June  2016    

   

     African  Americans  and  Long-­‐term  Unemployment:  A  Backgrounder      The  African  American  unemployment  rate  persistently  runs  about  twice  as  high  as  the  rate  for  white  Americans.  And  when  African  Americans  lose  their  jobs,  they  are  more  likely  to  remain  out  of  work  for  extended  periods.  Addressing  the  roots  of  this  growing  structural  unemployment  problem  is  critical  to  securing  economic  security  for  black  families—  and  the  nation  as  a  whole.      The  Overall  Problem  of  Long-­‐term  Unemployment      According  to  the  U.S.  Bureau  of  Labor  Statistics,  as  of  April  2016  over  2.1  million  Americans  had  been  out  of  work  27  weeks  or  longer.1  This  is  down  from  a  Great  Recession  high  of  almost  seven  million,  but  still  at  a  level  only  matched  by  the  peaks  of  previous  recessions.  The  long-­‐term  unemployed  have  also  become  the  largest  segment  of  jobless  Americans.  At  25  percent,  the  share  of  unemployed  who  are  long-­‐term  unemployed  is  at  the  highest  level  in  70  years.2      

 Source:  Federal  Reserve  Bank  of  St.  Louis      While  some  of  the  jobs  destroyed  during  the  Great  Recession  have  returned,  many  of  those  positions,  in  industries  like  manufacturing  and  call  centers,  are  likely  gone  forever.  Structural  changes  in  the  labor  market,  in  conjunction  with  a  recession  that  was  extraordinary  in  terms  of  length  and  severity,  all  contribute  to  the  stubbornly  high  long-­‐term  unemployment  rate.  While  manufacturing  has  largely  disappeared,  other  industries  like  technology  services  grew  rapidly  in  the  post-­‐recession  years.  However,  these  professional  services  often  require  some  form  of  credential  in  higher  education  or  specialized  training,  which  many  long-­‐term  unemployed  individuals  do  not  have.  Economists  often  cite  this  skills  mismatch  as  the  major  cause  of  long-­‐term  unemployment.    

0102030405060708090

100

1948 1954 1960 1966 1972 1978 1984 1990 1996 2002 2008 2014

LTU$Individuals$as$a$Portion$of$the$Unemployed,$1948=2014

27+,Weeks 15,to,26,Weeks Less,than,5,Weeks 5,to,14,Weeks

 

2    

African  Americans  and  Long-­‐Term  Unemployment    African  Americans  have  been  hardest-­‐hit  by  the  increase  in  long-­‐term  unemployment.  According  to  the  Bureau  of  Labor  Statistics,  African  Americans  comprise  26  percent  of  the  long-­‐term  unemployed  (out  of  work  for  27  weeks  or  more),  while  making  up  only  about  12  percent  of  the  American  labor  force.  By  contrast,  whites  make  up  62  percent  of  the  long-­‐term  unemployed,  far  less  than  their  79  percent  share  of  the  labor  force.        

 Source:  Bureau  of  Labor  Statistics      Structural  inequities,  blatant  discrimination  and  racism,  and  race-­‐blind  policy  solutions  are  all  major  factors  behind  African  Americans’  disproportionate  share  of  long-­‐term  unemployed.  Cities  like  Washington,  DC,  San  Francisco,  and  Seattle  are  experiencing  booming  populations,  influxes  of  capital  from  wealthy  consumers,  and  greater  innovation  driven  by  the  knowledge  economy.  But  many  of  these  opportunities  have  not  trickled  down  to  African  American  residents  who  have  endured  generations  of  discrimination-­‐related  poverty.      “The  rising  tide  lifts  all  boats”  mentality  has  done  little  to  lift  African  Americans  out  of  poverty,  and  the  long-­‐term  unemployment  rate  seen  in  African  American  communities  is  symptomatic  of  a  diverging  society  where  cities  become  shining  metropolises  for  white  Americans  but  remain  dismal,  poverty  ridden  realities  for  African  Americans.      To  the  extent  that  long-­‐term  unemployment  in  the  African  American  community  reduces  national  economic  output,  this  problem  affects  every  American,  no  matter  their  race.  But  the  costs  of  this  problem  also  go  beyond  macroeconomic  indicators.  “Two  Americas”  are  forming  in  major  metropolitan  areas  as  wealth  and  opportunity  become  increasingly  racialized.  More  research  is  needed  on  the  broader  impacts  of  this  polarized  urban  renewal  that  social  movements  can  lift  up  in  racial  justice  activism  in  their  communities  and  policymakers  can  use  to  address  the  needs  of  African  American  households,  businesses,  and  communities  in  major  metropolitan  areas  with  greater  efficacy.      

62%

26%

6%

79%

12%6%

White& African&American& Asian&

Share,of,Long2term,Unemployed,and,Labor,Force

Share,of,Long2term,Unemployed Share,of,Labor,Force

 

3    

The  Impact  of  Long-­‐term  Unemployment      In  2013,  the  federal  government  failed  to  renew  programs  that  provided  states  with  federally  funded  unemployment  insurance  for  those  out  of  work  longer  than  27  weeks.  Although  some  states  have  initiated  their  own  programs  to  alleviate  the  strains  of  long-­‐term  unemployment,  these  initiatives  are  not  as  comprehensive  as  the  previous  federal  program  and  payouts  vary  considerably  by  state.  Meanwhile,  researchers  have  documented  the  myriad  negative  impacts  of  long-­‐term  unemployment:    Poverty    Thirty-­‐five  percent  of  the  long-­‐term  unemployed  live  below  the  poverty  line,  compared  to  26  percent  of  those  experiencing  short-­‐term  unemployment.  Moreover,  long-­‐term  unemployed  households  earn  only  $27,204  in  annual  income  compared  to  $39,027  earned  by  the  short-­‐term  unemployed.  Long-­‐term  unemployed  households  lack  the  resources  to  pay  for  basic  necessities  such  as  housing,  food,  transportation  and  other  expenses.      Longer  spells  of  unemployment  are  also  associated  with  higher  likelihoods  of  exhausting  personal  savings  or  withdrawal  from  retirement  accounts,  further  placing  their  long-­‐term  financial  solvency  at-­‐risk.    Hiring  discrimination      AFL-­‐CIO  chief  economist  William  Spriggs  has  documented  that  African  Americans  are  at  increased  likelihood  of  disparate  impact  in  hiring  since  employers  prefer  not  to  hire  the  long-­‐term  unemployed,  and  since  these  individuals  are  disproportionately  African  American,  this  creates  a  double  barrier  of  racial  and  unemployment  status  discrimination.      An  Urban  Institute  study  found  that  employers  were  45  percent  less  likely  to  grant  a  phone  interview  to  someone  eight  months  out  of  work  compared  to  someone  only  a  month  out  of  work.  Similarly,  a  Center  for  Economic  and  Policy  Research  survey  found  that  less  than  half  of  employers  expressed  any  openness  to  hiring  a  formerly  incarcerated  person.    Brookings  economists  found  that  among  those  who  experienced  27  weeks  or  more  of  joblessness  between  2008-­‐2012,  only  36  percent  wound  up  finding  any  type  of  work,  while  the  other  64  percent  remained  unemployed  or  left  the  labor  force  altogether.  Only  11  percent  of  individuals  studied  found  permanent,  full-­‐time  positions.  Generally  speaking,  the  jobs  people  find  after  prolonged  unemployment  are  often  of  lesser  quality  compared  to  their  previous  position.      Mental  health      The  longer  people  are  unemployed,  the  more  likely  they  are  to  report  signs  of  poor  psychological  well-­‐being.  A  2014  Gallup  poll  found  that  18.0  percent  of  long-­‐term  unemployed  Americans  had  sought  treatment  for  depression,  compared  to  5.6  percent  of  those  with  full-­‐time  jobs,  and  12.3  percent  for  the  short-­‐term  unemployed.          

 

4    

 

 National  statistics  on  African-­‐American  unemployment  mask  the  crisis  proportions  of  the  problem  in  certain  communities.  While  the  federal  government  does  not  collect  city-­‐specific  data  on  long-­‐term  unemployment,  academic  research  makes  clear  that  New  Orleans  has  been  particularly  hard  hit.      New  Orleans  is  a  special  case,  in  part  due  to  the  devastation  of  Hurricane  Katrina  in  2005  which  greatly  reduced  its  population  and  economic  output.  This  is  a  city  that  might’ve  been  the  poster  child  for  equality  in  development.  Hurricane  Katrina  caused  a  mass  exodus  of  people,  jobs,  and  opportunities  that  have  slowly  come  back  to  the  city  over  the  last  decade,  and  is  nearing  pre-­‐Katrina  living  standards.  The  aftermath  of  the  storm  might  have  seen  the  historical  disparities  between  white  Americans  and  African  Americans,  quite  literally,  washed  away.  Although  certain  areas  were  particularly  devastated,  flooding  and  destruction  damaged  all  parts  of  the  city  and  all  industries.  As  the  city  redeveloped,  it  was  an  opportunity  to  ensure  that  all  residents  benefited  equally.        But  the  redevelopment  benefits  have  fallen  largely  along  racial  lines.  While  white  Americans  were  unemployed  in  the  city  at  a  rate  of  5.2  percent  in  2014,  the  official  unemployment  rate  among  African  Americans  was  15  percent.  But  accounting  for  those  who  have  left  the  labor  force,  less  than  half  (47  percent)  of  African  American  residents  over  the  age  of  16  were  employed  in  any  capacity.  Moreover,  African  American  households  overall  earned  a  median  of  just  $24,065,  while  white  households  earned  nearly  three  times  as  much,  at  $67,824  annually.      The  city  has  seen  growth  in  certain  industries,  many  low-­‐paying  like  restaurant  and  food  service,  others  high  paying  in  sectors  like  technology  and  entrepreneurship.  However,  who  has  access  to  any  employment  opportunities  at  all,  as  well  as  who  has  access  to  the  high-­‐income  work  versus  low-­‐income  work,  falls  heavily  along  racial  lines.  New  Orleans  faces  several  structural  challenges  in  addressing  the  job  and  wealth  disparity  between  white  and  African  American  residents:    Mass  incarceration  In  2013,  the  New  Orleans  incarceration  rate  (673  people  per  100,000)  was  nearly  three  times  as  high  as  the  national  average.  And  while  African  Americans  make  up  60  percent  of  residents,  they  make  up  85  percent  of  the  incarcerated,  according  to  the  Data  Center.      Job  insecurity  African  American  men  are  heavily  concentrated  in  low-­‐skilled  accommodation,  food  service,  and  construction  jobs  related  to  the  city’s  tourism  industry.  All  of  these  are  cyclical  and  prone  to  mass  layoffs  during  downturns.    Lack  of  skills  for  growth  jobs  A  Lindy  Boggs  National  Center  for  Community  Literacy  study  found  that  with  the  disappearance  of  manufacturing  jobs,  the  New  Orleans  economy  has  reoriented  itself  to  high-­‐skilled  professional  and  technical-­‐service  positions  that  have  largely  gone  to  white  residents.  According  to  the  Greater  New  Orleans  Data  Center,  by  2020  half  of  all  jobs  in  the  city  will  require  some  form  of  higher  education  credential.  Just  18  percent  of  African  Americans  have  at  least  a  bachelor’s  degree,  compared  to  65.6  percent  of  white  residents.3    

     

New  Orleans:  An  African  American  Unemployment  Crisis  

 

5    

Policies  to  Address  Long-­‐term  Unemployment      The  long-­‐term  unemployment  problem  requires  a  multi-­‐prong  approach  that  ameliorates  the  current  crisis  while  laying  the  foundation  for  economic  security  in  the  long-­‐term.  Among  the  policy  options:        Short-­‐term    

Increase  public  investment  in  infrastructure  projects  and  provide  tax  incentives  for  employers  who  hire  the  long-­‐term  unemployed;  

Provide  wage  insurance  for  formerly  unemployed  people  who  find  work  in  lower-­‐paying  positions;  

Improve  and  add  new  skills  for  LTU  individuals  with  training  programs  such  as  French-­‐style  “practice  firms”;  

Encourage  private  sector  employers  to  create  apprenticeship  programs  that  train  secondary  school  students  in  a  specific  trade  and  employ  them  upon  program  completion;    

Provide  subsidized  job  placement  programs  like  Platform2Employment  —    a  state-­‐funded,  8-­‐week  job  placement  program  in  the  private  sector;  

Reintroduce  federally  funded  unemployment  insurance  programs  for  those  out  of  work  more  than  27  weeks;  

Forbid  employers  from  asking  job  applicants  to  disclose  prior  criminal  history  (i.e.  “Ban  the  Box”);  

Improve  government  statistics  on  long-­‐term  unemployment  and  race  by  gathering  data  at  the  municipal  level.    

 Long-­‐term    

Introduce  a  Universal  Guaranteed  Income  for  all  Americans  regardless  of  labor  force  participation  status;  

Overhaul  U.S.  trade  policies  to  reduce  the  incentives  for  offshoring  jobs;   Increase  funds  available  for  work-­‐sharing  programs,  or  government  assistance  programs  for  firms  experiencing  financial  hardship,  as  a  means  to  reduce  the  likelihood  of  layoffs;  

Reform  policies  that  have  led  to  the  mass  incarceration  of  African  Americans;   Invest  in  higher  education  outcomes  for  African  Americans.  

                                                                                                                 1This  official  tally  of  the  “long-­‐term  unemployed”  excludes  people  who  have  dropped  out  of  the  labor  force  or  are  not  consistently  looking  for  

work.      2  With  the  exception  of  one  month  in  1983.  3  Institute  for  Policy  Studies  analysis  of  American  Community  Survey  data,  2014.      

Institute  for  Policy  Studies  

1301  Connecticut  Ave.  NW,  6th  floor,  Washington,  DC  20036,  tel:  202  234  9382,  www.IPS-­‐DC.org    

The  Institute  for  Policy  Studies  has  a  history  of  over  50  years  of  change-­‐making  and  power-­‐building  through  research  and  advocacy.  The  Institute’s  Black  Worker  Initiative  seeks  to  expand  opportunities  for  black  worker  organizing  as  a  vehicle  for  the  preservation  of  the  labor  movement  and  the  promotion  of  civil  rights  and  racial  and  economic  justice.    Co-­‐authors:  Marc  Bayard,  Director,  IPS  Black  Worker  Institute;  Sarah  Anderson,  IPS  Global  Economy  Director;  and  Marc  Priester,  IPS  Research  and  Program  Associate.