Summary
The gaps between Black and White unemployment and labor force participation rates are near historic lows.
Key Takeaways:
- Non-White workers and women saw their wages rise and unemployment rates fall in 2022, a notable break from US labor market norms. Black and Hispanic men have seen the fastest wage growth.
- Most sectors have recovered to their pre-pandemic employment levels, with the notable exceptions of government, retail and leisure – despite the latter industry posting the highest average monthly job growth of any sector for 2022.
- The gaps between Black and White unemployment and labor force participation rates are near historic lows.
The Bureau of Labor Statistics (BLS) Employment Situation Report is a critical and comprehensive source of information on the US. labor market. Released monthly, this report provides detailed data on employment, unemployment and wage statistics, offering insights into the health and trends of the economy. The importance of the BLS Employment Situation Report stems from its wide-ranging impact on various stakeholders, including policymakers, businesses, investors and workers.
The report is especially useful for studying the employment and wages of different demographic groups. It provides data on unemployment rates, labor force participation, the employment-to-population ratio, industry specific data and wage information. Much of this data is available for major racial and ethnic groups as well as by age and gender.
Industry Job and Wage Growth
In 2022, the economy added an average of 401,000 jobs per month. These gains, however, were not evenly distributed across different industries. The average monthly gains for leisure & hospitality (89,000), professional & business (67,000) and healthcare (47,000) led the pack.
To better understand the job market, it's important to look at percentage changes as well as net job gains since the total number of jobs in an industry can affect these numbers. Wages grew by 6.11% overall, led by leisure and hospitality at 7% and social assistance at 6%. Meanwhile, job growth was 4.95%. Again, leisure and hospitality and social assistance led with 8.3% and 6.8% growth, respectively. It is worth noting that these service industries are composed mainly of women, people of color, or those who identify as both.
On the other hand, predominantly male production industries such as manufacturing, construction and transportation/warehousing had less impressive job and wage growth.
Most major industries have recovered to their pre-pandemic employment levels, with the notable exceptions of leisure and hospitality, government and retail. This is particularly noteworthy considering that leisure and hospitality had the largest average monthly increases – a contrast that highlights just how much the pandemic affected this industry.
Individual Wage Growth
In examining the data from the past ten years, the past five years, and from the fourth quarter of 2019 (which marked the pre-pandemic period), we are presented with distinct, non-uniform periods of time. This timeline has been intentionally selected to demonstrate the changing dynamics in wage growth. Specifically, we'll delve into the details revealing that during these periods, non-White individuals have experienced wage growth that has consistently surpassed that of their White counterparts.
For all three periods, either Black men or Hispanic/Latino men have had the highest growth in wages, increasing by 22% and 17% respectively. Meanwhile, the wages of White men have increased 13%. When looking at industry wage growth, industries made up predominantly of women, such as Leisure and Hospitality and Healthcare have the highest wage increases over the same periods.
The wage gap between White men and other groups shows more variation. For most groups, the gap has declined over time with some periods of stagnation. However, Black men have had a larger decline in the gap over the last five years than over the last ten years. In other words, the gap has not moved steadily downward but progressed and then regressed over time. Another example is Hispanic/Latino men for whom the gap declined dramatically in the first year of the last ten years but has declined at a slower pace since.
Unemployment and Labor Force Participation
All race and gender groups enjoyed a decline in their unemployment rates in 2022. However, some groups had greater declines than others. Black men and Hispanic women led all groups when split by race and gender. Their unemployment levels declined by 27% and 24%, respectively. While this is a positive sign, Black and Hispanic workers also had much higher unemployment than White workers. White workers were already at a low level of unemployment, making it difficult for their unemployment to fall much further.
The labor force includes only those employed or looking for work, meaning those who have stopped looking for work are not counted. The labor force participation rate (LFPR) can be used to interpret changes in the unemployment rate. Ideally, we want the unemployment rate to decline and the LFPR to increase – because that combination means joblessness is falling because people are successfully finding work, not because job-seekers are striking out and giving up. But if both LFPR and topline unemployment measures are declining, one could conclude that workers are leaving the labor force. And if both are increasing, it suggests that people are re-entering the labor force as unemployed and are now looking for work. These last two scenarios are uncommon; the ‘sweet spot’ combination of rising LFPR and falling joblessness is the most common pattern in the historic data.
LFPR increased for all racial groups in 2022. Since the end of the pandemic, the LFPR of Black workers has risen dramatically while the rate for their White counterparts has held relatively constant. The gap between the LFPRs of Black and White workers is negative and at its lowest point on record.
Because the White LFPR has held constant while the White unemployment rate has declined, we can infer that many White workers have left the labor force. That coincides with evidence from the Pew Research Center suggesting that the number of older workers and baby boomers retiring increased during the pandemic.
Additionally, the LFPR for those over 55 declined dramatically at the beginning of the pandemic and has since stayed relatively constant. Thus, retirement may explain why Black workers now have a higher LFPR than their White counterparts – providing key context for the decline in the gap in unemployment rates between Black and White workers. Furthermore, because White workers are wealthier and more financially stable, this could also mean Black workers have to remain in the labor force out of financial necessity without the option to retire.
Organized Labor
In 2022, the economy gained 273,000 new union jobs, a 1.9% rise over 2021. But overall the number of people in the workforce grew by 3.9%. This means that non-union job growth outstripped union job growth – driving the country’s overall unionization rate down to 10.1%, the lowest level of unionization on record. The 273,000 new union workers were exclusively non-White workers with Black, Hispanic and Asian workers seeing increases of 142,000, 101,000 and 64,000, respectively. The number of White union members declined by 31,000. Black workers had the highest unionization rate and the largest increase in union jobs of all racial groups. This could be because Black workers are more likely to be employed in the public sector, which has a unionization rate close to five times higher than the private sector.
Filing a union petition with the National Labor Relations Board (NLRB) is a formal process initiated by employees or a labor organization (a union) to assert their rights to engage in collective bargaining. In 2022, the number of union petitions filed with the NLRB rose by an impressive 61% compared to the previous year. This increase coincides with the highest approval rating of unions since 1965 and a surge in union activities, such as the large-scale strike across the University of California system, which ran for six weeks during the holiday period last winter. There is clear evidence of workers' interest and public support for unionization.
Multiple Jobholders and Part-time Workers
Just under 5% of all workers last year held multiple jobs, reflecting a significant rise in raw-number terms: Multiple jobholders increased by 581,000, or 8% compared to 2021. Both Black men and women were more likely than other groups of workers to hold more than one job, at 5.1% and 6% respectively. Part-time workers – those working less than 35 hours a week – accounted for about 20% of the total labor force.
The term "part-time for economic reasons" refers to individuals who would like, and are available for, full-time work, but have had to settle for a part-time schedule due to economic conditions. These conditions can include their inability to find full-time work or reduced hours by their employer because of the state of the economy or the lack of demand for their work. In 2022, about 24% of working-age men (25 to 55 years old) had part-time jobs for “economic reasons”, meaning they couldn’t find full-time work, compared to 31% in 2021. Hispanic men exhibited the highest likelihood of accepting part-time employment, despite their preference for full-time work, with 35% doing so. They were followed by Black men, 29% of whom worked part-time but wanted full-time work. White men had a lower incidence, with 24% accepting part-time hours despite desiring full-time employment.
The Employment Situation Report offers a way to monitor income and employment details on a monthly basis. Reviewing this data for all of 2022 gives us a mixed picture of progress, and a useful jumping-off point for what some of this data really means for families struggling with generational wealth inequality, discrimination in the workplace and the pressure of rampant inflation.
The unemployment disparity between Black and White workers has never been narrower. But what lies beneath this unprecedented convergence? Is it an indication of receding income inequality, or simply a testament to the shifts in our demographic fabric? Or could it be a darker truth - that the pandemic's wave of illness and trepidation disproportionately affected our workforce? Were White workers simply better fortified by the advantages of historically higher wages and lower unemployment rates, offering them the option of leaving the workforce altogether?
Joseph Dean is an intern with NCRC and a graduate of Howard University with a Master's degree in Economics.
Photo by Ernie Journeys on Unsplash
