(Bloomberg) -- Black Americans have been gaining ground in the labor market this expansion, narrowing the gap with white workers to a historic low. Yet there are reasons to interpret that progress cautiously.
Nearly 58 percent of black adults are working, lagging the white ratio by less than three percentage points. The difference between the two groups is hovering around its narrowest level in data going back to 1975.
The gains may not last. Black people tend to experience more labor-market volatility, with employment rising during business-cycle highs and falling sharply back when recession strikes. A growing body of research points to that pattern as one component of the stubborn racial income gap in the U.S., which contributes to a wealth differential over time. White households are roughly seven times richer than their African-American counterparts.
“This first-fired, last-hired is so important,” Mary Daly, research director at the Federal Reserve Bank of San Francisco, said in an interview conducted last week, before the Fed entered its pre-meeting blackout period.
White workers see faster wage gains when they change jobs, but when black men do, their earnings growth decelerates, Daly and her colleagues show in unpublished research that was presented at a conference. For black women, job changes neither hurt nor help their pocketbook.
Black workers also move from full-time to part-time employment or the unemployment line more frequently, disrupting their careers.
Partly as a result, black people earn less than white people. The average black man in America earns 70 percent as much per hour as the average white man, Daly and her colleagues showed in separate research. Racial wage gaps widen over a worker’s lifetime, further evidence that disruptions may add up over time to hold back pay gains.
While comparatively low incomes are a problem in and of themselves, they also curtail wealth-building.
The trends illustrate that improvements in the labor market are a limited tool for healing racial inequities in the U.S., no matter what politicians say. President Donald Trump is the latest in a long line of leaders who have promised to better the fortunes of low-income African-American communities by targeting jobs.
A report due from the Labor Department on Friday is projected to show the job market continues to make strides. Payrolls stayed resilient, posting another good month of about 195,000 gains in November following hurricane-related distortions, according to the median forecast of economists surveyed by Bloomberg. The jobless rate probably held at a more than 16-year low of 4.1 percent, analysts project.
Central bankers, who are responsible for fostering low unemployment, have long expressed skepticism that jobs can provide a cure-all, painting them as a first step rather than an end solution.
“A generally strong labor market is helpful in alleviating all of those disparities, but we don’t have a targeted set of tools,” Fed Chair Janet Yellen told a bicameral group of legislators in testimony last week.
Felicia Wong, president of the Roosevelt Institute, a liberal think tank, said the racial wealth disparity is the product of accumulated disadvantage over time -- which is why short-term economic gains aren’t enough to bridge divides. It has “more to do with the historical exclusions from education, the housing market, the labor market and ultimately capital acquisition that African-Americans have had relative to whites.”
Daly’s work shows that explanations like education or area of residence don’t account for a large and growing portion of the wage gap, though it’s true that African-Americans graduate from high school and college at lower rates than white people. Hard-to-measure factors like discrimination or poor school quality could be contributing to the gap. Disadvantages like those matter a lot, because they might also restrain economic mobility.
Candace Watson knows what it’s like to work against ingrained disadvantages. Now 30, she was raised by a single mother who lived in publicly assisted housing in a poor neighborhood of the Bronx. The borough has some of the worst economic mobility in New York City, research shows, meaning that kids born poor in the area usually stay that way.
But Watson’s trajectory changed when her mother, Judith McCray, landed a steady job at Phipps Neighborhoods, a local community organization where Watson went to after-school programs. It offered child care and a decent wage, a combination that enabled McCray to go to college.
Watson benefited from her example, she says, and from community programs that took her on college visits and kept her busy. She followed in her mother’s footsteps, getting a degree and ultimately attaining her master’s.
Many in her childhood neighborhood now cycle through lower-wage jobs in retail or food service, precisely the kind that offer little security or wage growth, Watson said. Some drop out of the workforce entirely because they can’t afford child care.
Watson said she’s nervous that that situation will worsen as Phipps sees costs climb and funding stagnate, threatening to reduce the quality of the educational programming that helped her to go to college and, ultimately, prosper.
“Just getting a job itself is not enough,” Watson said. Jobs that pay little and demand long hours don’t “put you in a situation so that you can further educate yourself or advance in life.”
©2017 Bloomberg L.P.