The national Black unemployment rate dipped to a historic, first-time low of 4.7% in April, signaling a strong and recovering American economy.

But, it was a short-lived decline because it was back to 5.6% the following month, a nearly one percentage point increase. It’s stayed above 5% and even increased to 6% in the months since.

This is normal these days. In recent years, Black unemployment hovers between 5% and 6%. Meanwhile, the national total unemployment rate typically stays below 4%.

“A percentage point increase in the overall unemployment rate really means a nearly two percentage point increase in Black unemployment,” Michelle Holder, associate professor of economics at John Jay College, City University of New York, tells Word In Black. “It’s just disproportionate.”

Outside of the COVID-19 pandemic, it’s a decently low rate, Holder says. When the pandemic began, national unemployment dramatically increased from 3.5% in February 2020 to 14.7% by April. At that same time, Black unemployment was 6%, and in April, it more than doubled to 16.6%.

When the economy is doing well, Black unemployment declines. When it struggles, so do Black people.

Economists say it’s hard to predict if or when the Black unemployment rate will come back down or what it will take to sustain it. What is predictable is knowing when Black unemployment is high, Black people suffer the most — and for longer.

“When there’s a downturn, Black workers, in particular, get hit the hardest, the earliest, and they take the longest to recover,” Kyle K. Moore, economist for the Economic Policy Institute’s program on race, ethnicity, and the economy, says.

“Last to be Hired, First to be Fired”

Some might point to layoffs in the tech industry for the jump after the historic low. However, Moore says because Black folks have low representation in tech jobs, the whole of the blame shouldn’t be there.

Black people are overrepresented in other jobs like “transit and intercity bus drivers, nursing assistants, security guards, gambling surveillance officers, and home health aides,” according to the Bureau of Labor Statistics. Holder adds a boom in warehousing to this list.

Nationally, we’ve recovered all of the jobs lost in 2020 and then some. But certain industries continue to struggle to rebound from the pandemic. 

Downtown areas or business districts of major cities like the District of Columbia and New York City face a severe decline in revenue and employment opportunities since the emergence of remote work. 

Black unemployment rates are also higher than the national at 9.6% in D.C. and 8% in New York City, the Economic Policy Institute found.

High office vacancies shuttered the surrounding businesses that relied on corporate workers. These businesses also employed Black people in those service industries, for example.

“There’s occupational segregation throughout the labor market, such that Black workers are more likely to work in those occupations and industries that already have a high turnover rate. Those are the jobs that tend to shift labor quickly in the event of a downturn.”

Kyle K. Moore

Some economists also look at the Federal Reserve’s moves to create a “soft landing” for the economy post-pandemic. 

To get inflation down to 2%, the Fed raised rates 11 times since March 2022. They must do this while keeping the labor market under control and the economy out of a recession.

These increases don’t just affect people’s wallets. It’s become more costly to borrow for business as well. As a result, like consumers, companies tighten their budgets and make cuts.

“I believe the Fed is aware that the measures it undertakes don’t have a one-to-one effect when it comes to Black communities,” Holder says. “I would hope the Fed continues this very cautious, iterative approach to raising interest rates such that the ‘soft landing’ that appears to be the case currently continues.”

Keeping the Economy Steady, Keeps Black Unemployment Steady

Although the unemployment rate is steady, economists question whether it’s sustainable long-term. But that’s dependent on the state of the American economy. 

“Even though our unemployment rate numbers are low and our Black job holding ratio is pretty solid, we’re still, as a group, underpaid compared to white workers, and certainly [Black] women compared to men,” Holder says.

If unemployment does increase and the addition of new jobs each month slows, Black folks will feel it when it comes to finding new jobs, affording household expenses, and saving money,

Even more, reducing Black spending power could hurt the economy, nationally and locally.

A recession doesn’t look imminent like in 2021 and 2022, but it’s always possible if the economy has a hard time or the Fed raises rates too high. If that’s the case, Black workers will likely see an unemployment rate other racial groups won’t see, Moore says.

“If a recession does happen, [we should] try to put institutions in place that will protect workers and relief programs, improve our unemployment insurance and infrastructure so that folks can get what they need in the event of job loss,” Moore says. “There are a lot of things we can do to protect folks in the event of a recession.”

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