339,000 jobs added and historic lows for black unemployment : The Indicator from Planet Money The job market continues to surge despite fears of an economic slowdown. In recent months, Black Americans benefited from strong labor market conditions. But May's unemployment numbers hint that could change.

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A troubling cold spot in the hot jobs report

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It's Jobs Friday, which is that time of the month where we check in on the latest official jobs report. And today's report is kind of mixed. So on the one hand, the economy added about 340,000 jobs last month.


MA: Way more than expected. On the other hand, the unemployment rate ticked up to 3.7%, and about 440,000 people lost their jobs. And here's something particularly concerning about that.

MICHELLE HOLDER: If you break down by demographic group who lost jobs, about half of them are Black.

MA: Michelle Holder is a labor economist at the City University of New York.

HOLDER: So it may be the case that we're beginning to see the first kind of brushstrokes of the Fed's actions to tame inflation. And when the economy begins to contract, there are certain groups historically that begin to feel it first.

MA: Now, what's a bit confusing about this latest data point is that it comes just a month after the Black unemployment rate hit a historic low.


MA: This is THE INDICATOR FROM PLANET MONEY. I'm Adrian Ma. And today on the show, we make sense of these seemingly contradictory indicators. We'll talk about how recent data on Black employment is both encouraging and a sign that this country still has a lot of work to do.


MA: When you look at various measures of economic prosperity, like the jobs numbers, and then you break them down by race, you realize just how intertwined race and economic opportunity have been in this country. And for Michelle Holder, two of the starkest pieces of evidence for this are the unemployment rates for Black workers and white workers.

HOLDER: Just to give you context, from 1972 to 1997 - for about 25 years - the Black unemployment rate was regularly in the double digits. It was normal for the Black unemployment rate to be 10% or higher. One of the sort of rules of thumb that labor economists, like myself, had gotten pretty used to is that the Black unemployment rate is typically twice that of the white unemployment rate.

MA: And maybe it goes without saying, but this persistent gap is a result of a history of racist policies in this country - from slavery and Jim Crow to legalized discrimination, segregation and mass incarceration. For decades, policies like these threw up barriers to Black Americans in the labor market, making it harder to get certain kinds of jobs and steering them towards others. And Michelle says this is why during recessions, the unemployment rate for Black workers increases a lot more drastically than it does for white workers.

HOLDER: Black workers tend to be employed in sectors like manufacturing, retail trade, leisure and hospitality. These are sectors that are very sensitive to business cycle changes.

MA: This is exactly what we saw during the early pandemic. A year after the pandemic began, the white unemployment rate was about 5.5% while the Black unemployment rate was about 10%. But then, over the past couple years, Michelle says two things happened which have begun to narrow that gap. First, you had the federal government's pandemic relief measures. You might remember the federal government increased unemployment assistance for people who'd lost their jobs, and it also issued multiple rounds of stimulus checks to most American households.

HOLDER: That's what was undertaken to get the economy going again after unemployment hit 15%. It really did work. It got people spending money. And when people spend money, that creates jobs. It really zhuzhed (ph) up demand, you know, getting the economy back on footing, but really getting it roaring in a lot of ways.

MA: Now, about that zhuzhed up demand - a lot of economists would say that this contributed to the inflation that we've been experiencing, but also important to mention that a lot of other things were contributing to it also - low interest rates, supply chain shortages, big shifts in consumer behavior like people being stuck at home and buying tons of stuff online. Either way, Michelle says a shift in consumer behavior created huge new demand for workers in sectors like transportation and warehousing.

HOLDER: Over the last 36 months, that sector added a million jobs. Nearly a third of all new jobs, in an aggregate sense, was in this one sector. And more Black men are employed in the transportation and warehousing sector than any other sector.

MA: Michelle says these two macro trends - government fiscal policy combined with increased demand for certain kinds of workers - are major factors why Black unemployment is near a record low right now. But she also wants to keep things in perspective. She says having a job is not the same as having a good job necessarily. Take the transportation and warehousing jobs we just talked about.

HOLDER: So on the one hand, you have these job gains in a sector that has helped the Black community and Black workers. On the other hand, the types of jobs that this industry offers are not necessarily great jobs. Transportation and warehousing is typically a low-wage sector. These are not jobs that necessarily provide upward mobility. These are not jobs that necessarily provide an entree into the middle class.

MA: On the other hand, there is data to show, over the past few years, there's been a slight uptick in Black workers entering higher-paying fields like professional services and finance - fields that are generally considered more recession-proof. For Michelle, the overall job gains for Black workers have been encouraging, but a lingering concern for her is whether these gains can be sustained. And today's job numbers, which showed a disproportionate jump in the unemployment rate for Black workers, it validates her concern. Plus, she says that there are still entrenched issues facing Black workers in this labor market.

Take discrimination, for example. Now, it may be illegal to discriminate against job applicants based on their race, but that does not mean it doesn't happen. Algernon Austin is with the Center for Economic and Policy Research, and he says some of the most compelling evidence that discrimination still happens comes from what researchers call audit studies.

ALGERNON AUSTIN: These are studies where researchers send out a Black individual and a white individual. They apply for the same jobs, presenting the same resumes, same qualifications. And in those sort of experimental testing situations, you consistently see a preference for the white applicant although the qualifications are the same.

MA: Huh. And do you have any sense - like, do the results of those kinds of studies show any change in people's bias over time?

AUSTIN: Unfortunately, no.

MA: Oh.

AUSTIN: There was a review of 25 years of these studies, and it found no reduction in anti-Black bias over the 25-year period.

MA: What do you make of that?

AUSTIN: Anti-Black bias is pretty durable. We like to think that we've made more racial progress than we have.

MA: Like Michelle, Algernon says the trend that we've seen in recent weeks for Black employment numbers is encouraging.

AUSTIN: But you have to recognize, this is just a blip. I would love for this to be a permanent change and durable, but I am highly doubtful that it is.

MA: So what could be done to make these gains more durable? Well, for Algernon and Michelle, it boils down to basically two things - fighting discrimination and creating opportunity. Algernon says, for one, policymakers could strengthen and better enforce anti-discrimination laws. They could expand access to pre-K and to college. And Algernon, for his part, would also like to see job programs for people who are economically vulnerable. And he says programs like these could also benefit people of all races - not just Black workers, but whites, Asians, Latinos and Native Americans.

AUSTIN: All the studies show that if you improve the economic outcomes for African Americans, you improve the economic outlook for the country as a whole. So ultimately, the more people working, the more people who are able to realize their full potential, the better everyone is.


MA: This episode was produced by Cory Bridges with engineering from Katherine Silva. It was fact-checked by Sierra Juarez. Viet Le's our senior producer. Kate Concannon edits the show. And THE INDICATOR's a production of NPR.


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