Additional Labor Market Inequity
October 12, 2020
In the three previous articles "The Current Labor Market", "Labor Market Dynamics" and "Distress in the Labor Market 2020" the labor market as a whole and in terms of gender was studied. It was observed that women have experienced an improvement in their prospects for participation in terms of numbers but there surely remains ample room to advance in that area and much more in others such as "job type" and "wage" distributions.
Just like in terms of gender, the labor market regarding race has experienced significant changes during the last seven decades (Graph 1). The series to address the subject, available from the Bureau of Labor Statistics, includes the period from 1954 to 2020. In order to maintain consistency all data used corresponds to September of each year. The Top Panel of the Graph plots the ratio of the population 16 years old or older for each of two populations under study, White and Non-White, that is employed. The assumption made here is that the group of Non-Whites includes the Asian, Black and Native American populations and any others, such as people of mixed race.
Although the scale in Graph 1 has been modified in order to emphasize variation, it must be recognized that the changes have been very significant. In 1954 the ratio of jobs to population (number of people 16 years old or older employed as a percentage of the total population 16 years old or older) was 61% for Non-Whites while the one for White people was 55%. This situation persisted between 1954 and 1967. However, without additional data about the types of jobs held and wages earned at that time by Non-Whites it is not clear what is the reason for this behavior.
Although the scale in Graph 1 has been modified in order to emphasize variation, it must be recognized that the changes have been very significant. In 1954 the ratio of jobs to population (number of people 16 years old or older employed as a percentage of the total population 16 years old or older) was 61% for Non-Whites while the one for White people was 55%. This situation persisted between 1954 and 1967. However, without additional data about the types of jobs held and wages earned at that time by Non-Whites it is not clear what is the reason for this behavior..
The situation reverted between 1968 and 2020, period throughout which the Non-White population has seen lower levels of relative participation in employment. The bottom panel shows the difference between the relative participations of Whites and Non-Whites denominated here "Employment Gap" (EGAP). This EGAP was negative between 1954 and 1967 but has seen then climbed to as high as 8% in 1982 and 1983. Between 1984 and 1995 it was reduced to an average of 7% and dropped significantly to 3%, on average, between 1996 and 2003.
The "Employment Gap" then rose again to an average level of close to 4% between 2004 and 2007 to climb even more during the "Great Recession" and promptly after to a level of 5% (2008-2011). Since then, the EGAP had declined significantly to an average of 2%. However, the trend started to revert itself in 2019 and further deteriorated in September of 2020 to reach 3% confirming by this means the differential impact of the "Covid-19 Recession" among different cohorts of the population.
Since 1968, Whites have not only enjoyed a larger employment participation in absolute terms as expected (Graph 2), being the overwhelming majority of the population, but also in relative terms as confirmed by the EGAP (Graph 1). While the White population has grown at an average rate of 1% per year between 1954 and 2020 the Non White has increased an average of 3%, when employment rose respectively 1% and 2% for the two cohorts, as can be deducted from Graph 2 and Graph 1 .
The problems observed so far address only the issue of participation concerning number of employees, whether relatively or absolutely, without considering "Wage Distribution" or "Job Distribution". Given the lag in relative participation for Non-Whites in term of numbers, it is probably reasonable to claim that there is an even larger one regarding "Employment Quality", in other words, relating to "Job Income" and "Job Hierarchy".
Labor market participation for low income individuals, both in terms of numbers and quality, are critical since in addition to income for consumption and investment, other basic necessities are obtained through "Job Benefits" such as health insurance, pension and many others. The lack of adequate participation tends to perpetuate and accentuate poor wealth and income distributions.
It is also evident, that a lack of a comprehensive safety net has a disproportionate negative effect on the Non-White population. Even, with this population cohort growing from 10% of the total in 1954 to 23% in 2020, and even when monolithically united, it will not be able to enact legislation or adopt social policies that will overturn the pervasive problems observed. Without a doubt, the only way to approach a solution is for the White majority to adopt a moral standard addressing these concerns of inequality as it presently represents 77% of the total population.
Table 1 compares the labor market situation for the White and Non-White populations between Septembers of 2019 and 2020. The population of Whites 16 years old or older is 201.6 million which is greater by 142.5 million than the equivalent population of Non-Whites growing at annual rates of 0.3% and 1.0% respectively between 2019 and 2020.
| Table 1 | |||||||||
| Labor Market (Population 16 years or older) | |||||||||
| September (Numbers in millions) | |||||||||
| 2019 | 2020 | 2020 - 2019 | 2020 / 2019 | Indicator | White | Non-White | White | Non-White | White | Non-White | White | Non-White |
| Total Population 16 years or older | 201.0 | 58.6 | 201.6 | 59.2 | 0.7 | 0.6 | 0.3% | 1.0% | |
| Employed | 123.0 | 35.3 | 115.5 | 32.1 | -7.5 | -3.3 | -6.1% | -9.2% | |
| Unemployed | 4.1 | 1.7 | 8.7 | 3.9 | 4.7 | 2.2 | 114.5% | 126.7% | |
| Labor Force = Employed + Unemployed | 127.0 | 37.0 | 124.2 | 35.9 | -2.8 | -1.1 | -2.2% | -3.0% | |
| Not in Labor Force | 74.0 | 21.6 | 77.4 | 23.2 | 3.5 | 1.7 | 4.7% | 7.8% | |
| Unemployment Rate = Unemployed / Labor Force | 3.2% | 3.1% | 7.0% | 10.8% | 3.8% | 6.2% | 119.4% | 133.7% | |
| Number of Jobs Lost | 7.9 | 3.6 | |||||||
| 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: Non-White data and Number of Jobs Lost for Population 16 years or older were calculated by Economic no nonsense. | Note 3: Non-White population is assumed to include Asian, Black and Native American people and any other Non-Whites, such as those of mixed race | ||||||
While the number of unemployed Whites increased by 115% the one for Non-Whites did by 127%, similar percentages as the ones observed for males and females in "Distress in the Labor Market 2020" . Thus, the covid-19 recession has been especially harsh on the female and Non-White cohorts forcing the number of unemployed females and Non Whites from 2.6 million in September of 2019 and 1.7 in September of 2020 to 6 and 3.9 million respectively. If the current situation is compared to the one observed at this time last year there are 7.9 million and 3.6 million jobs lost for Whites and Non-Whites corresponding to 3.9% and 6.1% of the population respectively (Table 1). This calculation is conducted by assuming that if the participation and unemployment rates had remained stable while population grew 0.3% and 1.0%, then 123.4 million Whites and 35.7 million Non-Whites would be employed instead of the current 115.5 million and 32.1 million correspondingly. Thus the population of white males has been the least negatively affected in labor market terms by the novel coronavirus recession.
Graph 3 shows "The Index of Participation" for the populations under study. The index corresponds to the change from year (t-1) to year t, from a base year equal to 100, of the share of population ith 16 years old or older employed in year t as a percentage of the total population ith 16 years old or older divided by the share of the population ith 16 years old or older employed in year t as a percentage of the total population 16 years old or older. It is similar to the problem portrayed on Graph 1 but starting from an equal level of 100 in 1954. From this new perspective the low rates of participation already observed are compounded by the problem of a much larger volatility. This means that when there is distress in the economy and the labor market for the white population, the misery for the non-white population is amplified just like in the case already observed of the female population.
From the graph it can be concluded that absolute worst year in this series for the Non-White population, according to the Participation Index, was 1982.There was irregular progress until "The Great Recession". It was only in 2012 that the Index started to rise again for the Non-Whites also diminishing the difference with respect to the White population until 2019 when again suffered a setback.
When the economy slows down, affecting employment, relatively more jobs of non-white workers are lost. It is only when the labor market for white males improves considerably that the labor market for other population segments starts to recover, stressing the need for an adequate safety net as these less privileged groups have less in terms of savings or assets that would allow them to survive through periods of increased misery. Outcomes like deteriorating income and wealth distributions and larger differences between males and females and between the dominant majority and minorities do not make a country rich but rather a country for the rich.
