Written Testimony of Algernon Austin Ph.D. Director of the Program on Race Ethnicity, and the Economy Economic Policy Institute

Meeting of February 16, 2011 - EEOC to Examine Treatment of Unemployed Job Seekers

Good Morning Chair Berrien, Commissioners Barker, Ishimaru, Lipnic, and General Counsel Lopez. Thank you for giving me this opportunity to address you today.

I direct the Economic Policy Institute's Program on Race, Ethnicity and the Economy. In this capacity, I work to advance policies that enable people of color to participate fully in the American economy. Since the start of the Great Recession, my program has been carefully tracking the unemployment rates for Hispanics, African Americans, Asian Americans, and American Indians.

An important context for the discussion today is the fact that the country is in the midst of a significant jobs crisis. We need over 11 million jobs to return us to the unemployment rate we had at the start of the recession in December 2007.¹

While all racial groups have seen significant increases in their unemployment rate since the start of the recession, people of color have seen some of the largest rises. Today, I will speak to the current unemployment condition of African Americans, Hispanics, Asian Americans, and American Indians.

Unemployment among African Americans

African Americans face a persistent jobs crisis. Since the start of the recession, the white unemployment rate peaked at 9.4%. But, based on historical patterns, an unemployment rate of 9.4% if it were applied to African Americans would be considered a low unemployment rate. The black unemployment rate peaked at 16.5%, 7.1 percentage points higher than the white peak. In January of this year, the white unemployment rate was 8%. For blacks, it was 15.7%, basically twice as high as the white rate.²

Scholars who study African-American unemployment know that generally the black unemployment rate is about twice that of the white unemployment rate.³ We can measure this two-to-one, black-to-white ratio precisely from the 1970s to today.⁴

The two-to-one, black-to-white unemployment rate ratio is not primarily due to differences in educational attainment between black and white workers. For example, if we restrict our view to workers with a bachelor's or higher degree, we see that in 2010 the white unemployment rate was 4.3% while the black unemployment rate was 7.9% or 1.8 times the white rate (Figure A). Thus, all black workers, regardless of educational attainment, are more likely to be unemployed than white workers.

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Unemployment among Hispanics

Hispanics face a similar problem of high unemployment as African Americans but to a somewhat lesser degree. As mentioned above, since the start of the recession in 2007, the white unemployment rate peaked at 9.4%. The Hispanic unemployment rate peaked at 13.2%, 3.8 percentage points higher. In January of this year, the Hispanic unemployment rate was 11.9% while the white rate was 8%. This yields a Hispanic-to-white unemployment-rate ratio of 1.5-to-1 for January. A Hispanic unemployment rate that is 1.5 times the white rate is the typical pattern that we have seen since 2000.⁵

As with African Americans, we see a sizable difference in the unemployment rates of Hispanics and whites even when we restrict our view to workers with a bachelor's or higher degree. Among college-educated workers, the Hispanic unemployment rate is 1.4 times the white rate (Figure A). Thus, in general, Hispanics are more likely to be unemployed than whites.

Hidden Unemployment Disadvantages among Asian Americans

Overall, the Asian-American unemployment rate is lower than the white rate. But, as I have shown in my research, there are hidden disadvantages for Asian Americans in the labor market. From 2007 to 2010, the Asian-American unemployment rate for college-educated workers has been higher than the comparable white rate.⁶

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Additionally, data from the Bureau of Labor Statistics shows that in the middle of last year Asian Americans had the highest long-term unemployment rate of America's major racial groups. In the second quarter of 2010, 51.7% of unemployed Asian Americans had been unemployed for more than 6 months,⁷ and 39% of them had been unemployed for more than a year (Figure B). These long-term unemployment rates were slightly higher than the rates for African Americans, the group that is typically the worst off in unemployment statistics.⁸ Thus, college-educated Asian Americans are not as successful at finding work as one might assume from the aggregate national data, and once Asian Americans are unemployed they may face significant challenges finding work.

Unemployment among American Indians

The available data for measuring American-Indian unemployment is less than ideal. But what the available data shows is that American Indians have a very high unemployment rate. My research shows that American Indians had an unemployment rate of 15.2% in the first half of 2010 while the white rate was only 9.1%.⁹ This yields an American Indian-to-white unemployment rate ratio of 1.7-to-1.

In regions with the highest concentrations of Native peoples, I have found some of the highest Native-to-white unemployment disparities. While nationally, the Native unemployment rate is 1.7 times the white rate, in Alaska and the Northern Plains states, the ratio is higher. In Alaska, the Native-to-white unemployment ratio was 3-to-1 in the first half of 2010. In the Northern Plains states, it was 2.5-to-1.¹⁰ Thus, nationally American Indians are more likely to be unemployed than whites, and the disparities are greatest in many places where the density of the Native population is greatest.

Conclusion

The nation is currently experiencing a high level unemployment. Unfortunately, because the pace of job growth has been slow, we will remain in a state of high unemployment for the next few years. This means that many communities of color will be a state of very high unemployment into the foreseeable future because communities of color have unemployment rates above the national average. For example, it is not likely that the black unemployment rate will fall below 10% before 2014.¹¹

The unemployed population is disproportionately made up of people of color. Although blacks make up 12% of the labor force, they make up 20% of the unemployed. Hispanics make up 15% of the labor force and also 20% of the unemployed.¹²Native Americans, too, are over-represented among the unemployed, especially inAlaska and the Northern Plains states. Asian-Americans have a low overall unemployment rate, but once they become unemployed they seem to have difficulties finding work, and college-educated Asian Americans are not as successful at finding work as their white peers.

All of this means that any practice which disadvantages currently unemployed workers relative to similar employed workers will likely have a disproportionate negative impact on people of color.

Footnotes

¹Heidi Shierholz, "Labor Market Moving in Two Directions at the Same Time," (Washington D.C.: Economic Policy Institute, February 4, 2011).

² Author's analysis of data from the U.S. Bureau Labor Statistics' Current Population Survey.

³ See, for example, Steven Shulman, "Discrimination, Human Capital, and Black-White Unemployment: Evidence from Cities," The Journal of Human Resources, Vol.22, No. 3. (Summer, 1987), pp. 361-376, and Leslie S. Stratton, "Racial Differences in Men's Unemployment," Industrial and Labor Relations Review, Vol. 46, No. 3 (Apr., 1993), pp. 451-463.

⁴See http://www.stateofworkingamerica.org/index.html%3Fp=4173.html.

⁵Author's analysis of data from the U.S. Bureau Labor Statistics' Current Population Survey.

⁶ Algernon Austin, "Hidden Disadvantage: Asian American Unemployment and the Great Recession,"Issue Brief #277 (WashingtonD.C.: Economic Policy Institute. May 28, 2010) and Figure A.

⁷ Yuki Noguchi, "Asians Out of Work Longest among U.S. Minorities," (Washington w:st="on">D.C.: NPR, October 8, 2010).

⁸ Ibid. and Figure B.

⁹ Algernon Austin, "Different Race, Different Recession: American Indian Unemployment in 2010,"Issue Brief #289 (Washington D.C. :Economic Policy Institute, November 18, 2010).

¹⁰ See Austin, "Different Race, Different Recession."

¹¹ Author's estimate based on November 2010 projections from Moody's Economy.com.

¹² Author's analysis of data from the U.S. Bureau Labor Statistics' Current Population Survey.