Key Takeaways:
- The labor market remains tight as job growth continues to return to normal.
- Black Americans continue to enjoy record low levels of unemployment (5.8%) well below the 7% unemployment rate that was the record low pre-2015.
- The unemployment rate for Black men continues to increase, with November’s 6.4% rate exceeding last April’s record low by almost two percentage points.
- Black women saw a half percentage point decrease in November going down to 4.8%, a little higher than their record low last March of 4.2%.
- In opinion polls African Americans see a stability to strengthening of their personal finance yet have a pessimism toward the country’s economy as a whole that is reflected in their pessimism of racial equality advancing.
The Bureau of Labor Statistics (BLS) monthly jobs report and the ADP National Employment Report provide a deep look into employment and income. The BLS November monthly report has the unemployment rate at 3.3% for White workers, 5.8% for Black workers, 3.5% for Asian workers, and 4.6% for Hispanic workers. The November report shows both White and Asian workers at what economists call “full employment,” defined as an unemployment rate at or below 4%. Black and Hispanic unemployment rates are well above that threshold, but low in relation to historical patterns for those groups.
In this edition of our Race, Jobs and the Economy series, we overview the most recent BLS employment situation and discuss the viewpoints of Americans, especially Black Americans on the economy and their finances.
Analysis of Topline Figures in September BLS Report
The economy added roughly 199,000 jobs, below the 240,000 average for the past 12 months, but beating the consensus forecast of 172,500. Unemployment also beat expectations, remaining unchanged at 3.7%.
Jobs & Sectoral Trends
The industries with the largest employment gains in BLS’s November report were healthcare (+77,000), government (+49,000), and leisure and hospitality (+40,000). There was a notable decline in retail trade (-38,000) and transportation and warehousing (-5,000). The former is concerning going into the holiday season as last November, 55,000 such jobs were added, indicating retailers have scaled back hiring this season.
One of the benefits of using the ADP report alongside the BLS report is that the former can provide an alternative perspective on the economy compared to the latter. According to ADP’s payroll data, over half of 103,000 private sector jobs gained in November came from the trade, transportation, and utilities sectors which employ a disproportionately large number of Black and Hispanic workers.
Also, ADP found that the leisure and hospitality sector lost several thousand jobs. Both observations directly contradict the BLS employment report, a common scenario that is frequently acknowledged by analysts who cite it.
One way to reconcile the contradictions between the BLS and ADP reports is that the BLS relies partly on estimates from establishments on projected hiring for the following month, where ADP utilizes real-time payroll data. BLS frequently revises its figures after businesses submit additional reports. For example, September’s total jobs gain was revised down by 35,000.
Speaking of contradictions, if the ADP numbers are correct, then it is hard to explain the dramatic increase in Black male unemployment discussed below. The transportation sector is a large employer of Black men. Nevertheless, future revisions of BLS numbers will help us understand which estimate provides a better understanding of the nature of the labor market.
ADP also noted that pay increases for job-stayers increased at the slowest pace since September 2021. Similarly, job-changers posted the smallest year-over-year increase in pay growth since June 2021. The difference in pay gains between the changers and stayers, the premium for switching jobs, is also near its lowest level in 3 years – further evidence of labor market power shifting away from workers and toward owners.
In October’s update, we noted a large decline in manufacturing jobs due to the UAW strikes. According to the BLS strike report, over 30,000 workers participated in the UAW strikes, and with their cessation, the manufacturing industry gained 28,000 jobs in November. A striking worker is officially counted as unemployed in BLS data if they are out on strike for the entire period being measured. The BLS credits this methodological reason for the 28,000 gain in November – confirming that the similarly sized drop in October’s official numbers was the fiction we thought it was in last month’s analysis.
The Labor Market
According to the BLS report, the number of unemployed and persons not in the labor force declined by 215,000 and 352,000, respectively, while the number employed increased by 747,000. The latter figure of over 700,000 is statistically significant and indicates that the decline in the unemployment rate was caused primarily by increased employment rather than workers leaving the labor force.
The news gets even better when we look at other measures of labor market strength. The number of workers who report being part-time for economic reasons declined by 295,000, a statistically significant figure. The U-6 unemployment rate, which includes underemployed workers, edged down 0.2 percentage points to 7.0%.
October witnessed the lowest number of unfilled job openings (8.7 million) since March 2021. The ratio of openings to unemployed workers, a highly cited metric that indicates labor market tightness, dropped to its lowest level since August 2021. Coupled with the fact that hiring, quits, and layoffs remained unchanged from the previous month, the labor market continues to dampen as we noted in our previous update. These data points led Nick Bunker’s Indeed’s Hiring Lab to suggest that the economy is already moderated, returning to pre-pandemic levels of growth and a recessionary decline in employment not expected.
While the overall Black unemployment rate remained unchanged, Black men experienced a substantial increase of 0.9 percentage points in the month, up to 6.4%. Black women, on the other hand, enjoyed a decline of 0.5 percentage points, down to 4.8%. White and Hispanic workers did not exhibit these large differences between the genders officially tracked in economic data. Most groups’ overall unemployment rates were unchanged or declined slightly, though the Asian unemployment rate (which is not broken down by gender) increased by 0.4 percentage points to 3.5%.
Economic Pessimism for African Americans Born of Enduring Racism
Much has been written concerning the country’s economic pessimism despite many strong economic indicators. As has been mentioned African American economic indicators are near historic highs but like Americans as a whole the majority of African Americans are pessimistic about the country’s economy. The American public is historically pessimistic about the state of the economy. Econometrics say the economy is strong. Public sentiment is famously unresponsive to statistics and charts, however, and understanding how and why wonks and voters have such opposite conceptions of the world around them is valuable to us all.
Journalists, economists and activists are having an ongoing debate about those hows and whys. On the one hand, unemployment is at its lowest level in decades, real wages are above pre-pandemic levels, inflation is just above 3%, and even workplace satisfaction is at an all-time high. On the other hand, polling suggests that Americans are not as enthusiastic about the economy as the aforementioned figures would have one believe. Consumer sentiment dropped to a six-month low in November, while a recent poll of battleground states found 81% of registered voters rate the economy as either “Fair” or “Poor.” While these stats are worrisome overall, different groups are experiencing and reacting to economic changes differently – and there is some reason to think that this is simply a natural lag between public perception and economic data which will soon decline dramatically in force.
A September poll found that while overall only 22% of respondents felt that the economy was improving, this figure was 32% for Black Americans. 77% and 70% of Hispanic and White respondents, respectively, stated that the economy was getting worse but only 58% of Black Americans felt the same. When Pew Trust polled Black Americans back in February, 68% felt they didn't have enough money currently to support the life they wanted and 58% believed they eventually would.
An understanding of recent economic history may elucidate why Black Americans are less pessimistic than other groups. For example, the recently released 2022 survey of consumer finances showed that Black households had the largest percentage increase in net worth of all racial groups. Median Black wealth jumped 60% to $44,900, up from $27,900 in 2019. In addition, Black unemployment levels are at historical lows and their labor force participation rates returned to their pre-pandemic levels faster than any other group. Blacks were also a unique demographic group in their economic experience of the pandemic-induced recession: They were the only group whose incomes did not decline in that period, instead slightly increasing to a record of near $53,000.
Despite the aforementioned statistics, 58% of Black respondents reported the economy was worsening. Yet according to a Washington Post poll over the last two years 70% of African Americans see their financial situation as staying the same or getting better. What is the cause of African Americans seeing the economy pessimistically as unemployment, wages and wealth are relatively good. For African-Americans, the pessimism found in the Pew Poll could be a reflection of their concerns of ongoing racism in the United States. The same Washington Post poll that had most African Americans stating their personal economy was either stable or getting better also showed African Americans with non-optimistic assessments of racism and racial inequality. Nearly 50% of African Americans think it is a bad time to be Black in America. Only 11% of African Americans say racism will get better over their lifetimes, and not quite 20% of Blacks think Whites trust Black people.
It appears that African Americans can both be pessimistic about the US economy as a whole and understand that their personal economies are maintaining or getting stronger. Increases in income, wealth, and employment do not erase their concerns for the future. For Black Americans, the concern that racism will maintain inequality in America can only worsen concerns for the future of the country and its economy.
Joseph Dean is NCRC's Racial Economic Junior Research Specialist.
Dedrick Asante-Muhammad is NCRC's Chief of Policy, Research and Equity.
