, this is largely driven by the fact that African-American men face lower wages compared to men in other race groups in the economy. Black men employed full time earned on average $653 per week in 2011, 76.3 percent of the average salary earned by white men. By contrast, black women earn on average $595 per week or 84.6 percent of the average salary earned by white women.3 While the gap between black and white men fell substantially during the 1990s due to increased occupational desegregation, in the last few years the gap in earnings remained stable throughout the recent recession and recovery period.4
More than a quarter of employed black workers aged 25 or older have earned a college degree, a share that exceeds that for Hispanics5 but continues to trail that for Whites. While black workers continue to trail Whites in educational attainment, the number of African Americans with a college degree has been growing faster. In the past decade, the number of black workers with a college degree has increased by over a quarter, compared to a fifth among White workers.
Black workers are more likely to be employed in the public sector than are either their white or Hispanic counterparts. In 2011, nearly 20 percent of employed Blacks worked for state, local, or federal government compared to 14.2 percent of Whites and 10.4 percent of Hispanics. Blacks are less likely than Hispanics and nearly as likely as Whites to work in the private sector, not including the self-employed.6 Few Blacks are self-employed — only 3.8 percent reported being self-employed in 2011 — making them almost half as likely to be self-employed as Whites (7.2 percent).
The average unemployment rate for Blacks in 2011 was 15.8 percent, compared to 7.9 percent for Whites, and 11.5 percent for Hispanics. Historically, Blacks have had persistently higher unemployment rates than the other major racial and ethnic groups. In addition, the increase in the black unemployment rate during the recession was larger than that for other races partly because workers with less education are particularly hard hit during recessions. Moreover, the unemployment rate for Blacks was slower to fall after the official end of the recession. The slower recovery for African Americans in the labor market has been partly the result of government layoffs after the official end of the recession. Blacks have been more vulnerable to the drastic layoffs in government in the past two years because they make up a disproportionate share of public sector workers. Moreover, with the exception of health and education, Blacks are under-represented in the sectors that have experienced the greatest job growth during the recovery, including manufacturing and professional and business services.
In addition, once unemployed, Blacks are less likely to find jobs and tend to stay unemployed for longer periods of time. Blacks remained unemployed longer than Whites or Hispanics in 2011, with a median duration of unemployment of 27.0 weeks (compared to 19.7 for Whites and 18.5 for Hispanics). Nearly half (49.5 percent) of all unemployed Blacks were unemployed 27 weeks or longer in 2011, compared to 41.7 percent of unemployed Whites and 39.9 percent of unemployed Hispanics. Once a worker is unemployed for a prolonged period, it becomes harder to find a new job. Job search becomes harder for such an individual because the worker may not have the networks of employed friends and family to refer them to jobs and because they may become disconnected and depressed the longer they remain unemployed.7 Also, job search becomes more difficult without income support, as an unemployed person may not have the resources to afford transportation, seek information and even afford clothes for interviews.8 Finally, as the pool of applicants grows larger, employers sometimes use employment status, including unemployment duration, and credit ratings as ways to screen out candidates even if these are poor screens and these candidates may be qualified for the jobs.9
Recently there have been some encouraging signs for African Americans. The unemployment rate for Blacks has been trending down since summer 2011. In January 2012, the unemployment rate for Blacks was 13.6 percent; down 3.1 percentage points from the peak of 16.7 percent in August 2011.10 Continuing employment gains in private sector health care jobs since the end of the recession have helped to bring the unemployment rate down for Blacks, as this industry has a large share of African-American workers. Over the past year ending in January 2012, Blacks have seen strong job growth in a diverse range of industries, including financial activities, professional and business services, and education and health services. African Americans are also benefiting from the slowing pace of job losses in state and local government which have disproportionately affected them.
Periods of High Unemployment
In January 2007, the year the recession began, the unemployment rate for black workers was 7.9 percent, compared to 4.2 percent for Whites and 5.8 percent for Hispanics. By January 2009, the unemployment rates had climbed to 7.1 percent for Whites, 12.7 percent for Blacks and 10.0 percent for Hispanics. By the end of 2010, the unemployment rate for Blacks had risen more than for either Whites or Hispanics.
Unemployment for the nation peaked at 10 percent in October 2009, while the unemployment rate for Blacks continued to rise before peaking at 16.7 percent in August 2011 (Chart 1). In comparison, the unemployment rate for Whites peaked along with the national rate in October 2009 at 9.3 percent. Hispanic unemployment peaked at 13.1 percent in November 2010.
In recent months, there have been signs that African Americans have begun to benefit from the nation's economic recovery. The national unemployment rate in January 2012 was 8.3 percent, well below the nation's average unemployment rate in 2010 of 9.6 percent. Although their unemployment rate started to decline later, African Americans also saw improvement over that time. The black unemployment rate in January 2012 was 13.6 percent, down from the 2010 average of 16.0 percent, and a little lower than February 2009's rate of 13.7 percent.
Chart 2 shows the seasonally-adjusted monthly unemployment rate for black men, women, and youth (aged 16-19). As shown in the chart, the unemployment rate among adult black men (aged 20 and over) has risen considerably more than for adult black women (aged 20 and over), creating an unemployment rate gap that grew throughout the recession and only narrowed in January 2012. In 2007, the unemployment rate gap averaged 1.2 percentage points. By 2009, the average unemployment rate gap between adult black men and women had expanded to 4.8 percentage points, before narrowing slightly over the course of 2010 and 2011 to 3.5 percentage points. In January 2012, the gender unemployment gap was virtually eliminated. Adult black men had an unemployment rate of 12.7 percent compared to a rate of 12.6 percent among adult black women.
Across all races and ethnic groups, the unemployment rate for youth (aged 16-19) is much higher than that for adults. As Chart 2 illustrates, this is also true among Blacks. The unemployment rate for black youth reached a high of 49.1 percent in November 2009 and as of January 2012 had fallen to 38.5 percent. Not only has the unemployment rate remained high, but a large number of black teens are no longer in the labor force - either working or looking for work — which explains some of the drop in the unemployment rate. In 2007, black teens participated in the labor force at a rate of 30.3 percent. By 2011, that rate had declined to 24.9 percent. Labor force participation of black men and women aged 20-54 declined by 2.3 percentage points from 78.2 percent in 2007 to 75.9 percent in 2011, while participation among older black workers (aged 55 and older) increased by 1.3 percentage points — 35.3 percent in 2007 to 36.6 percent in 2011.
Some of this decline in labor force participation among black teens indeed reflects an increase in the proportion of black teens enrolled in school. Among 16-19 year-olds, 85.4 percent were enrolled in school in October 2011, compared to 80.7 percent in 2007, the year the recession began.11 The rate of school enrollment also increased for Blacks aged 20-24. In October 2011, 34.9 percent of this cohort was enrolled in school compared to 32.8 percent in October 2007.
One factor that may partially explain why black labor force outcomes lag behind those of their white counterparts is their lower educational attainment. However, as Chart 3 illustrates, the role of education in explaining the unemployment disparity faced by African Americans is very complicated. African-American unemployment rates are higher than those for Whites at every education level.
Despite racial difference in unemployment rates by education level, the link between greater educational attainment and improved employment outcomes remains strong for all racial and ethnic groups, including African Americans. Additionally, the unemployment gap between Blacks and Whites is smaller for those with more education. Unemployment rates for African Americans were lowest among those who attained a bachelor's degree or higher. For instance, Blacks with at least a bachelor's degree had an unemployment rate of 7.1 percent (compared to 3.9 percent for Whites) whereas Blacks with some college or an associate's degree had an unemployment rate of 13.1 percent (compared to 7.0 percent for Whites). Unemployment rates are higher for those with fewer years of schooling. Blacks with only a high school diploma had an unemployment rate of 15.5 percent (compared to 8.4 percent for Whites), and Blacks with less than a high school diploma experienced a 24.6 percent unemployment rate (compared to 12.7 percent for Whites with less than a high school diploma).
