Hints of Worker Confidence Belie Rise in Black Unemployment

Black Americans were the only demographic group to see a rise in joblessness in August, but the increase in the unemployment rate came as more Black Americans returned to the workforce to seek employment, a sign that potential workers are optimistic about job prospects.

The Black unemployment rate rose to 8.8% from 8.2%. The labor force -- which encompasses both employed individuals and those actively searching for a job -- increased by 287,000 for Black Americans, but a larger number of new entrants were unemployed versus employed, driving the rise in the unemployment rate.

The gains in labor participation among African Americans were driven by women, and were one of the few signs of improvement in the U.S. job market in an August report that otherwise came up short of estimates. People are likely to enter the labor force when they perceive that there are jobs to be had. 

Hints of Worker Confidence Belie Rise in Black Unemployment

Several factors might be contributing to the changes in labor participation. The end of supplemental pandemic unemployment insurance programs and return to school in some parts of the country may have prompted some to seek a job, while persisting child-care challenges and the spread of the delta variant of the coronavirus probably kept others out of the workforce. 

“The unemployment rate for Black workers with an associate degree remains higher than the unemployment rate for white high-school dropouts,” William Spriggs, the chief economist at the AFL-CIO said in an interview on Bloomberg Television. “So that tells me employers are still on some planet where they aren’t desperate for workers. They are totally bypassing Black workers. And that tells me they’re not serious.”

While the Black unemployment rate has fallen from a pandemic high of 16.7% last year, it remains well above the nation’s average. With the August increase, the jobless rate for Black workers is almost double that of White workers, which stands at 4.5%.

The unemployment gap may weigh on the Federal Reserve as it looks to begin removing some of the emergency measures implemented during the pandemic and, further into the future, raising interest rates.The Fed has pledged to look at maximum employment as a “broad-based and inclusive” goal, and has cited minority jobless rates in its research and policy meetings.

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