Jobless rate for blacks in Arkansas in double digits as state unemployment falls to all-time low

Although Arkansas’ unemployment rate hit an all-time low in February, the percentage of unemployed working-age blacks across the state has steadfastly remained in double-digits following the Great Recession – dropping below 10% only a few times in the past nine years, according to jobless data culled from the U.S. Bureau of Labor Statistics.

If the latest (BLS) figures are accurate, even after the normal revisions by the Labor Department, Arkansas is poised to drop below 10% for one of the few times in the past decade when the new jobless data for minority hiring in Arkansas is released by the state Department of Workforce Services on April 15.

According to post-recession BLS data, the unemployment and wage gap between blacks and the rest of the nation’s working class has been a thorn in the side of the recovering U.S. economy. In January, the jobless rate for working-age blacks (age 16+) in Arkansas fell one point to 10% and has declined six of the seven past months since July 2015, when the percentage of unemployed blacks hit 11.4%.

A year ago, a study by Washington, D.C.-based Economy Policy Institute showed that black unemployment levels were higher than pre-recession levels in 28 states, even as unemployment rates for whites, Hispanics, and Asians were slightly above their pre-recession levels. And while the national white and Hispanic unemployment rates were each within 1 percentage point of their pre-recession levels in the fourth quarter of 2014, the national black unemployment rate was 2.4 percentage points higher than before the recession began.

EPI: BLACK UNEMPLOYMENT STILL AT CRISIS LEVEL
Using a unique analysis of Current Population Survey data and Local Area Unemployment Statistics program data from the BLS, EPI economist Valerie Wilson estimated state unemployment rates by race and ethnicity in over 30 states. In 2014, the annual black unemployment rate was highest in Wisconsin (19.9%), Nevada (16.1%), Michigan (15.8%), and the District of Columbia (15.7%), out of 30 states for which data was available.

And though black unemployment significantly declined in 15 states and the employment-to-population ratio increased in six states, blacks have returned to pre-recession unemployment rates in just two states, Connecticut and South Carolina.

“The unemployment rate for black communities is at a crisis level, even as the economy gets closer and closer to a full recovery,” said Wilson, director of EPI’s Program on Race, Ethnicity, and the Economy (PREE). “Even before the Great Recession, black unemployment has consistently been twice as high as white unemployment. To address this problem, we need to look beyond simply returning to the pre-recession status quo and implement policies aimed at ensuring that everyone who is willing and able to work has a job.”

In the fourth quarter of 2014, nationwide unemployment rates were 4.5% for whites, 6.7% for Hispanics, 11% for blacks, and 4.4% for Asians. Strikingly, the national black unemployment rate of 11% in the fourth quarter of 2014 was still higher than the overall national unemployment rate was at the peak of the recession—9.9 % in the fourth quarter of 2009. Though the black unemployment rate is projected to drop significantly by the end of 2015, African Americans will still be further from a full recovery than whites or Hispanics.

The most BLS recent data shows the U.S. unemployment rate for the United States averaged 5.3%. The rate for African Americans was 9.6%, but rates varied among the states. The lowest unemployment rates for African Americans were in Hawaii (4.1%), Alaska (4.6 %), Nebraska (5.3 %), and Colorado (5.9 %). The highest unemployment rates for African Americans were in Iowa (14.8 %), Minnesota (14.1 %), and Nevada (13.5 %).

At the beginning of March, the gap between the overall U.S. unemployment rate and the rate for African Americans in 2015 was 4.3 percentage points. Within states, the gaps were largest in Iowa (11.2 percentage points), Minnesota (10.3 points), and Connecticut (7.6 points). Only in Alaska and New Mexico were unemployment rates for African Americans lower than those state’s overall rates.

The same data shows that Arkansas is in the bottom half of the class when comparing the state’s labor pool to the rest of the nation. In 2015, Arkansas’ unemployment rate for blacks averaged 10.3%, among the 22 states with double-digit jobless rates for the nation’s second-largest minority group behind Hispanics.

Wilson said in a more recent report that the post-recession recovery is moving ahead slowly, as noted by recent Gross Domestic Product data showing a downturn in recent U.S. growth in the third and fourth quarters. In December, state unemployment rates ranged from a high of 6.7% in New Mexico to a low of 2.7% in North Dakota. Nationally, African Americans had the highest unemployment rate, at 8.3%, followed by Latinos (6.3%), whites (4.5%), and Asians (4%).

The white unemployment rate in the fourth quarter of 2015 was at or below its pre-recession level in 20 states: Arkansas, California, Colorado, Connecticut, Illinois, Indiana, Iowa, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, Ohio, Rhode Island, South Dakota, Vermont, and Wisconsin. The white unemployment rate is within 0.5 percentage point of its pre-recession level in another 16 states.

During the fourth quarter of 2015, according to EPI data pulled from the latest Labor Department figures, the African American unemployment rate was lowest in Virginia (6.7%) and highest in Illinois (13.1%). The lowest black unemployment rate in the country (Virginia’s 6.7%) was the same as the highest white unemployment rate (6.7% in West Virginia). Fifteen states had African American unemployment rates below 10% in the fourth quarter of 2015—in 10 of these states, the rate was lower than the fourth quarter national average for African Americans (9.1%).

ARKANSAS BLACK JOBLESS RATE ‘PERSISTENTLY’ HIGH
Overall, the post-recession unemployment for blacks in Arkansas has risen 1.1 percentage points between the fourth quarter of 2007 and the fourth quarter of 2015, compared to a decline of 0.9% for whites in the same period. The declining rate for working-class whites across the state has continued in 2016, dropping to an impressive 4% in January, well below the state and U.S. jobless rates at 4.4% and 4.9%, respectively. That compares to a jobless rate of 10% for blacks in January, the same level as seven months ago.

The only extended period of time where the post-Recession unemployment rate for blacks has fallen below 10% was from April 2008 to January 2009 when those numbers ranged between 9.4% and 9.9%. Otherwise, there has been only three times since – in December 2014 and September and October of 2015 – when Arkansas’ jobless rate for blacks has dropped below that crucial threshold.

On the other hand, from August 2010 to August 2014, the unemployment rate for the state’ black labor pool held above 12% for 48 consecutive months. Since then, it has steadily declined and is poised to fall below the 10% ceiling if the state’s job market continues to improve, as noted by the all-time low of 4.2% in February when nearly 9,000 new workers were added to the state’s brimming 1,351,766-man labor pool.

From Wilson’s vantage point, the employment picture for blacks is slowly improving, but still is a persistent problem that spans across periods of strong economic growth and downturns. The nationally-recognized economist said the reason why black unemployment is so high in states like Arkansas is the loss of manufacturing and other middle-class jobs that usually employ a higher percentage of minority workers.

“That would contribute to the black unemployment remaining so high and the reason why it has taken longer to recover because the jobs that blacks traditionally held are not there anymore,” Wilson said of the state’s loss of nearly 10,000 manufacturing sector jobs since 2009.

However, Wilson said that she is pleased that the national jobless rate for blacks is coming down as more blacks and older workers are starting to look for jobs again as more employers are adding new positions to their payroll.

“That means more people are entering the labor force, whereas during the recession we had a lot of people dropping out because they felt like they couldn’t find a job,” Wilson told Talk Business & Politics. “The reason that (the jobless rate) is trending down is demographic. We know that a lot of the workforce is aging, and we have the Baby Boom generation starting to retire so we have a large number of people leaving the labor market.”

Wilson also said another positive sign in the job market is that wages for most workers are trending higher. In last week’s U.S. unemployment report when more than 215,000 jobs were added to the nation’s economy, average hourly earnings for all employees on private nonfarm payrolls increased by 7 cents to $25.43. Over the past year, average hourly earnings for U.S. nonfarm workers have risen by 2.3%, BLS data shows.

Still, Wilson said the troubling 2-to-1 “unemployment gap” between black and white workers needs to be addressed by policymakers because a 10% unemployment level for minorities is not healthy for the overall U.S. economy.

“My caveat on all of this is although things are moving in the right direction, there is still the gap between blacks and whites that, frankly, is always there – whether we are in a recession or recovery,” said the EPI economist.

Wilson noted that while Arkansas’ 4.2% is a wonderful accomplishment, she said Arkansas legislators and policymakers should look at other state employment data when discussing economic progress.

“If we just look at that (4.2%) number, we neglect the fact that for African Americans a rate of 9.8% or 10% … is still a recession level unemployment rate. … Even if it is lower than it was a few years ago, that still should not be acceptable – that’s still not a good unemployment rate. If that was the national rate or the rate for whites – it would be a crisis,” she said.

Going forward, Wilson said states like Arkansas that have double-digit unemployment rates for blacks should pursue workforce and infrastructure investments that create jobs.