The April unemployment rate, at 3.6 percent, is at its lowest rate since December 1969. First-quarter growth was reported at 3.2 percent, a robust figure that exceeds estimates, earlier this year, that growth would be somewhat slower. This perhaps gives the man who lives in the House that Enslaved People Built something to crow about.
But many economists are waiting for the other shoe to drop, having workshops and forums about the coming recession.
Black pain continues
Take the unemployment rate. It declined overall. At the same time, the unemployment rates for African-Americans and teenagers were unchanged. The Black unemployment rate, at 6.7 percent, is more than twice the White rate of 3.1 percent. This ratio of 2.16 percent is higher than the usual 2:1 unemployment rate, widening inequality.
Despite claims of economic improvement and an improvement in some of the indicators, the fact that others remain stagnant is telling. For example, 1.2 million people have been out of work for more than half a year. They represent one in five of the unemployed.
The persistence of unemployment for some individuals should be troubling for those who make public policy. The number of people who are considered “marginally attached” to the labor force – which means that they’d work if they could find work, but they’ve ceased to look – is the same as it was this time last year.
These marginally attached workers include discouraged workers, and there are nearly half a million of them, again the same as last year. There is an indication that the 3.6 percent unemployment rate that is being hailed as so historic is a false indicator of progress.
Still not looking
While employers are clearly hiring, they aren’t hiring enough people to make those at the bottom confident enough to look for work! The labor force participation rate is also falling, again suggesting that our ‘strong economy’ is not pulling enough more people into the labor market.
Instead, some are leaving! Why? Even though wages grew at 3.2 percent last month, they have not yet reached the 3.5 percent level that the Federal Reserve Bank would consider healthy. Thus, the Fed indicated that they change the interest rate, although No. 45 has pushed for a full percentage point drop in the interest.
The Fed’s decision to hold interest rates constant is partly a result of weaknesses in the first quarter growth report. It’s always good news when the growth rate is more than 3 percent, but consumer spending is down for the third straight quarter. And the 2018-2019 shutdown clearly had some impact on consumer spending.
Too many consumers who are still recovering from the shutdown. Many who are contractors but not government employees lost roughly 12 percent of their annual income.
Not enough hiring
Our economy is stronger than it was a year ago, but not as strong as some claim. Companies aren’t hiring enough African-Americans to close the unemployment rate gap.
There is legislation that might improve the economic status of Blacks. H.R. 7, the Paycheck Fairness Act, would provide remedies to close the gender pay gap. Congressional Black Caucus member Bobby Scott (D-Va.) introduced the Raise the Wage Act, HR 582. It would provide increases in the federal minimum wage to $15 by 2024.
According to the Economic Policy Institute, the legislation would give Black workers a 38 percent pay increase (compared to 23 percent for White workers). And when workers earn more, they can spend more, strengthening economic growth.
While the top one percent are certainly benefitting from growth and expansion, those at the bottom haven’t yet benefitted. Why aren’t the needs of those on the bottom significant enough to address?