Unemployment among Black Americans may lag as the country recovers from the most recent recession, according to new research done by the Federal Reserve Bank of Atlanta.

Black workers tend to make more gains in the economy during a boom after a recession, despite the fact that overall Black unemployment remains consistently above that of whites. 

But during hard times — like recessions and depressions — nonwhite and particularly Black Americans take the biggest hits.

Why It Matters: Unemployment and poverty end up costing Americans money in the form of higher spending on health care, incarceration and welfare benefits. It also works to contract the economy. A 2008 study found that childhood poverty specifically reduces overall gross domestic product by 1.3%, increases the cost of crime by the same percent and raises health expenditures by 1.2%. Since Black and Hispanic Americans are disproportionately poor, it follows that reducing such poverty expands the country’s economic capacity.

This fact has gotten more attention from prominent economic scholars and powerholders in recent years. In June, Fed Chair Jerome Powell acknowledged that minorities bear the brunt of economic hardships.

“The economic downturn has not fallen equally on all Americans, and those least able to shoulder the burden have been the hardest hit,” he said at the time.

“In particular, despite progress, joblessness continues to fall disproportionately on lower-wage workers in the service sector and on African Americans and Hispanics.”

Such was the case during the Great Recession, when Black-owned small businesses and Black homeownership were disproportionately hurt by the economic downturn.

Some Statistics: In the second quarter of 2020, Blacks had an unemployment rate of 16.1% to whites at 12%. A year later, Black unemployment dropped to 9.2% while white unemployment hit 5.1%.

The improvement of Black unemployment is a positive trend that economists note, but, more broadly, if Black workers made up the entire economy, America would frequently be in the throes of a recession, as the Great Recession unemployment rate hovered around 10%.

In American history, recessions typically mean the overall unemployment level is at least 6%.

As of 2019, 37% of the S&P 500 did not have a single Black board member, and for Fortune 100 companies, there were 136 Black board members representing 11.1% of directors, according to Forbes reporting.

What Could Change: There are broad policy changes recommended to alleviate Black poverty, including changes to employment and wage-setting practices.

Julie Hotchkiss, the scholar who produced the Federal Reserve Bank of Atlanta report, recommends employers invest in new workers, particularly Black workers, in order to develop their skills and allow them to climb the economic ladder within companies.

Photo: Christina @wocintechchat.com via Unsplash.