The Bureau of Labor Statistics (BLS) reported that 372,000 jobs were added in June, while the unemployment rate remained unchanged from May, at 3.6%. However, Black unemployment remains almost double the national rate (5.8%), and 5.7 million people are not in the labor force but are looking for jobs, suggesting that the recovery has not fully benefited marginal workers.
Furthermore, COVID-19’s impact on the labor market is ongoing and complex. Due to the pandemic, 2.1 million people could not work because their employers closed or lost business, while 1.4 million missed a whole week due to illness.
This blog highlights three important patterns affecting workers of color: declining labor force participation, uneven recovery in the private and public sectors, and increasing cost burdens. Also, we provide recommendations for creating a resilient workforce with opportunities for marginalized workers.
Black workers’ participation in the labor force is cooling disproportionately.
There was almost as much exodus from the labor force (353,000) as additions to it (372,000), and the labor force participation rate dropped by 0.1 percentage point, from 62.3% to 62.2%. Black workers showed the most significant decline (0.8 percentage points), followed by Asian Americans (0.5 percentage points). The labor force participation rates of white and Latino or Hispanic workers remained the same, even though the size of the white labor force declined.
According to this data, black and white workers left the labor force for different reasons. There were 137,000 fewer employed white workers and 152,000 more exits from the labor force due to employed white workers leaving the workforce. However, the loss of 166,000 employed Black workers does not fully explain the 291,000 Black exits from the labor force. In the past year, the number of unemployed Black workers decreased by 97,000, suggesting that these workers gave up their job search due to discouragement. According to the BLS, blacks who had not sought employment in the previous four weeks but desired a job increased by 14.9%.
According to the BLS, the number of workers aged 25 to 54 who left the labor force grew faster (2.7%) than those aged 55 and older (1.1%). People with children under 18 also exited the labor force by 4% in June, suggesting that child care was an issue as school-aged dependents entered summer break. According to the Census Bureau’s Household Pulse Survey, Black people with children under five are 12% more likely to have lost their jobs to care for them.
The impact of long Covid could also explain the overall drop in labor force participation. An analysis by Brookings earlier this year suggests that 15% of unfilled jobs could be linked to long Covid, which can disproportionately affect minority households due to health care access inequities.
As private sector hiring slows, state and local government employment remains stagnant.
According to President Joe Biden, as of June 2022, there were 140,000 more jobs in the private sector than in February 2020, demonstrating one of the fastest job recoveries in history. Despite the aggregate recovery, there are essential differences between industries. Leisure and hospitality employment are still down 1.3 million (7.8%) from February 2020, and social assistance (including child care) is down 87,000 jobs (2%).
The overall Black employment rate in the private sector reflects U.S. demographics, but a McKinsey report shows they are overrepresented in frontline positions and managerial roles. As a result of 20 hourly jobs for every salaried job, Black workers have limited opportunities to advance their careers. They are 23% less likely to receive meaningful advancement support and 41% less likely to view promotions as fair.
However, the number of government jobs remains 2.9% below its pre-pandemic level (664,000 fewer jobs) even though the public sector was not hit nearly as hard as the private sector. Especially Black workers, who have long relied on public sector employment for economic security and mobility, are concerned about this slow recovery. In 2021, 16.9% of public workers were Black, compared to 12.3% of the national population.
Compared to February 2020, state and local governments employed 656,000 fewer people. The Brookings Institution warned two years ago against repeating the mistake of failing to shore up state and local government employment during the Great Recession when cuts disproportionately affected workers of color and middle-wage jobs. State and local employment rolls continue to lag, and some local economies have been harder hit than others despite the federal response to the pandemic.
Consumers are spending more on basic needs as inflation rises
Americans’ incomes increased by 0.5% in June, but real disposable income decreased by 0.1% due to persistent inflation, which is 9.1% year-over-year, far exceeding the average wage growth of 5.1%. Consequently, consumer spending increased by 0.2%, mainly on housing and utilities, gasoline, international travel, and health care.
Due to the end of the pandemic eviction moratorium, eviction filings have increased above pre-pandemic rates in some cities. Renters in Black-majority neighborhoods face disproportionate eviction rates, and research from the Washington Center for Equitable Growth shows that LGBTQ+ people also face extreme difficulties finding affordable housing.
There is a need to create a more equitable and resilient workforce amid growing economic uncertainty.
Many Americans fear losing their jobs as the labor market cools and inflation rises. Many 20-somethings cannot find good jobs due to a recent Brookings analysis. We have normalized a path from high school to low-wage employment, unemployment, and poverty for many young people (disproportionately females, Blacks, and Hispanics).
We need robust workforce preparation programs, including paid apprenticeships and work-based learning, to increase labor force participation and create an equitable workforce. Using American Rescue Plan and Infrastructure Investment and Jobs Act funds, local and state governments can create paid service corps that provide young talent with a pipeline into good jobs while also expanding public sector capacity. In addition to securing employment for early- to mid-career workers, these government workforce initiatives can help implement green infrastructure and other climate priorities.