African American Unemployment Rate Sees the Highest Rise Since 2021

The proportion of unemployed African American workers is escalating, hitting the zenith since 2021, a condition that economists interpret as the weakening employment market. The present assessments of labor statistics suggest that, despite showing positive trends initially, the job market appears to be facing challenges. The overall unemployment rate, which was 4% earlier this year, rose to 4.3% in August, though the unemployment rate among African American workers has seen a more significant hike, inflating from 6% to 7.5% in just the previous quarter.

The rising inequality preoccupies the economists, given that the historical data portrays African American workers as the earliest to be impacted during a slump within the job market. The increasing unemployment among both African American individuals and the younger generation is often considered as a preliminary warning signal of a flailing economy. Economists believe these trends are an indication of softening labor conditions.

While African American unemployment has consistently recorded higher rates compared to unemployment among Whites, the gap seemed to shrink over the past couple of years. However, the current widening of this gap is a concerning element to consider when assessing the overall health of the job market.

Economists frame the growing unemployment rates among African American workers as an issue of being the earliest to lose their jobs and the last to regain employment. This pattern need not be a norm but appears to be proving itself true in this instance. The rise in joblessness potentially affects those living on the socio-economic edges the hardest, often signalling a broader economic downturn.

It’s notable that the upward trend in unemployment among African American workers is particularly pronounced among African American women. As the employment market begins to stutter, these workers typically suffer the most due to their over-representation in the economic sectors most sensitive to labor market fluctuations.

The disproportionality of African American workers and especially African American women in sectors vulnerable to layoffs – such as the public sector, hospitality and leisure, retail, and lower wage professions – contributes to this issue. This not only exemplifies but also fortifies the ongoing income and wealth disparities.

Nevertheless, it’s imperative to remember that rates of unemployment among African American workers can be more unstable than other measures, which makes the consistent tracking of this trend over the coming months crucial for economists. African Americans, specifically women, have a higher likelihood of being employed in government roles compared to other racial groups.

An increase in African American unemployment could be an early harbinger of an incoming recession. However, no single governmental organization holds the power to officially declare a recession. Government bodies and most economists turn to the National Bureau of Economic Research (NBER) for this declaration.

The NBER describes a recession as a considerable contraction in economic activity, affecting various sectors of the economy over a prolonged period. While traditionally, two consecutive quarters of negative GDP growth might lead to a recessionary label, such periods usually coincide with a rise in unemployment rates.

The most recent recession was a brief but intense slump at the start of the pandemic in 2020. Prior to that, the United States economy witnessed a severe recession from 2007 through 2009. Today, the likelihood of a recession in the upcoming year is escalating and now sits at a disconcerting high of 48%.

While this figure remains under 50%, it is noteworthy that historically, such high probabilities have rarely been observed without a subsequent recession occurring. Economists will, therefore, maintain vigilance regarding the African American unemployment rate in the upcoming months.

The recent surge in this statistic appears indicative of the ‘cracks forming’ in the U.S. labor market. Besides African American unemployment, emerging challenges for graduates securing jobs after college, the lengthening durations of unemployment, and a rise in prolonged unemployment are other factors mirroring this deterioration.

Taken collectively, these elements seem to deliver a unified message that the job market is no longer as robust as it once was and, if anything, appears to be weakening progressively.