TheLoop21.com

By: Marvin King (Add to your loop)
Mon, 03/09/2009 - 01:00

The numbers don't lie: Blacks fare worse during recessions.

Recessions hurt everyone, but have a particularly tough effect on black Americans. The old adage that blacks are the last hired and first fired actually rings true. Economists might fret over production, but I care about jobs. Can people find work? Can they take care of themselves and their families?

This is the reason, out of all the different numbers to follow, that for my money the most important is unemployment. It tells us about both the state of the macro-economy, as well as the pressures that individual households are facing.

Economists will tell you that full employment or 0% unemployment is virtually impossible (nor desirable: wages would skyrocket, which sounds nice, but then so would inflation, which is not nice).

In historical perspective, we think as good an unemployment rate between 4 and 6%, above 6% the economy starts to slow, and above 8%, the economy is hurting. Since 1972, the overall American unemployment has hummed along at 6.15% -—not perfect, but strong enough that the economy keeps growing. Over the same time, however, the black unemployment rate is 8.95%, 2.8% higher. While that sounds small, in reality that translates to hundreds of thousands black job seekers who are looking for, but not finding work.

Look at the following chart and you can see my point. Black unemployment is always higher than the overall employment rate, sometimes much higher. Moreover, if you look at the bottom line, you notice the gap between black unemployment and overall unemployment tracks nicely with recessions. In 1983, the gap reached nearly 6%, in the early nineties it spiked, the gap spiked again following 9/11 and in our current recession, we are seeing the same thing again.

Simply put, blacks do worse during recessions.

The nature of unemployment is that there is a domino effect for local neighborhoods and towns. If I lose my job, I eat out less, I go longer between haircuts and cut back on groceries. Most people spend most of their money locally. Because blacks tend to live in greater proximity to each other, high unemployment affects not only those folks who lost their job, but all those neighborhood businesses; it has a compounding effect.

Some Industries, Cities Better Off

If you are looking for a job, changing careers or looking to relocate, you need to be aware that not every industry and every city is the same. Latest estimates indicate that unemployment in construction, transportation, professional services, manufacturing and agriculture have been particularly hard-hit this recession. Conversely, government employment and the self-employed are relatively well off. Work for Uncle Sam or work for yourself.

Digging a little deeper in the available data, I pulled up numbers on New York, Chicago, Los Angeles, DC and Atlanta. These are the five metro areas with the largest black populations. Looking at the overall unemployment in these cities shows some city effects. Washington DC and Atlanta have low unemployment rates and my estimates for black unemployment in those cities indicate they are leaders in African American job creation.