WASHINGTON, Nov 27 (Reuters) – Economists who have studied employment during the recovery from the coronavirus pandemic agree that Black, Latino and less-educated workers have made big gains compared with whites or those with college degrees whose wealth typically outperforms others.
But as demand for workers begins to decline, they also hope that the United States will break the historical pattern in which the burden of rising unemployment falls more heavily on those same groups.
William Rodgers, vice president and director of the institute, said that after an initial half-percentage point rise in the unemployment rate from the historic low of 3.4% in April, there is reason for optimism, but also a dose of growing concern. for Economic Equity at the Federal Reserve Bank of St. Louis.
Measures like the employment-to-population ratio haven’t behaved significantly differently for major racial groups, for women versus men, or among those with lower levels of education, he said at a Federal Reserve Bank of Boston labor market conference earlier this month. Different. And through what he calls the current “tight labor market recovery period,” which begins in March 2022, which coincides with the start of federal interest rate increases and the unemployment rate below 4%, less advantaged groups have held on to the employment gains they made during the economic recovery. Recovery from the pandemic.
For example, employment-to-population ratios for Black men and Black women remained higher on average from March 2022 through September 2023 than they were before the health crisis. The employment-to-population ratio for those aged 25 and over without a high school diploma has trended higher in recent months even as it has stabilized for those with more education.
However, for younger workers, especially for younger blacks who are not enrolled in school, job outcomes have begun to deteriorate in what Rodgers said is a potential sign that whatever benefits the current tight labor market has offered to those living on the margins of the economy, they may not Be permanent.
Rodgers said that for most segments of the population, “we are not seeing a significant increase in unemployment rates, which is a good thing” as job opportunities decline and demand for workers declines. But he added that the “worrying news” was the recent rise in youth unemployment.
Rodgers is not alone in his concern. The jump in the unemployment rate among 16- to 19-year-olds, from 9.2% in April to 13.2% in October, warrants close monitoring as a “leading indicator of the broader labor market,” said Torsten Slok, chief economist at Apollo Global Management. weakness.”
Real wage growth
Facing the worst inflation breakthrough in 40 years, the Fed aggressively raised interest rates from March 2022 until last July, and now appears to have reached the peak of its tightening cycle.
Throughout the process, policymakers hoped to engineer a return from the rapid pace of price increases to the Fed’s 2% inflation target, while keeping the employment gains of recent years intact. Federal Reserve Chairman Jerome Powell has often pointed to 2019, the year immediately before the pandemic, as a good place for the U.S. economy, with the unemployment rate consistently below 4%, inflation remaining low, wage gains flowing to lower-paid workers, and a narrowing… The long-term unemployment gap between whites and racial and ethnic minorities.
The economy’s performance during that period has prompted many Fed officials to reconsider their thinking about how low the unemployment rate can be without posing the risk that wages will rise too quickly and lead to broader inflation. Since then, research has tended to point to the possibility of untapped pools of labor that become available only when the labor market is tight – an argument for keeping monetary policy more flexible.
In the face of a marked slowdown in inflation, the Fed will see in the coming months whether it has in fact succeeded in achieving the elusive “soft landing,” and in particular whether the pandemic experience — when massive fiscal stimulus was followed by massive fiscal stimulus — has… The massive shaping of the labor market has done nothing to change the basic distribution of jobs, income, and opportunities across sectors of the economy.
For example, a JPMorgan Chase Institute study earlier this month found that average income gains for Blacks and Latinos outpaced inflation even during pandemic-era price spikes, with inflation-adjusted income higher through August than it was in end in 2019. By contrast, inflation-adjusted incomes for whites and Asians were slightly lower.
Workers in the lowest-paid quartile have also seen median “real” income gains of 6% since 2019, more than the rest of the income distribution.
Despite inflation, “we continue to see real wage growth, and it’s higher for Black and Latino households,” said Chris Witt, the institute’s president, adding that the difference may be driven by things like the change in occupational mix and wages during the pandemic. When personal services required higher wages to attract people back to work, an increase in the bargaining power of workers in general.
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“Remarkably fair”
Such results have given some hope that the gains can continue this time, rather than being lost under the last-in-the-first-out dynamic that typically occurs, like Cecilia Ross, the former head of the Council of Economic Advisers under President Joe Biden. That’s what the incoming head of the Brookings Institution said at a Federal Reserve Bank conference in Boston this month.
She added that the labor market recovery so far has been “remarkably fair.”
But the next few months could be revealing. After rising at the start of the pandemic, for example, the gap between the unemployment rate between whites and blacks fell quickly as the economy reopened and reached a record low of 1.6 percentage points in April.
It has since risen to 2.3 points, and the percentage rise in the number of unemployed blacks has been almost double that of whites.
Pandemic-era programs have provided a safety net for many families, and the tight job market that has developed since then has helped many get a foothold, Ross said.
“Will this continue and what will come?” She said. “You can already see we’re losing a little ground.”
Howard Schneider reports. Edited by Dan Burns and Paul Simao
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