THE PERSISTENT BLACK-WHITE UNEMPLOYMENT GAP IS BUILT INTO THE LABOR MARKET. Many economists find it promising that the U.S. unemployment rate fell from a high of 14.7 percent in April 2020 to 8.4 percent in August 2020. Some policymakers have used this as evidence that little further fiscal relief is warranted. Significantly, however, unemployment rates have not fallen for everyone:
The Black unemployment rate reached a high of 16.6 percent in May 2020, and as of August 2020, it was still at 13.2 percent. Conversely, the white unemployment rate fell to 6.9 percent in August 2020 from a high of 12.8 percent in April, or nearly half of the Black unemployment rate. The ratio of Black-to-white unemployment went from 1.27 in April 2020 to 1.97 in August 2020—that is, the Black unemployment rate is currently double the white unemployment rate.
This 2-to-1 Black-white unemployment rate gap is not an accident: The labor market is designed to create it. In February 2020, the Center for American Progress wrote about the consistent and persistent 2-to-1 racialized unemployment gap, in part refuting the theory that tight labor markets can close this gap. The theory posits that in a tight labor market—wherein the economy is close to full employment—employers are less likely to discriminate, allowing people traditionally on the margins of the labor market to finally get hired.
Although this phenomenon may help explain the falling Black unemployment rate, it cannot explain the gap. Since unemployment data disaggregated by race first became available in 1972, African Americans have consistently shown an unemployment rate double that of whites. This 2-to-1 gap has persisted through some of the best economies and through some of the most severe economic downturns.
(The) pattern of racial disparities in the labor market remains consistent whether partitioned by age, gender, education level, or veteran status. In (its) February issue brief, CAP made the argument that this pattern is a result of structural racism. In short, barriers in the labor market—including mass incarceration and employment discrimination—create an environment that allows unemployment gaps to persist, resulting in the unequal outcomes seen in the data.