African Americans continue to see greater gains in wages, employment and wealth than at any point in recent history. While the labor market appears strong – with unemployment rates below the 4% threshold defined as “full employment” for the past two years – many workers still report that rent and other high-cost items make it difficult to build wealth. This strong labor market has shrunk the historic racial disparities in topline jobless rates. The African American unemployment rate is now roughly 1.5 times that of Whites, down from a long-term trend of roughly doubling the White unemployment rate.
The Bureau of Labor Statistics (BLS) monthly jobs report and the ADP National Employment Report provide a deep look into employment and income. The January BLS report has the unemployment rate at 3.4% for White workers, 5.3% for Black workers, 2.9% for Asian workers and 5.0% for Hispanic workers.
In this edition of our Race, Jobs and the Economy series, we overview the most recent BLS jobs report alongside some of the latest figures on Black labor including wages, union membership and wealth.
Analysis of Topline Figures in January BLS Report
The economy added 353,000 jobs in January according to the BLS, more than double the consensus prediction of 162,000 new jobs created in the month. The unemployment rate remained at 3.7% for the third month in a row despite predictions it would rise to 3.8%.
Jobs & Sectoral Trends
The industries with the largest employment gains were professional and business services (+74,000), healthcare (+70,000), and retail trade (+45,000). The high-paying professional and business services industry has been a major pillar of the labor market’s overall recovery from pandemic-driven lows. January’s boom in the sector is an outlier in raw-numbers terms, but more broadly reflects a steady trend: The industry averaged 14,000 new jobs each month throughout 2023, significantly lower than last month’s jobs gains. By contrast, the manufacturing sector’s strong January runs counter to recent trends. Manufacturing added 23,000 jobs in January after experiencing little net job growth in 2023. The mining sector, meanwhile, shrunk by 5,000 jobs in January.
BLS statistics representing the government’s official record do not always track neatly with the monthly private-sector analysis generated by ADP. The two reports told the same story at the end of 2023, as we noted in our previous Race, Jobs and the Economy analysis of December’s figures. But this time around the ADP and BLS figures paint radically different pictures about hiring last month. ADP reports only 107,000 private sector jobs were added in January – about one-third the volume of private sector job growth BLS found. The gaps are even more dramatic at the sectoral level: ADP reports just 2,000 new jobs in that key, high-wage professional services sector, lower by a factor of 35. The private-sector analysis also found mining jobs increased by 6,000 in January, the precise opposite finding from BLS’s data. As dramatic as these differences are, they could be worse. On a serious note, the two reports seldom align with each other, thus the ADP is frequently used to check the figures coming from the government. Nevertheless, it’s useful to compare and monitor both reports over time to better gauge the vitality and strength of the economy.
Black Labor
In December’s analysis, we noted a huge drop in the Black male unemployment rate from 6.3% in November to 4.6% in December. Today’s BLS report has that rate up at 5.3%, still significantly lower than November. About 100,000 fewer Black men reported being employed in January than in December, while about 80,000 more were listed as unemployed. The unemployment rate for Black women, meanwhile, held steady in January at 4.8% approaching a level of full employment.
Black Wages
In Q4 of 2023, median weekly earnings for Black workers stood at $967, compared to $1,157 for White workers. Black wages increased by 7.7% year-over-year, the largest percentage gain of all racial groups. Here too there is a notable difference within the data between Black women and Black men. Black male wages increased more in line with other groups at 4.8%, but Black women’s wages increased by more than 9%, the largest increase of all race-gender groups.
Black Union Workers
The BLS’s annual union membership report was published a week prior to the jobs data released Friday. The two main annual estimates are the union membership rate, or the percentage of workers who are dues-paying members of a union, and the union representation rate, or the percentage of workers who enjoy the benefits of a union contract but are not themselves members.
The report found that in 2023, only Hispanic and Black workers enjoyed increases in their union membership rate. The Hispanic union membership rate rose 0.2 percentage points to 9% in 2023. Black worker union membership hit 11.8% in 2023, also up by 0.2 percentage points. Union representation meanwhile rose only for Black workers, to 13.1% from 12.8% in 2022. Black workers continued to have the highest unionization membership in and representation by labor unions, with Black men leading the pack with a 13.2% union membership rate.
Black Wealth: Statistical Gains, Structural Concerns
Significant gains for Black household wealth may rest on fragile foundations. The major driver of increases in Black wealth is currently out of reach for the majority of Black people.
From 2019 to 2022, Black households had the largest increases of any racial group in median and average net worth, gaining by 60% and 28% respectively. Median Black household net worth rose from $24,100 to $44,900 in that time, driven primarily by growth in home equity. Striking and positive as these large percentage increases may be, they look quite paltry in comparison to White household wealth in actual dollar terms. White households had a median net worth of $284,310 in 2022 after gaining $65,104 over the same time period. The percentage gains are smaller for White households than Black ones not because Whites are somehow falling back to the pack – it’s a simple mathematical reality caused by the massive difference in the starting point wealth level for each group.
The nature of Black wealth gains can be separated from the magnitude, however, and is itself instructive. Home equity plays a large role in supporting Black wealth and that role is growing substantially. In 2013 home equity accounted for 32.7% of Black wealth. In 2022 that figure was up to 43.8%. That is the largest share since the turn of the century. In fact, from 2013 to 2022, home equity accounted for over 60% of the gains in average net worth for Black households, versus only 21% for White households. This means that Black households are extremely dependent on housing to maintain and build wealth – even though the majority of African Americans are not homeowners.
Conclusion
January’s numbers suggest the African American economy is on the right path to start the year. The data show Black workers maintaining record-low unemployment rates, which should help build off the largest percentage increase in median wealth between 2019 to 2022 and the largest year-to-year wage increase of 7%. The challenge is how to maintain this rate of economic improvement to move African Americans out of asset poverty, to full employment and wages more in line with the majority White population. In an election year especially, policies that can maintain this momentum should be at the forefront of the national political discussion.
Joseph Dean is NCRC’s Racial Economic Junior Research Specialist.
Dedrick Asante-Muhammad is NCRC’s Vice President for Racial Economic Equity and Research.
Photo by Christina @ wocintechchat.com on Unsplash
