People Of Color See Higher And Rising Unemployment In Possible Signs Of Softening Economy


The labor market is still going strong overall, but communities of color still struggle with higher and, in some instances, worsening unemployment. Further economic pain can quickly spread, especially among communities of color, amid political risks from Republicans holding the government’s ability to pay its bills hostage and the Fed aggressively raising interest rates.

The overall labor market is still going strong. The Bureau of Labor Statistics estimates that the labor market added 311,000 jobs in February 2023, while the unemployment rate grew slightly from its more than five decade low of 3.4% to 3.6%. The employed share of the prime age population between the ages from 25 to 54 years old grew to 80.5% from 80.2% in January and thus close to the pre-pandemic high of 80.6%. In general, the labor market is expanding at a meaningful yet sustainable level.

There are persistent weak spots in the labor market, though. Many communities of color have higher average unemployment rates than is the case for white workers. The unemployment rate for Black workers was 5.7% and the one for Latino workers was 5.3% compared to 3.4% for Asian workers and 3.2% for white workers. Gaps in unemployment rates by race and ethnicity have persisted, even as the labor market went through a historical recovery from the pandemic induced recession.

In recent months, the gap in unemployment has even increased for some communities of color. For example, the unemployment rate for Latinos has risen from a recent and historic low of 3.9% in September 2022 to 5.3% in February. And, the unemployment rate for Asian workers has increased from 2.5% to 3.4% during those months. The unemployment rate for Black workers fell slightly from 5.9% to 5.7% during those five months. In comparison, the unemployment rate for white workers has changed little from 3.1% to 3.2% in that same time. The unemployment rate gap for Latino and Asan workers relative to white workers has widened, in the case of Latino workers, quite substantially. Such a widening gap is often an indication of a softening economy as people of color tend to be the first ones to feel the economic pain in a phenomenon referred to as “last hired, first fired.”

Digging deeper into the data for Latino workers, the rise in unemployment is especially pronounced among Latino men. Their seasonally unadjusted unemployment rate increased from 4.6% in February 2022 to 6.4% a year later, while the unemployment rate for Latina women barely increased from 5.1% to 5.4% during that year. Among prime age workers – those aged from 25 to 54 years old – the rate for Latino men went up from 3.6% to 5.8% over the past 12 months compared to a small decline from 4.8% to 4.7% for Latino women.

A different pattern emerges in the data for Asian workers. The unemployment rate for prime age Asian men went from 2.7% to 4.0% over a twelve month span – a 1.3 percentage point increase – while the unemployment rate for prime age Asian women grew by 1.6 percentage points from 1.9% to 3.5% at the same time. The job market is softening for many people of color.

The economy faces substantial risks of a slowdown or even a recession. Republicans are gambling with the fiscal health of the federal government by refusing to give it the ability to pay its bill. At the same time, the Federal Reserve seems poised to raise its key interest rates further in an effort to engineer a more noticeable slowdown. When economic growth falls, many more people of color will feel the economic pain of unemployment and financial distress before white people will.


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