April Jobs Report: Eliminating Persistent Racial Disparities Should be a National Priority

Dr. Bernard E. Anderson
Whitney M Young, Jr. Professor Emeritus, The Wharton School, University of Pennsylvania
Senior Economic Advisor, National Urban League

With 428,000 jobs added in April, the unemployment rate – 3.6% – and the number of unemployed individuals – 5.9 million – continue to inch closer to their February 2020 pre-pandemic levels of 3.5% unemployment 5.7 million unemployed individuals.

The labor force participation rate dipped 0.2 to 62.2%, while average hourly earnings rose 10 cents to $31.85.

The report shows average monthly job growth of 400,000 over the last six months, reflecting modest employment growth as the economy pulls out of the pandemic.  Employment growth was widespread across industries, with employment in most industries near or approaching the pre-pandemic level.  Still, 5.9 million workers not in the labor force reported that they want a job. That is the base for future labor force growth.

The U.S. economy is strong, but swimming in a sea of inflation and uncertainty about the path forward.  

The consumer price index (CPI) grew 8.5%, the highest rate in four decades. The personal consumption expenditure index (PCE), a broader measure of inflation,grew 5.6%.  The number of job openings exceeds hiring, and the quit rate remains high as workers seek better jobs and higher wages. In response, many employers are raising wages in order to retain employees and attract new hires.  But because wages are growing slower than inflation, there is little evidence of wage/push inflation.

Inflation is generated by the imbalance between supply and demand. Supply chain bottlenecks reduced the availability of consumer goods, foreign oil producers constrained oil supplies, and China, a major global exporter, imposed a lockdown to contain Covid19. In addition, sanctions on Russia in response to its invasion of Ukraine put upward pressure on energy and key agriculture commodities.  The major impact of the sanctions is felt in the Eurozone but there are spillover effects on the U.S. economy. 

The white unemployment rate of 3.2% was unchanged from the previous month, while the Black rate fell slightly from 6.2% to 5.9%, shrinking the racial gap only slightly.  Due to massive fiscal stimulus and creative Federal Reserve monetary policy, the economy bounced back faster from the pandemic than it did following the Great Recession.  But through it all, there has been no structural change in racial disparities in the labor market.  The implementation of the dual mandate is a sine qua non for stable, balanced growth but that alone is not sufficient to eliminate racial disparities in employment and income. Through the ebb and flow of job creation, the black/white unemployment gap never closed more than three-tenths of a percentage point more from a persistent ration of about 2:1.

Eliminating racial disparities in employment and income should be a high national priority. Earlier this week Chairman Powell said stable, non-inflationary growth contributes to racial equity. But that is only partly true. To achieve that goal, it is necessary to enforce strong anti-discrimination policies. In addition, job training programs targeted toward racial minorities who are locked in low paying occupations and industries should be implemented.  Such programs can be funded by employer tax credits, and with grants to community-based organizations with a demonstrated effectiveness in moving workers into higher paying occupations and industries.  The time is long past for eliminating racial inequality in the labor market.