Continued Wage Growth, But A Possible Warning Sign From Black Workers: Race, Jobs & The Economy Update – May 2023

Total nonfarm payroll employment grew by 339,000 in May. That’s good news and falls in line with the average monthly gain of 341,000 over the previous year. The 3.7% national unemployment rate indicates a resilient job market, which has continually added positions across various sectors. But when we delve deeper into the figures, a more complex narrative emerges.

Takeaways from the May Employment Situation Report include:

• The topline national unemployment rate remained low at 3.7%.
• Black unemployment rose dramatically from its historic low of 4.7% last month, jumping to 5.6%. Rising Black unemployment is often the first to increase prior to a recession.
• The construction sector continued to show rising employment and rising wages, benefitting Hispanic workers, who represent 35% of all construction workers, and helping to lower Hispanic unemployment to 4%. 

Several industries showed strong job growth in May. Professional and business services led the pack, adding 64,000 jobs. The government sector added 56,000 positions, healthcare boosted employment with 52,000 new jobs, while construction and social assistance industries contributed 25,000 and 22,000 jobs respectively. Additionally, the leisure and hospitality sector continued its upward trend, adding 48,000 jobs. Wages also continued to rise in May. Weekly earnings increased from $33.33 to $33.44. Since May of 2022 average hourly wages have risen $1.38.

This broad-based job growth is a positive sign for the economy, suggesting demand for workers is strong across different sectors. 

While the overall unemployment rate rose slightly to 3.7%, the increase was not uniform across racial and ethnic groups. The unemployment rate for Black workers jumped from its historic low of 4.7% in April to 5.6% in May, a significant 0.9 percentage point increase. Hispanic workers, by contrast, saw a decrease in unemployment, down 0.4 percentage points from April to 4.0%. This is likely due to the steady growth in construction jobs, an industry where Hispanic workers make up 35% of the workforce.

In comparison, the unemployment rate for White workers edged up by only 0.2 percentage points to 3.3%. The racial unemployment gap is a complex issue, resulting from a combination of factors including education disparities, discrimination and differences in industry representation. 

The rapid increase in Black unemployment in May is a cause for concern – not only for racial equity advocates but the entire US economy. Historical patterns show Black unemployment often rises before a recession.

The Black unemployment rate is sometimes seen as a “canary in the coal mine” for the broader economy. When it begins to rise, it can be an early signal of a potential downturn. This is due to a variety of factors, including the fact that Black workers are often overrepresented in industries more susceptible to economic volatility. Therefore, a continued increase in Black unemployment could be an early warning sign of a future recession.

Top Line Numbers

• • Overall unemployment rose 0.3% to 3.7%
  • 339,000 jobs were added in May, the average gain over the last twelve months has been 341,000
  • Biggest gains in employment were in healthcare (74,6000), professional and business services (64,000), Government (56,000), Leisure and Hospitality (48,000), and Construction (25,000).

Unemployment Rate by Race and Gender

• • • The White unemployment rate increased 0.2% since April to 3.3%
      • White Men’s unemployment rate increased 0.2% since April to 3.3%
      • White Women’s unemployment rate increased 0.1% since April to 2.9%
    • Black unemployment rate increased 0.9% since April to 5.6%
      • Black Men’s unemployment rate increased 1.1% since April to 5.6%
      • Black Women’s unemployment rate increased 0.9% since April to 5.3%
    • Hispanic unemployment rate decreased 0.4% since April to 4%
      • Hispanic Men’s unemployment rate decreased 0.1% since April to 4%
      • Hispanic Women’s unemployment rate decreased 0.7% since April to 3.4%
    • Asian unemployment rate increased 0.1% since April to 2.9%

Raw Total Joblessness, LFPR and Wages

• Number of People Employed decreased by 310,000 in May
  • White Employed decreased by 112,000 in May
  • Black Employed decreased by 125,000 in May
  • Hispanic increased by 222,000 in May
• Labor Force Participation Rate decreased by 0.1% to 60.3% in May
  • White was unchanged at 62.3%
  • Black increased 0.2% to 63.2%
  • Hispanic increased 0.1% to 66.9%
• Hourly Wages increased by $0.11 to $33.44 in May

Dedrick Asante-Muhammad is NCRC’s Chief of Organizing, Policy and Equity.

Jason Richardson is NCRC’s Senior Director of Research.

Photo Credit: Daniel Steuri via Flickr.