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Race and Economy

The consistent unemployment gap between Black and white workers

David Brancaccio and Erika Soderstrom Apr 12, 2024
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"That disparity between Black and white workers is something that remains really a defining feature, unfortunately, of the U.S labor market," said Valerie Wilson of the Economic Policy Institute’s Program on Race, Ethnicity and the Economy. bymuratdeniz/Getty Images
Race and Economy

The consistent unemployment gap between Black and white workers

David Brancaccio and Erika Soderstrom Apr 12, 2024
Heard on:
"That disparity between Black and white workers is something that remains really a defining feature, unfortunately, of the U.S labor market," said Valerie Wilson of the Economic Policy Institute’s Program on Race, Ethnicity and the Economy. bymuratdeniz/Getty Images
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The economy added more than 303,000 jobs for the month of March, bringing the unemployment rate back down to 3.8%. Broken down further, the unemployment rate for white workers stood at 3.4%. For Black workers, that rate is higher at 6.4%.

The unemployment gap between Black and white workers has consistently been around 2-to-1 ever since the government started collecting unemployment data for Black workers back in 1972. That disparity is only starting to maybe change.

“Marketplace Morning Report” host David Brancaccio talked with Valerie Wilson, director of the Economic Policy Institute’s Program on Race, Ethnicity and the Economy about reducing the disparity gap. The following is an edited transcript of their conversation.

David Brancaccio: That 2-to-1 ratio. That is typically what we’ve seen over the years?

Valerie Wilson: Yes. In fact, the stability of that relationship between Black and white unemployment is actually documented for almost seven decades in national statistics. That disparity holds up across periods of economic expansion and recession. We see it for all age cohorts, for men and women at nearly every level of education. So, it is a pretty persistent racial disparity and unemployment.

Brancaccio: So interesting. I remember reporting in April of 2023. The headline: Lowest unemployment rate on record for Black people. Back then, it was 4.7%. You take a look a year later, and you still see this difference by race?

Wilson: Yeah. There are really two things that are important to keep in mind when we’re considering racial disparities and unemployment.

One is the fact that you just mentioned: Over the longer period of time, we’re interested in whether or not that rate is coming down. And yes, recently we’ve seen historically low black unemployment. That’s important. That’s significant. 

But at the same time, that disparity between Blacks and whites is still incredibly persistent. So even though we’ve made progress on reducing Black unemployment, that disparity between Black and white workers is something that remains really a defining feature, unfortunately, of the U.S labor market.

Brancaccio: I mean you studied this. At the heart of this must be prejudiced institutional racism. But would you also say access to education? 

Wilson: That is a reason that is commonly stated for the disparity and true. When we’re looking at averages, there are differences between Black and white workers in terms of educational attainment.

So, on average, sure. You’re going to see some portion of that disparity being a result of those differences in education, because workers with less education tend to have higher unemployment rates. But the thing that really challenges how much education is explaining the gap is when we look at workers with the same level of education, and we still see that 2-to-1 disparity. That points more strongly towards the issue of structural racism as a major factor in the disparity. 

Brancaccio: So, what is in the toolkit to dealing with this persistent issue?

Wilson: I think there are three things that are important to reducing those disparities: One, similar to where we are in the current state of the labor market, we really need full employment. However people define that: a tight labor market, a high-pressure labor market, essentially extended periods of low unemployment. Reduce unemployment much more among Black workers. That’s important. 

The second important factor would be unions. Because what a labor contract does is it’s essentially a proactive anti-discrimination tool. Those contracts typically lay out clearly defined rules and processes for hiring, for promotions and for pay. Those things minimize opportunities for discrimination. The event that they don’t minimize or avoid that, there are often provisions that provide clear recourse for workers. 

Beyond that, I think it’s important that we have adequate funding and staffing for the agencies responsible for enforcement of our anti-discrimination laws. Transparency again plays a major role in their ability to carry out enforcement actions.

Brancaccio: You see businesses complaining about too tight labor markets, but as you look across the entire economy, you’re not complaining.

Wilson: Absolutely. Another benefit of those tight labor markets is that it raises wages. I think that’s the business complaint. But for workers, you know, that’s really important. We’ve had a prior four decades where wages have been really flat for the majority of workers. Post-pandemic, we’ve started to see workers regain or call back some of those lost wages or the lack of growth that we’ve seen in the previous four decades. 

The effect of that additionally, has been to narrow the Black-white wage gap a bit in recent years as well as seeing the highest wage growth among low-wage workers. So tight labor markets are important not only for reducing unemployment, but also supporting wage growth for workers.

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