The State of Black Workers before the Great Recession

When first inaugurated, President Barack Obama worked to end the downward economic spiral and averted another Great Depression by restoring the health of the financial sector by injecting federal resources into the economy. After avoiding a much bigger catastrophe the focus has been on stimulating job creation and fostering economic growth. While the composition and the size of these efforts have been vigorously debated, most commentators agreed upon the goal of these efforts which is to end the recession and get the economy back on the pre-recessionary track. Few voices in mainstream policy circles have questioned whether this goal is appropriate.

Simply ending the recession will not solve the job crisis within the Black community. Many analysts have noted that labor market distress—when properly calculated—among Black workers has been at catastrophic levels for decades. In the tough labor market of today, about one out every four Black workers is underemployed, but even in good times the ratio was one in seven. This recognition calls into question the policy goal of returning the economy to pre-Great Recession norms and standards. Labor markets prior to December 2007 did not serve the Black community well; to the contrary, racial inequality in labor market outcomes was a central feature.

This research brief documents aspects of racial inequality before the Great Recession—in other words during the best of recent times. Part I provides an overview of the current job situation. Part II examines the distribution of Black men and women across the 13 major industry sectors with a special emphasis on the five industries that employ the largest number of Black workers. Part III examines the differential in median wages in each of the five key sectors. Part IV examines the racial inequality within these key sectors by exploring within industry wage distributions and the high concentration of Black pay at the bottom. The conclusion provides some policy and research recommendations.

December 2007 marked the onset of the Great Recession. Two years later, job losses tallied over 8.4 million or 6.1% of all non-farm industry jobs. This represented the largest loss of jobs in absolute or percentage terms since the Great Depression. In 2010, employment growth resumed, but gains have been weak. The private sector averaged less than 100,000 per month for the first half of 2010. Monthly public sector jobs averaged just 48,000 driven by the temporary hiring of Census workers at the federal level. Job declines continued at state and local levels in response to severe budget crises. For workers, weak economic conditions are reflected and felt on the fragile jobs front.

Thus, the current situation remains bleak as the overall unemployment rate remains high at 9.5%—slightly down from a cyclical high of 10.1% reached in October 2009. For Blacks, recessionary job losses hit hard as unemployment increased from 9.0% to high of 16.5%. The tepid jobs recovery has done little to alleviate Black unemployment as it remained an elevated 15.4% in June 2010. Comparatively, white rates at the onset of recession were just 4.4% and they topped out at 9.4% in October 2009. They have since declined to 8.6%.

The hardship caused by this prolonged recession is not fully captured by the official unemployment rate. A more comprehensive account of economic stress for workers is what the Bureau of Labor Statistics calls the U6—which is a broader measure of labor underutilization. The U6 or underemployment includes the officially unemployed along with discouraged and marginally attached workers who have fallen out of the labor force and those working part-time because they can not find full-time work. By this measure, the situation in the Black community is dire. The Black underemployment rate went from 14.4% at the beginning of the recession and is now 23.6% just off a recent high, in June 2010, of 25.0%.