Other Labor Market Developments 2020

October 14, 2020

There are less "visible" groups in the U..S. that have also endured a great amount of suffering during the covid-19 recession but that are not often considered because they represent relatively smaller segments of the population, have only become more significant only recently or have not traditionally been part of the discourse. In the previous article "Additional Labor Market Inequity" the White and Non-White populations 16 years old or older and the impact of the novel corona virus recession on them was reviewed from the point of view of the labor market. As explained there, the Non-White population includes the Asian, Black, Indigenous American, Mixed Race and any other population segments not included within the white one. Indeed, the Non-White segment was calculated by Economic no nonsense as a residual from the White population.

It was not until after the new space acquired, as a result of the civil rights struggle of the 1960's, that in 1972 the Bureau of Labor Statistics started to compile statistics specifically identifying the labor market for the Black population (Graph 1). The availability of these series, for the population 20 years old or older, allows now the study of the Black, White and Rest populations. This time the population Rest is computed by Economic no nonsense as the residual from the White and Black populations. Thus, this segment presumably includes the Asian, Indigenous American, Mixed Race and any other segments not included within the White or Black populations.

Graph 1 shows how Rest has become almost as large as the Black segment within both employment and population as a whole. While, Rest was equivalent to 1.2% and the Black segment was 9.7% of the population 20 years old or older in 1972, they grew to 9.7% and 12.7% respectively in September of 2020 (top right panel of Graph 1).

The "Great Recession" had an enduring impact on employment as observed in the bottom left panel of the graph. Indeed, close to 140 million people were employed in September of 2007, last year before the recession, to only recover close to that level in 2014 to 142 million as the population grew by 16 million during the same period. So, over a decade ago seven years passed before the job level was recovered to pre-recession numbers. This time the nature of the recession is different but if it takes the same time, only in 2025 there will be 153 million people employed again, emphasizing the need for an extended safety net during periods of severe unemployment. Furthermore, the lowest employment level was only reached until 2010 for the population 20 years old or older.

September of 2020 saw a decrease of close to 11 million jobs with respect to September of 2019 while between 2010 and 2007 the equivalent figure was only 5 million. Thus, right now the economy, in absolute labor market numbers, is much worse than what was observed during the last recession, forcing the question of whether there will be some recovery in the fourth quarter of 2020 in terms of employment to at least recuperate 5 million additional jobs, thus lowering the loss to 6 million by the end of the year. The latter is doubtful considering the lack of additional fiscal stimulus and the shortness of the period. In fact, it is possible to realize additional job losses instead of gains.

Table 1 compares the employment situation for the Black, Rest and White populations 20 years old or older in September of 2019 and 2020. The White population has the absolute lowest unemployment rate, only 5.3%, while the Black and Rest segments have rates of 11.8% and 8.7% respectively.

	2019			2020			2020 - 2019			2020 / 2019
Table 1
Labor Market (Population 20 years or older)
September (Numbers in millions)
Indicator	Black	Rest	White	Black	Rest	White	Black	Rest	White	Black	Rest	White

Total Population 20 years or older	30.7	23.4	188.7	31.0	23.7	189.5	0.3	0.3	0.8	1.1%	1.2%	0.4%

Employed	19.0	15.2	118.9	17.0	14.0	111.5	-2.0	-1.2	-7.4	-10.5%	-8.0%	-6.2%

Unemployed	1.0	0.5	3.5	2.3	1.3	6.3	1.3	0.9	2.8	126.2%	173.7%	78.3%

Labor Force = Employed + Unemployed	20.0	15.7	122.5	19.2	15.4	119.5	-0.7	-0.4	-2.9	-3.7%	-2.3%	-2.4%

Not in Labor Force	10.7	7.7	66.3	11.8	8.3	70.0	1.1	0.7	3.7	10.0%	8.5%	5.6%

Unemployment Rate = Unemployed / Labor Force	5.0%	3.1%	2.9%	11.8%	8.7%	5.3%	6.8%	5.6%	2.4%	134.8%	180.2%	82.7%

Number of Jobs Lost				2.2	1.4	7.9

Jobs Lost % of Pop. 20 or older				7.1%	5.9%	4.2%

Source: Bureau of Labor Statistics, Current Population Survey and Economic no nonsense calculations.
Note 1: Data is seasonnally adjusted by the Bureau of Labor Statistics.
Note 2: Rest data and Number of Jobs Lost for Population 20 years or older were calculated by Economic no nonsense.
Note 3: Rest population is assumed to include Asian, Indigenous American and any others, such as those of mixed race.

Nonetheless, the group with the largest change in the unemployment rate between 2019 and 2020 was the Rest with a 180% increase followed by the Black and the White with 135% and 83% growths respectively, producing an increase in the number of unemployed people of almost 1 million for each the Rest and the Black segments and 3 million for the White. At the same time the labor force endured a decrease of 4 million.

In terms of number of jobs lost the Black population is the most comparatively and negatively affected. In fact, while the number of jobs lost as a percentage of their total population cohort, 20 years old or older, is 7.1% for the Black, the equivalent numbers for the Rest and the White populations were 5.9% and 4.2%.

The number of people out of the labor force increased most significantly between 2019 and 2020 in the case of the Black (10%) followed by the Rest (8.6%) and the White (5.6%) segments as seen in Table 1. It is important to note that the growth rates for the Rest and Black populations are the highest which makes the current crisis even more burdensome as their employment base is being most extensively eroded.

Graph 2 shows "The Index of Participation" for the populations under study. The index corresponds to the change from year (t-1) to year t, starting on a base year equal to 100, of the share of the i_th population 20 years old or older employed in year t as a percentage of the total i_th population 20 years old or older divided by the share of the i_th population 20 years old or older employed in year t as a percentage of the total population 20 years old or older.

The dynamics of the situation in Graph 1 are more easily understood with the Index of Participation depicted on Graph 2. Starting from the base year, 1972 in this case, it is observed how the White population has comparatively enjoyed less labor market volatility than either the Rest and the Black groups as its Participation Index has remained very close to 100, falling below 100 only between 2017 and 2019 since 1974, loss that has been currently recovered as the Rest and Black groups have lost relatively more during the covid19 recession.

The reason over the comparatively larger magnitude of the Rest's index in relation to the Black or the White one requires an explanation. A thorough examination is difficult without additional data. However, a possibility is that this group, due to its composition, must work relatively more. Thus, more workers per household may be prevalent among this segment in order to solvent the circumstances or to maintain a certain standard of living than is otherwise required. There may also be many people in this group that for some reason, do not have access to the safety net due to less formal compensation arrangements or other obstacles.

Graph 2 takes into account simultaneously population and employment dynamics. It shows a "Reversion Zone" starting in 2019 when prevailing labor market trends "flipped". It confirms the previous assertions made in Additional Labor Market Inequity in the sense that negative developments in the White's population labor market have a multiplier or expanded effect on the Black and Rest population's markets.