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Black unemployment rises in the August job report despite more job seekers

A woman walks outside a store in New York City on February 22, 2021.

John Smith | Corbis News | Getty Images

The lack of headline job numbers was disappointing enough, but the August 2021 job report showed that black workers face an even greater battle for employment compared to job seekers of other races.

Employers hired only 235,000 people last month, far fewer than the expected 720,000. The unemployment rate fell from 5.4% to 5.2%, in line with estimates.

But the unemployment rate among black workers rose to 8.8% in August from 8.2% in July. The white unemployment rate fell from 4.8% to 4.5% and the unemployment rate in Asia fell from 5.3% to 4.6%.

The unemployment rate for Hispanic and Latin American workers fell from 6.6% to 6.4%.

A majority of economists and President Joe Biden pointed to the growing number of cases of the Covid-19 Delta variant for sluggish overall job numbers. Experts have also pointed to a drop in consumer confidence for the hiring slowdown.

The rise in black unemployment is even more worrying as the labor force participation rate among black workers has risen over the last month and is roughly the same as that of white workers at 61.6%.

In other words, despite a greater proportion of blacks either working or looking for a job, a greater proportion have not been able to find a job.

Employers are the problem, said AFL-CIO chief economist William Spriggs, former chairman of the economics department at Howard University. He found that in August the unemployment rate among black workers with associated qualifications exceeded that of white early school leavers.

In particular, black workers with an associate degree had an unemployment rate of 6.9%, while the unemployment rate among white school dropouts was 5.8%. The unemployment rate across all races was 7% for those aged 25 and over without a high school diploma, while the unemployment rate for black people with a high school diploma in the same age group was 10%. These numbers challenge the long-held belief that higher educational achievement is rewarded in the workplace.

“Lots of people find jobs, but a greater proportion of those who went looking didn't. So black unemployment has risen because employers are still skipping black workers, ”Spriggs told CNBC on Friday. "When you look at these numbers, it becomes clear that employers are saying, 'We want workers, but not exactly.'"

Spriggs' comments cite the widespread complaint among U.S. employers that they cannot find workers to fill a record number of vacancies. The Department of Labor reported last month that job vacancies rose to a record 10.1 million on the last day of June.

Some employers, and restaurants in particular, make an effort to entice potential employees with salary increases, bonuses, and more generous benefit plans.

Walmart, for example, said Thursday that it is raising the hourly wages for more than 565,000 store clerks by at least $ 1. However, these incentives need to be significant enough to overcome the barriers that keep people from working, said Kristen Broady, a fellow in the Brookings Institution's Metropolitan Policy Program.

"Is it enough to cover childcare?" She asked. "Are you raising wages enough so that people can cover the cost of getting this job?"

Business leaders, including the Chamber of Commerce CEO, have blamed a lack of skilled labor, Covid-era unemployment benefits and a lack of childcare for employers' struggles.

However, Spriggs said the persistently high unemployment rate among black workers had a primary explanation – discrimination.

"When you see black workers struggling but the job market is doing well, that's a sign that employers are showing their preference," Spriggs said.

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