U.S. Employment Disparities Shrink in Key Metric Favored by Fed
(Bloomberg) -- U.S. employment disparities along racial and ethnic lines narrowed in August, according to a key metric favored by Federal Reserve officials published by the Labor Department in Friday’s monthly jobs report.
The so-called prime working-age employment-to-population ratio, which captures the percentage of Americans between the ages of 25 and 54 who currently have jobs, advanced for Black workers in August -- to 73% from July’s 72.3% figure -- outpacing gains for all other groups.
For the White population, the rate advanced to 78.6% from 78.5%, while that for Hispanic or Latino population rose to 74.5% from 74.4% and that for Asian workers ticked down to 78% from 78.1%.
Employment rates for various racial and ethnic groups are set to play an increasingly important role in the Fed policy debate in the year ahead as the U.S. central bank takes steps to wind down its bond-buying program and begins contemplating the timing of interest-rate increases.
In August 2020, Fed policy makers unveiled a new monetary policy framework that redefined their mandate to seek maximum employment as a “broad-based and inclusive” goal, meaning they would pay closer attention to such data when making decisions on interest rates going forward than they did in the past.
Officials say they don’t expect to begin raising interest rates from current near-zero levels “until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment,” though they have so far declined to specify what sorts of numbers would meet their broad-based and inclusive test.
August’s figures brought the ratio of Black prime working-age employment relative to White prime working-age employment to 91.5% on a 12-month average basis. That’s still well below the 94.3% ratio between the two employment rates that marked the high of the previous expansion in October and November of 2018.
For comparison, in December 2015 -- when the Fed first began raising rates in its last tightening cycle -- the ratio between Black and White prime working-age employment rates stood at 91.8% on a 12-month average basis.
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