In February 2020 when the overall unemployment rate was 3.5%, a 50-year-low, the black unemployment rate was 5.8%. The white unemployment rate was 3.1%. William Rodgers, former chief economist at the US Department of Labor, has estimated that the real unemployment rate for African Americans may have reached 19% in March.
“The reason why African Americans bear the brunt of downturns more is that when firing decisions start to occur the least educated and those with the least experience tend to be let go first. There is also continued discrimination in the workplace,” Rodgers said.
Economists who focus on race have long said that this “last hired, first fired” phenomenon dramatically affects black Americans more than any other group in the US due to the country’s history of racism and segregation of black Americans in the work sector.
Low wages have a ripple effect on a family’s ability to save money and build wealth.
“The reason why African Americans bear the brunt of downturns more is that when firing decisions start to occur the least educated and those with the least experience tend to be let go first. There is also continued discrimination in the workplace,” Rodgers said.
Economists who focus on race have long said that this “last hired, first fired” phenomenon dramatically affects black Americans more than any other group in the US due to the country’s history of racism and segregation of black Americans in the work sector.
Workers of color, particularly black Americans, have long been over-represented in the lowest-paying service and domestic occupations, such as taxi drivers and restaurant servers. Working in these fields leads to lower wages – black Americans have the lowest median wage of any racial group in the US – and the jobs are often seen as the most expendable during an economic downturn.
Those who got to keep their jobs during the last recession saw little relief even after the recession’s recovery period. Even with a low unemployment rate, wage growth for low-wage workers, especially for black workers, has been slow. Black Americans have seen the slowest wage growth compared with other groups of Americans, reaching a growth rate that was four times slower at certain wage distribution levels, according to a 2018 Economic Policy Institute report.
“Even though overall on aggregate we were in a better position, many of the underlying weaknesses of our economy were still there – inequality both on class and race,” said Valerie Wilson, director of the Economic Policy Institute’s program on race, ethnicity and the economy.Low wages have a ripple effect on a family’s ability to save money and build wealth.
Black families are especially vulnerable to economic downturns because they lack the savings that can act as a buffer against unexpected layoffs or lost wages. And during the last recovery they lost ground against their white peers.
The median net worth of black families is $17,600, compared with $171,000 for white families. A white family is likely to have $10 for every $1 a black family has. The percentage of black families that have a net worth at or below zero dollars is 10 points higher than the percentage of white families in the same financial situation – 19% compared with 9%, respectively. And the black homeownership rate is the lowest of any racial group in the US and has consistently been about 30% lower than the white homeownership rate over the years, even as the economy was getting stronger.
“Wealth allows you to respond to that unexpected health emergency, that broken hole in the tire you have to replace. It also allows you to buy a home, put your kids through school,” said Danyelle Solomon, vice-president of the race and ethnicity program at the Center for American Progress.
Having less wealth also has some dire health consequences. Experts agree that being poor has costly effects on a person’s health: for adults living in extreme poverty, being poor can cost up to 15 years of life expectancy.
It is no surprise, then, that black Americans – who are less likely to be insured and more likely to have existing health conditions than their white counterparts – have seen higher death rates due to Covid-19 compared with any other group in the US. Black Americans made up 25% of deaths from Covid-19 in the US though they make up a little under 13% of the US population.
“National emergencies, pandemics, epidemics, what they do is they spotlight inequality,” Solomon said. “What we see in Covid-19 is no different. It’s highlighting racial disparities at every single level that have been with our society for a very long time.”
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