Study shows racial divide

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U.S. recession widened jobs gap between blacks and whites

As the U.S. struggles to dig out from a “great recession,” blacks and Hispanics are more than three times as likely as whites to live below poverty, according to a report released last week.

That’s one stark conclusion of an annual “State of Black America” report, issued by the National Urban League, a civil rights group based in New York.

Also, a jobs gap with white Americans has widened. African-Americans had a jobless rate 4.6 percentage points higher than that of white Americans as the recession began in 2007, and now that difference has grown to 6.8 percentage points. Hispanic Americans don’t confront as large a chasm with whites, but the gap for them has also grown significantly in the past 30 months, according to Labor Department data.

To some extent, these racial disparities repeat patterns seen in past recessions. But economists also say the trends are part of a larger challenge for America, which goes beyond the cyclical ups and downs of the jobs market.

The tough job market, they say, is shaped in important ways by longer term forces — so-called “structural” changes such as the decline of factory jobs. These forces include the growing importance of education to labour-market success, and the tendency of Americans over age 65 to remain active in the job market.

Racial minorities, especially blacks, have been affected by these changes. So have other groups including the young, the less-educated, and men. Here are some of the job-market trends:

The unemployment rate for Americans age 20 to 24 stood at 15.9 percent in the most recent quarter, almost double where it stood in 2007. Workers age 65 or older have also seen a jump, but only to 5.8 per cent joblessness.

Even as older workers delay retirement, more teens have been dropping out of the labour force entirely. The upshot: in this economy, it’s taking longer for young people to establish connections to the world of work.

The jobless rate for men, currently 9.9 per cent, has never been so far above the jobless rate for women (now 7.8 per cent), according to research by economists at Wells Fargo Securities. A key reason: more women are going to college than men. Also, women often enter fields of work that are less prone to big layoffs during downturns, such as teaching or healthcare.

Unemployment for Americans with a college degree or higher is 4.4 per cent, versus 10.8 per cent for those with a high school diploma only.

“Many unemployed are unemployed longer because of a mismatch of skills — not just due to weakness” in consumer spending, John Silvia, chief economist at Wells Fargo Securities, wrote recently. These difficulties, he says, “have been developing since the 1970s and have now come to full bloom in this economic cycle.”

Although blacks are more affected than whites by some of these changes, the challenge increasingly affects white Americans as well. The National Urban League report notes that blacks are doing better, relative to whites, than they did in the wake of the deep recession of 1981. “The last time unemployment rate for whites was higher than nine per cent was in March 1983,” the report says. “At that time, black unemployment was 20.1 per cent.”

This time, by contrast, when white unemployment peaked at 9.4 per cent last year, African American unemployment stood at 15.7 per cent. Joblessness for both groups has edged down slightly since then.

Still, those jobless rates remain at troubling levels, and the National Urban League says this “will require focus on the structural … components of unemployment.”

Education “is the true path out of poverty,” the report says. “Education is the civil-rights issue of our time.” The dropout rate from high school is 26 per cent for Hispanics and 13 per cent for blacks, versus 10.8 per cent for whites.

More education or retraining won’t guarantee jobs for the unemployed, economists say, but it’s a central part of any long-term plan for job growth.

For its part, the National Urban League urges expanded government support for small-business loans, youth jobs, and urban “jobs academies” for the chronically unemployed.

Another challenge of this recession, Silvia says, stems from the housing market. The decline in home values, and the difficulty of selling homes, has made it harder for many Americans to move in search of new work.

Organizations: National Urban League, Labor Department, Wells Fargo Securities

Geographic location: U.S., New York.Also

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