The coronavirus pandemic has created enormous changes in employment and income for all Americans. From just March to April, more jobs were lost than had been gained over the past two decades. While the economy has rebounded somewhat from its low of 133.4 million employed in April to 143.5 million in July, the months-long pandemic has shocked the economy more than the Great Recession of 2007 to 2009.
In the Great Recession and the most recent economic downturn, job losses affected an economy that already has disparate employment and income outcomes by race. In both cases, these disparities have been exacerbated, with minorities often losing the most.
Unemployment has historically been higher for Black and Hispanic Americans.
Historically, Black Americans have had the highest unemployment rates of any race or ethnic group, ranging from around 5.5% in the months before the pandemic to over 16% during the height of the Great Recession's lingering effects. They are followed by Hispanic Americans, who have had unemployment rates two to four percentage points lower than that of Black Americans. Asian and white Americans experience the lowest rates of unemployment, with Asian Americans’ rates as low as 2.5% in the final months of 2019.
While the unemployment rate is one useful measure of the labor market, it does not factor in workers who have become discouraged by looking for work and dropped out of the labor force altogether. The labor force participation rate measures what percent of the eligible working-age population is either employed or unemployed but actively looking for work.
Historically, Hispanic Americans have had the highest rates of labor force participation, typically above 66%, and Black Americans have had the lowest rates, generally below 63%. White and Asian Americans generally have similar labor force participation rates in between those of Black and Hispanic Americans.
Black Americans have lost the most in recent recessions.
Different race and ethnic groups entered both the Great Recession as well as the current economic downturn with differing levels of unemployment and labor force participation. However, some groups have lost more jobs in economic downturns than others.
From December 2007 to December 2009, Black Americans lost 7.7% of their jobs, while white Americans lost 5.4% and Hispanic Americans lost 4.6%. The job losses due to COVID-19 have been significantly greater than those during the Great Recession.
So far since February, Black Americans have lost 13% of their jobs to the pandemic, nearly twice what they lost in the Great Recession. Asian and Hispanic Americans have lost similar amounts, while white Americans have lost 8.9% of their jobs. In both the Great Recession and the current recession, Black Americans have lost about 1.4 times as many jobs proportionally as white Americans, despite starting from higher levels of unemployment than white Americans.
Both recessions have had lasting impact on labor force participation rates as well. Labor force participation rates for all groups have not returned to pre-Great Recession levels and had in fact been falling nearly every year until 2016 as many people never returned to searching for work. However, labor force participation rates fell more for white Americans than for Black Americans.
In the current recession, labor force participation rates have fallen the most for Black Americans who lost a greater percentage of participation in four months than in the 10 years following the Great Recession. Asian Americans have left the labor force at nearly the same rates as Black people in recent months, a pattern out of the norm for Asian Americans. White Americans have experienced the smallest decrease in labor force participation in response to most recent recession.
Black Americans have the lowest income growth of all groups.
Just as there are significant differences in employment and wealth among different race and ethnic groups, there are also historical differences in income earned among demographic groups. In 2018, Asian Americans had the highest median household income of every group at $87,000 per year, followed by white non-Hispanic Americans at $71,000 per year. Hispanic Americans had an income of $51,000 per year, and Black Americans made $41,000 per year. Furthermore, while the income of white, Hispanic, and Asian Americans have increased 8%, 11%, and 18% since 2002, adjusting for inflation, income for Black Americans has only increased 2% in that same time period.
Part of the reason why income for Black Americans has increased so much less during this time period is due to how much the Great Recession impacted Black Americans both in terms of wages earned and jobs lost. While the income of other race and ethnic groups fell 7-9% from 2007 to 2011, the income of Black Americans fell over 12% in that time. The income of Black Americans has also grown back more slowly since the recession than for Asian and Hispanic Americans.
Household income is also shaped by differences in household composition as well as differences in unemployment rates and labor force participation rates. Another way to compare income among race and ethnic groups while holding those other differences constant is to look at median weekly earnings for full-time wage and salary workers. The weekly earnings data tells a slightly different story—while Asian Americans still earn the most at $1,174 per week followed by white Americans at $945 per week, Black Americans earn slightly more per week than Hispanic Americans ($735 per week compared to $706). This suggests that part of the reason that Hispanic household income is higher than that of Black households is partially due to differences in household composition and labor force participation.
In terms of change over time, the story is largely the same—Black Americans have seen little of the wage increases experienced by other demographic groups. Their weekly earnings have gone up 4% since 2002, but have gone up 7%, 17% and 26% for white, Hispanic, and Asian Americans, respectively.
Many factors play a role in differences in employment and income among race and ethnic groups, including differences in the types of jobs certain groups are most likely to hold as well as more systemic factors. Data like this demonstrates the importance of disaggregating data by race to uncover how different experiences have been for various populations.
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