Jobs, Race, and the Economy Update for December 2023: Positive economic data for African Americans, but doubts about decreasing racial inequality

 Jobs, Race, and the Economy Update for December 2023: Positive economic data for African Americans, but doubts about decreasing racial inequality

While employment growth recovers to average levels, the labor market is still tight.

Black Americans' jobless rate is still record low (5.8%), far lower than the previous record low 7% unemployment rate achieved prior to 2015.

Black men's unemployment is still on the increase; in November, it was 6.4%, almost two percentage points higher than the record low set in April of last year.

The proportion of Black women fell by half a percentage point in November to 4.8%, somewhat higher than the record low of 4.2% set in March of previous year.

Black Americans, according to opinion surveys, are optimistic about improving their own fortunes but are pessimistic about the nation's economy, which is mirrored in their pessimism about achieving racial equality.

A comprehensive look at employment and wages may be found in the monthly jobs report from the Bureau of Labor Statistics (BLS) and the national employment report from ADP. The unemployment rates according to the BLS November monthly report were 4.6% for Hispanic workers, 5.8% for Black workers, 3.5% for Asian workers, and 3.3% for White workers. Both white and Asian workers are at what economists refer to as "full employment," which is an unemployment rate of 4% or less, according to the November data. While still much over that range, the unemployment rates for Black and Hispanic people are modest when compared to their historical trends.

In this installment of Race, Jobs, and the Economy, we go over the latest BLS employment data and talk about how Americans, particularly Black Americans, see the economy and their financial status.

Examination of the September BLS report's topline data

The economy created around 199,000 new jobs, above the consensus estimate of 172,500 but falling short of the 240,000 average for the previous 12 months. The unemployment rate, which stayed at 3.7%, also exceeded forecasts.

Employment and Area Patterns

According to the BLS's November report, the three sectors with the most employment growth were leisure and hospitality (+40,000), government (+49,000), and healthcare (+77,000. Transport and storage (-5,000) and retail commerce (-38,000) also had significant drops. The former is relevant as we approach the Christmas season since 55,000 new positions of this kind were created in November of last year, suggesting that shops have hired fewer people this year.

Utilizing the ADP report in addition to the BLS report has the benefit of allowing the BLS report to provide a different viewpoint on the economy than the latter. ADP payroll data shows that the commerce, transportation, and utilities sectors—all of which employ a significant number of Black and Hispanic workers—accounted for more than half of the 103,000 new private sector jobs that were created in November.

ADP also discovered that the leisure and hospitality industries had lost thousands of jobs. Both remarks clearly contradict the employment statistics from the BLS, which is often used by analysts.

The fact that the ADP utilizes real-time payroll data while the BLS mostly relies on establishment forecasts for anticipated hiring for the next month is one approach to reconcile the discrepancies between the two reports. The BLS often updates its statistics upon the submission of new data by firms. For instance, the overall employment growth for September was increased to 35,000.

Speaking of inconsistencies, it is difficult to account for the sharp rise in black male unemployment that is covered below if the ADP figures are accurate. One of the biggest industries for black employment is transportation. However, further adjustments to the BLS data will enable us to determine which estimate best captures the characteristics of the labor market.

Additionally, according to the ADP, pay growth for working people grew at its weakest rate since September 2021. In a similar vein, since June 2021, job changers have had the lowest annual wage gains. The disparity in pay increases between those who change employment and those who remain in one Additionally, the job switch premium is almost at its lowest point in three years, which is indicative of a shift in the labor market power from employees to owners. As.

UAV assaults caused a significant drop in manufacturing employment, as reported in the October update. Over 30,000 workers took part in UAW strikes, and when they ended in November, the manufacturing sector lost 28,000 jobs, according to the BLS strike report. If a worker is on strike for the whole duration of the measurement period, they are formally classified as jobless in the BLS statistics. The BLS explains the 28,000 increase in November with this logical explanation, proving that our hypothesis from last month's research for the comparable fall in October's official data was correct.

work market

The BLS data states that although the number of employed people climbed by 747,000, the number of jobless people and those not in the labor force decreased by 215,000 and 352,000, respectively. Oh! The second number, which is 700,000, is statistically significant and suggests that a gain in employment rather than people quitting the labor market was the main cause of the reduction in the unemployment rate.

When we consider further indicators of the health of the job market, the news becomes much better. A statistically significant decrease of 295,000 workers reported working part-time due to financial difficulties. Underemployed people are included in the U-6 unemployment rate, which decreased by 0.2 percentage points to 7.0%.

The number of open positions fell to 8.7 million in October, the lowest since March 2021. A frequently used indicator of a tight labor market, the ratio of open positions to jobless workers, dropped to its lowest point since August 2021. Layoffs and employee attrition were unchanged from the previous month; as we said in our last update, the labor market is still becoming worse. These facts lead Indeed's Hiring Lab's Nick Bunker to conclude that a recessionary fall in employment is not anticipated and that the economy is already stabilizing, reverting to pre-pandemic levels of growth.

Black men's unemployment rate increased significantly by 0.9 percentage points to 6.4% during the month, despite the overall black unemployment rate being steady. Conversely, the proportion of black women fell to 4.8%, a decrease of 0.5 percentage points. These significant gender disparities were not seen among White and Hispanic workers, according to official economic figures. While the Asian unemployment rate—which is not gender-specific—rose by 0.4 percentage points to 3.5%, the overall unemployment rate for most categories either stayed the same or slightly decreased.

Black Americans' economic despair stemming from pervasive racism

Despite a number of encouraging economic indicators, a lot has been written about the nation's economic misery. Although African American economic indices are close to record highs, the majority of African Americans remain gloomy about the nation's economic outlook, as do Americans in general. Regarding the status of the economy, the American people has traditionally been gloomy. Economics are powerful, according to econometrics. But public opinion is insensitive to numbers and graphs, and it is important for all of us to comprehend how and why pollsters and voters have such different perspectives of the world.

Economists, journalists, and activists disagree on the how and why. On the one hand, real incomes are rising beyond pre-pandemic levels, inflation is just over 3%, unemployment is at its lowest point in decades, and even workplace happiness is at an all-time high. However, the study reveals that Americans' opinions of the economy are not as positive as the numbers above may imply. In November, consumer confidence reached a six-month low, and 81% of registered voters in crucial states said the economy was "fair" or "poor." While there is reason to believe that there is a natural lag between public perception and economic facts, various groups are perceiving and responding to economic developments differently, even if these numbers are generally concerning. which will shortly drastically decrease.

According to a September study, 32% of Black Americans said they believed the economy was getting better, compared to just 22% of respondents overall. Only 58% of Black Americans share the view that the economy is growing worse, compared to 77% of White respondents and 70% of Hispanic respondents. Black Americans were polled by the Pew Trust in February, and 68% of them said they did not now have enough money to maintain the life they want, while 58% said they would someday.

Why Black Americans are less gloomy than other groups may be explained by having a basic understanding of recent economic history. As an example, the most current 2022 Survey of Consumer Finances revealed that, out of all ethnic groupings, Black families' net worth climbed by the most proportion. Black wealth as a whole increased by 60% in 2019 to $44,900 from $27,900. Furthermore, compared to other groups, Black unemployment is at an all-time low, and their labor force participation rate has recovered more quickly than any other. Blacks also experienced the pandemic-induced recession differently than any other demographic group: at that time, they were the only ones whose income did not fall but rather slightly grew to a record $53,000.

58 percent of black respondents said that the economy is growing worse, despite the aforementioned figures. However, 70% of African Americans believe that during the previous two years, their financial status has remained the same or improved, according to a Washington Post study. African Americans' generally positive views of wealth, income, and unemployment rates contribute to their negative outlook on the economy. The Pew survey's pessimism among African-Americans could be a reflection of their worries about the persistence of racism in the country. same laundry A majority of African Americans surveyed by Ton Post said that their personal economic was either steady or improving, and the study also revealed that African Americans had pessimistic opinions about racism and racial inequality. It's not a good time to be black in America, according to almost half of African Americans. Less than 20% of Black Americans believe White people trust Black people, and just 11% believe racism will improve in their lifetime.

It seems that African Americans believe their respective economies are maintaining or growing, despite their seeming pessimism about the state of the American economy as a whole. Their worries about the future do not go away even with increases in wealth, income, or work. Black Americans' worries about racism's ability to perpetuate inequality in the United States may exacerbate worries about the nation's economic destiny.