Daniel Altman is the chief economist at Instawork.
There is a old saying: “If America catches a cold, black America will get pneumonia.” This is certainly true of the Black/African-American community’s experience of the pandemic, but it can reverberate even more deeply in the labor market. With higher unemployment rates on the horizon, can black/African-American workers avoid an economic disaster?
Since the 1970s, the unemployment rate for black/African American people in the US, on average, more than double the rate for whites. The worst period was in the 1980s, when it was 2.5 times higher. In fact, the actual ratio may be even higher because of: undercounting in black men. Still, the pandemic was actually an unprecedented leveling off, with the ratio dropping to just 1.2 in April 2020.
In part, this was because frontline workers, who worked during the pandemic, disproportionately black/African American. These workers personally supplied timepieces in warehouses, commissaries, vans, recycling centers and other essential operations. They took extra risk by showing up at their workplace and potentially exposing them to a deadly virus for which no effective treatment had yet been developed.
In some cases, black/African American workers received higher wages to compensate them for these risks. Their median weekly earnings increased by 17% between the end of the fourth quarter of 2019 and the second quarter of 2022, compared to an increase of only 10% for white employees, while hours worked per week were virtually unchanged. The proportion of black/African-American workers paid at or below the minimum wage fell from 1.8% in 2020 to 1.3% for 2021.
The gap that came back
But these gains can be somewhat misleading. Wages rise when there is a labor shortage, and the pandemic itself disproportionately affected Black/African American people, especially in the beginning. Higher wages during a labor shortage may also be accompanied by an expectation that workers will produce more in the same period. Indeed, labor productivity peaked in the first year of the pandemic, but not necessarily because of new skills or technology. As more workers — including black/African American workers — returned to the workforce, these productivity gains began to disappear.
The economic recovery has also restored previous inequality by helping different communities unequally. Unemployment rates have fallen across the board and the labor market remains unusually tight. But the Census Bureau survey data shows the unemployment rate for black/African-American workers is on the rise 6.4% from August 2022 exactly double the rate for whites.
Looking ahead, the forecast is hardly sunny. While the unemployment rate for black/African American workers is still close to historic lows, many are once again faced with the prospect of losing their jobs. Leading economists say the economy may need to reach an unemployment rate of 7.5% before inflation can be suppressed. Since the overall unemployment rate is always higher than the rate specific to white workers, that could translate to a rate of 15% or higher for black/African-American workers — a level unprecedented since 2011. The consequences for families would be catastrophic, and they could also be long-lasting. After the Great Recession, unemployment among black/African-American workers stayed above 15% for two yearswhile the rate for white workers steadily declined.
New options on the labor market
Faced with an uncertain future, it is not surprising that black/African American workers are diversifying their options in the labor market. For starters, they have become a mainstay of my company’s network of personal watchers. Since March alone, their presence has grown from 43% to 49% of our flexible workforce. And our recent State of the flexible workforce The report finds that, on average, they get exactly the same hourly rate as white workers in similar positions.
Black/African American workers have also signed up for more hours of flexible work than their white counterparts, at least on the Instawork platform. The monthly hours of the two groups followed each other closely until June, when they began to diverge. In August, unpublished company data shows that active black/African American workers worked an average of two more hours per month. To better understand the black/African-American community’s participation in the workforce, government statistics – which, as I mentioned in a Wall Street Journal opinion piece, probably underreport flexible working— will also have to take these changes into account.
As the economy slows and unemployment rises, we expect more people from all communities to seek additional income from flexible work. And in this situation, black/African-American workers can finally have an advantage. After building relationships with companies, getting on staff rosters and taking long-term assignments, many of them will be first in line for available services. Those who lose their full-time jobs may not be able to replace all of their income, but they may simply have more buffer than in past recessions.
An untapped resource
Experts have suggested many causes:and possible remedies—for high unemployment rates among black/African-American workers. These workers don’t necessarily have the skills needed to take on available jobs; in some cases, they may simply not be aware of any open positions. This is an opportunity for employers, especially in a tight labor market. By posting job opportunities on platforms favored by Black/African American workers, leveraging their networks of existing Black/African American employees, and adopting public policies that celebrate diversity, companies can attract qualified candidates who have new perspectives. bring to the workplace.
Businesses should also support initiatives at local and national levels to deepen human capital, reduce discrimination and strengthen disadvantaged communities. It can, of course, take years for programs and legislation in these areas to be implemented. But in the meantime, workers and companies can seize new opportunities to interact in a labor market increasingly democratized by new ways of working.