While the national unemployment rate dropped in May, joblessness among Black workers increased to the highest level in more than a decade.
Even as President Trump is eager to celebrate last week’s surprising jobs report, there remain glaring warning signs that the economy will not be roaring back anytime soon, especially for Black Americans.
Trump on Friday celebrated the surprising May jobs report, which found the unemployment rate decreased to 13.3% from 14.7% in April. Buoyed by these numbers—which were inflated due to a calculation error, though were still lower than April—Trump is planning to center his re-election campaign around a strong economic recovery that he expects to take place this summer. But even if a recovery occurs, which is far from guaranteed according to many economists, the jobless rates are likely to remain high.
“Even if everyone who was on temporary layoff went to work tomorrow, and the only people who were unemployed were people who had been permanently laid off, we’d still have recession-level unemployment,” Michael Strain, director of economic policy studies at the conservative American Enterprise Institute, told Politico. “We’d still have lost a half-decade of progress.”
If last week’s job report is any indication, Black Americans will disproportionately suffer from those losses. While the national unemployment rate dropped in May, joblessness among Black workers increased from 16.7% to 16.8%, the highest level in more than a decade. The unemployment rate for white workers, meanwhile, dropped to 12.4%, worsening the economic disparity between Black and white Americans.
Black-Owned Businesses Hit Hardest
Black small business owners have been particularly devastated by the ongoing economic collapse. There was a 41% decline of Black owners from February to April, according to a study from the National Bureau of Economic Research (NBER). In comparison, the number of businesses owned by white people fell by only 17%, the study found.
The decline of Black-owned businesses and rising Black unemployment figures have both been driven in part by shortcomings in the federal government’s coronavirus relief efforts. Black business owners largely struggled to obtain loans from Paycheck Protection Program (PPP), the government’s small business relief program. The PPP aimed to stem job losses by providing forgivable loans to small businesses to be used to cover payroll obligations, thus preventing layoffs and ensuing unemployment claims.
But just 12% of Black or Latino-owned business owners who applied for aid from the $650 billion program received what they had asked for, according to a May study by the Global Strategy Group. Another 26% reported receiving only a fraction of what they requested. The inability of Black business owners to obtain PPP funds not only harmed those owners, but also their employees, as Black business owners have historically been more likely than white business owners to hire Black employees.
Black-owned businesses were also particularly vulnerable because their businesses are disproportionately in sectors that have been most vulnerable to the ongoing economic collapse. According to the Bureau of Labor Statistics, the industries with the largest total job losses in April were in accommodation and food services, retail, and health care and social assistance. More than 27% of Black-owned businesses are in those three sectors, compared with only 19.7% of white-owned businesses, according to an Economic Policy Institute analysis of Census Bureau data.
The Widening Racial Divide
The ramifications of these various disparities could haunt Black Americans for years. As the NBER report noted, “early-stage losses to small businesses … may portend longer-term ramifications for job losses and economic inequality.”
These disparities didn’t surprise Dania Francis, an economics professor at University of Massachusetts Amherst.
“Many of us who work in racial disparities were predicting that white workers would be absorbed at a faster rate, and therefore we would start to see the gap between black and white unemployment increase again,” Francis told The Hill.
These diverging jobless rates could only be caused by one thing, said Valerie Wilson, of the Economic Policy Institute (EPI): racial discrimination. Wilson pointed to the fact that across all levels of education, more Black workers are unemployed than their white peers.
“At least in theory, [Black Americans] are doing everything they were told they should do,” Wilson told CNBC. “Yet they still face significantly higher levels of unemployment and gaps in wages.”
Black people in the U.S. have long suffered higher unemployment rates than their white counterparts, due to centuries of systemic and institutional racism that has driven widening gaps in racial wealth and pay, education, home ownership, and health care.
Those disparities have been on stark display this year, as the coronavirus has disproportionately killed Black people. Black Americans make up only 13% of the U.S. population, but comprise roughly 24% of COVID-19 deaths where the race is known, according to the COVID Tracking Project.
In response to the continued record-breaking unemployment rates, Democrats have been fighting to pass another coronavirus relief bill. The House passed the $3 trillion Heroes Act in May, but Republican Sen. Majority Leader Mitch McConnell balked at the bill and declared it dead on arrival. President Trump and most of his Republican allies have instead said they’re in no rush to pass another bill and may wait until mid-July to do so.
Stephen Moore, an informal economic adviser to the president, has argued the improving unemployment numbers are an argument against further government spending. Others, like Strain, the AEI economist, argued those numbers improved only because of federal relief programs, such as the Paycheck Protection Program, and are worried last week’s report will give lawmakers a false sense of confidence.
“My concern is that the rapid pace of progress will discourage Congress from giving support to the economy and workers and families and small businesses,” Strain told Politico. “The economy in December 2020 will be poorer than the economy in December 2019. We will have recession levels of unemployment. The idea that we can say, ‘OK, well, the unemployment rate is 13 percent. We’ve done all we can do,’ flies in the face of the basic facts of the situation.”
The presumptive Democratic nominee for president, Joe Biden, agrees more needs to be done, telling CNBC in May that an economic recovery looks “a long way away.” While Biden has not commented on the Heroes Act, he has set forth his own proposals. On Thursday, he introduced a wide-ranging plan for how to safely reopen the economy. His proposal includes federal funding to guarantee paid leave benefits for workers who become sick and a jobs program to hire thousands of people to track the spread of the coronavirus.
“There should be rent forgiveness and there should be mortgage forgiveness now in the middle of this crisis. Forgiveness. Not paid later, forgiveness,” Biden said during a May appearance on Snapchat’s Good Luck America. “It’s critically important to people who are in the lower-income strata.”
If steps aren’t taken to pass further stimulus efforts, it’s Black Americans who will suffer the most, as Valerie Wilson and Elise Gould of EPI noted in a recent paper.
“If we are to protect African Americans from suffering under the same needlessly heavy burden during the next economic or public health crisis that they are suffering under now, we must work diligently to address long-standing underlying racial disparities in economic and health outcomes,” they wrote.