Job Growth Continues but Leaves Some Behind

In June, the Bureau of Labor Statistics (BLS) reported an addition of 372,000 jobs, with the national unemployment rate holding steady at 3.6%. Despite these promising numbers, the labor market recovery remains uneven, especially for marginalized communities. Black unemployment, for example, is nearly double the national average, at 5.8%, pointing to a significant disparity. Additionally, 5.7 million people are out of the labor force but still searching for work, indicating the recovery is leaving behind many, particularly those on the margins.

The lingering effects of the COVID-19 pandemic continue to shape the labor market. An estimated 2.1 million individuals couldn’t work in June due to business closures or employer losses caused by the pandemic, while 1.4 million people missed a full week of work due to illness.

This report explores three major trends disproportionately affecting workers of color: declining labor force participation, an uneven recovery in the public and private sectors, and the rising financial burdens placed on households. Additionally, we examine potential solutions to build a more resilient, inclusive workforce.

Black Workers Leaving the Labor Force at Higher Rates

One concerning pattern is the cooling participation of Black workers in the labor force. While 372,000 jobs were added in June, 353,000 people exited the labor force. The labor force participation rate dipped slightly, from 62.3% to 62.2%, with Black workers showing the largest decline—a significant 0.8 percentage point drop. This was followed by Asian Americans, whose participation fell by 0.5 percentage points. By contrast, white and Latino or Hispanic workers saw no change in their labor force participation rates.

The data suggests that the reasons behind Black and white workers leaving the labor force differ. While white workers saw 137,000 fewer employed individuals and 152,000 exits due to retirement or other factors, Black workers experienced 166,000 fewer employed individuals yet recorded a total of 291,000 exits. This discrepancy points to discouragement among Black workers, with many giving up their job search. The BLS reported a 14.9% increase in Black workers who had not looked for work in the previous four weeks but still desired employment.

Additionally, the impact of caregiving responsibilities is contributing to labor force exits, especially for workers with children. Black parents with young children are 12% more likely to leave their jobs to care for them, according to the Census Bureau. Meanwhile, long COVID also plays a role in the decline in participation. Brookings research suggests that up to 15% of unfilled jobs may be linked to long COVID, which disproportionately affects minority communities due to inequities in healthcare access.

Public Sector Jobs Lag as Private Sector Rebounds

President Joe Biden recently highlighted that as of June 2022, private-sector employment had surpassed pre-pandemic levels by 140,000 jobs. However, this growth is not evenly distributed across industries. For example, the leisure and hospitality sector remains 1.3 million jobs below its February 2020 numbers, a decrease of 7.8%, while child care and social assistance sectors are still down 87,000 jobs, or 2%.

The private sector’s recovery also mirrors racial disparities. According to a report by McKinsey, Black workers are overrepresented in lower-wage frontline roles, with limited pathways to career advancement. For every 20 hourly jobs, only one salaried job is available, limiting Black workers’ opportunities to move up the economic ladder. Black workers are 23% less likely to receive meaningful advancement support and are 41% less likely to perceive promotion processes as fair.

On the other hand, public sector employment remains far below pre-pandemic levels. Despite not suffering the same level of disruption as the private sector, government jobs are down by 664,000, or 2.9%. This shortfall is concerning for Black workers, who have historically relied on public sector employment for economic stability. As of 2021, 16.9% of public sector employees were Black, compared to their 12.3% representation in the overall U.S. population.

While federal support through pandemic relief packages aimed to prevent public sector job losses, state and local governments are still employing 656,000 fewer people than before the pandemic. This slow recovery could disproportionately affect workers of color, particularly in regions with fragile economies.

Inflation Squeezes Households as Wages Fall Behind

Despite a 0.5% increase in income in June, the rising inflation—measured at 9.1% year-over-year—continues to erode real wages. Consumer spending increased slightly by 0.2%, but much of that went toward necessities like housing, utilities, gasoline, and healthcare. Real disposable income, however, dropped by 0.1%, underscoring the challenges faced by many households.

The end of pandemic-related eviction moratoriums has led to a surge in eviction filings, particularly in Black-majority neighborhoods. Studies by the Washington Center for Equitable Growth also show that LGBTQ+ individuals face significant difficulties securing affordable housing in the current economic climate.

Building a More Inclusive Workforce for the Future

Amid these challenges, it’s crucial to focus on creating an equitable and resilient workforce. With inflation on the rise and job growth slowing, many Americans fear job insecurity, particularly young adults. A Brookings analysis reveals that many young people, especially women and marginalized groups, are stuck in low-wage jobs or face long-term unemployment.

There’s a pressing need for expanded workforce development programs, including paid apprenticeships and work-based learning opportunities, to ensure that marginalized groups are not left behind. The American Rescue Plan and the Infrastructure Investment and Jobs Act provide opportunities for state and local governments to create workforce initiatives that prioritize good jobs and invest in future talent, especially for younger workers.

By expanding workforce preparation, we can ensure that the economic recovery benefits everyone, creating a more sustainable, equitable future for American workers.