December’s Jobs report reveals a growing racial employment gap, especially for Black women

The Bureau of Labor Statistics (BLS) December employment report, released Jan. 7, provides good news for the state of the country’s economic recovery, but job growth has been smaller than expected and disparities remain between races and genders.

“2022 is not just a new year, it is a new horizon for the American labor market and [last week’s] Disappointing report suggests we have work to do to address sourcing and matching challenges, ”said Becky Frankiewicz, regional president of ManpowerGroup North America, at Brookings Metro.

In December, total non-farm payroll employment increased by 199,000 (below the projected 422,000) and the unemployment rate fell from 4.2% to 3.9%. The number of unemployed fell by 483,000 to 6.3 million. While these numbers indicate a robust economic recovery, December’s unemployment rate was still higher than in February 2020, before the pandemic.

Table 1 shows the US unemployment rate by race for the three-month period between October and December 2021. Unemployment rates for Whites (3.2%), Asian Americans (3.8%) and Latin Americans or Hispanics (4.9%) fell in December. The black unemployment rate, however, fell from 6.5% in November to 7.1% in December.

Table 2 shows the unemployment rate in the United States by race, sex and age from December 2020 to December 2021. The unemployment rate for black men fell from 7.2% in November to 7% in December, while their labor force participation rate was declining. from 66.4% to 65.7%. The unemployment rate for black women fell from 4.9% in November to 6.2% in December, while their participation rate rose from 60.3% to 61.1%.

In December 2021, the participation rate for black adolescents aged 16 to 19 was 28.6%, compared to 29.8% in November 2021 and 30.9% in December 2020. The unemployment rate for black adolescents has declined slightly (from 22% to 21%), but remains the highest of all groups, with December marking the second consecutive month the rate has exceeded 20%.

Table 2

December’s low unemployment rate reflects November job vacancy data

According to the latest BLS Job Postings and Workforce Turnover Summary, released Jan.4, the number of job postings fell by 529,000 in November 2021 (to 10.6 million) , for a job vacancy rate of 6.6%. The total number of departures increased by 382,000 (to 6.3 million) and the number of workers who left their jobs reached a new high of 4.5 million, from 4.2 million in October 2021.

The largest increases in the number of quits occurred in accommodation and food services; health care and social assistance; and transportation, warehousing and utilities. The number of workers leaving their jobs during the pandemic has been higher in low-wage sectors as workers take advantage of the increased demand for labor to seek jobs with higher wages and better working conditions .

“With more jobs open than available workers and increasing wages among white and blue collar workers, employers need to focus on the compensation needed to attract and retain talent,” ManpowerGroup’s Becky Frankiewicz told Brookings Metro.

In a recent analysis of BLS data, Economic Policy Institute senior economist Elise Gould wrote: Labor, they quit to take other jobs. Indeed, as hires exceed quits in all industries, it is likely that many workers will turn to higher paying jobs in the same industry. Gould also noted that “the workforce shrank by nearly 8 million workers in March and April 2020 and has recouped about 70% of those losses since then.”

These data, although a month behind the employment report, suggest that labor markets in all sectors are still tight, offering workers leverage and making it easier for the unemployed to find employment. a job. Nonetheless, the decrease in job openings also makes sense given that employment reports for November and December show fewer jobs added than expected.

Fed changes monetary policy to cool economy

At its December meeting, the Federal Reserve signaled that it would step up its reduction in bond purchases and likely raise interest rates as early as March, with two more subsequent hikes spread throughout the year to cool down. the economy. Several members also pleaded for the reduction of the Fed’s bond portfolio.

This monetary change reflects changes in the Fed’s assessment of full employment and inflation measures. According to the minutes of the meeting, “many participants saw the US economy progress rapidly towards the Committee’s maximum employment target” and “several participants felt that labor market conditions were already broadly compatible with maximum employment “. Regarding inflation, the minutes reveal that “participants noticed that the inflation figures had been higher and were more persistent and more widespread than expected.” Further, “while participants generally continued to expect a significant drop in inflation over 2022 as supply constraints eased, almost all said they had revised their inflation expectations upward. for 2022 in particular, and many have also done so for 2023. “

Fed participants are always looking for a wider range of indicators to assess economic conditions, including racial disparities. The minutes say that “a few participants noted the recent drop in unemployment rates for African Americans and Hispanics and the narrowing of the racial and ethnic gap in the prime-age employment ratio as suggesting a more inclusive recovery of the labor market “. But given this latest jobs report, it’s clear the recovery is far less inclusive than previously hoped.

Omicron variant continues to disrupt the economy

According to the Centers for Disease Control and Prevention (CDC), as of January 6, 74% of the U.S. population had received at least one dose of the COVID-19 vaccine, 62.4% were fully immunized, and 35.3% had received a booster . dose. COVID-19-related hospitalizations and deaths remained concentrated among unvaccinated people, with unvaccinated people nine times more likely than fully vaccinated people to be admitted to hospital with COVID-19. In addition to the long-term personal health impacts of COVID-19, the business and economic risks associated with unvaccinated employees include exposure and infection of other employees and customers; hospital costs; apprehension for employees and customers of coming to a workplace with lower employee vaccination rates; and the risk of business closure due to understaffing.

On December 1, the CDC announced the first confirmed case of the COVID-19 variant Omicron in the United States, likely a late indicator of the spread that was already taking place. Over the month, Omicron became the dominant strain in the United States and led to a sharp increase in the number of COVID-19 cases. While Omicron’s full economic impacts remain to be seen, this is likely a cause of the muted numbers in the December jobs report. In response to the Omicron variant, Reuters reports that Mark Zandi, chief economist at Moody’s Analytics, has adjusted his projection for economic growth in the first quarter from 5% to 2%. “Omicron is already affecting people’s behavior and business practices,” Zandi noted, which can be seen in lower credit card spending and reduced restaurant meals.

In addition to depressing economic growth, the new variant could also fuel inflation concerns. “To the extent that Omicron keeps people from working, it can exacerbate supply chain problems and drive up prices,” PNC Bank chief economist Gus Faucher told CNN. This effect could be offset by changing the CDC’s recommendation from 10 days of isolation to five days for people with COVID-19 who show reduced symptoms – a policy change for which business interests such as companies airlines lobbied and led to cuts in wages paid. sick leave from companies such as Walmart.

Finally, the impact of this variant on access to schools and daycare services is not clear, which could also affect the labor market participation and employment ratios in the short term.

Racial disparities must be corrected before the economic recovery cools

The December employment report shows positive trends at the aggregate level in terms of employment, labor market participation and added jobs. Nonetheless, the growing racial disparity in employment underscores that economic recovery is still hampered by systemic biases against black workers, especially black women and black teens.

Now that the Fed shifts its monetary policy, it is likely that the labor market will relax, codifying these racial disparities over a longer period. As the Omicron variant continues to impact economic conditions, it is crucial that policymakers continue to use all available tools to help economic recovery for everyone.

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