Why Reduce African-American Male Unemployment?

By Rodgers, William M. | National Urban League. The State of Black America, January 1, 2009 | Go to article overview

Why Reduce African-American Male Unemployment?


Rodgers, William M., National Urban League. The State of Black America


Just one year into the current recession that began December 2007, the U.S. economy lost over 2.6 million private-sector jobs. The job losses have been widespread, but largest in construction, manufacturing, retail trade, and professional business services. : The alarming observation is that the bulk of the recession's job losses occurred in the final quarter of 2008, signaling a dramatic acceleration in the labor market's deterioration.

What have been the consequences of the job losses? Between December 2007 and December 2008, the Bureau of Labor Statistics' (BLS) "official" U.S. unemployment rate jumped from 4.9 to 7.2 percent. Over 11.0 million Americans are now unemployed, compared to 7.7 million at the recession's start. The number of Americans working part-time for economic reasons more than doubled from 3.4 million to 8.0 million. Marginally attached individuals, people who "want a job" but are not actively searching, increased from 1.3 mülion to 1.9 million. If the part-time workers and marginally attached individuals are added to the calculation of the BLS's "official" unemployment rate, the jobless rate jumps from 7.2 to 13.5 percent.2

Shifting to the experience of African-American men reveals that at the start of the recession their jobless rate was 9.7 percent (compared to the nation's rate of 4.9 percent), and had increased to 14.3 percent after twelve months. This 4.6 percentage point growth is double the increase in the nation's jobless rate. In terms of actual people affected, the number of unemployed African-American men increased from 808,000 to 1,199,000, a 48 percent increase.

A consequence of the recession is that public awareness and policy conversations have shifted from addressing the economy and African Americans' long-term challenges to saving an economy in peril. The immediate goals are to bailout and restructure financial and housing markets, and provide temporary, targeted and timely economic stimulus. Because of the delayed impact of economic stimulus, it is important in the short-term to structure a stimulus-recovery package that minimizes the increase in African-American male unemployment. Doing so will not only help the economy recover, but it will also reduce the "scaring" effects that the recession will have on future opportunity, especially for young African Americans who are the most sensitive demographic group to economic change.

This essay's primary goal is to highlight some of the important economic and fiscal benefits associated with minimizing the increase in African-American male unemployment over the next three years. To do this, I first estimate the statistical relationship between U.S. and African-American male unemployment rates. I then use this statistical relationship and forecasts of the U.S. unemployment rate to construct estimates of the African-American male unemployment rate for the period 2009-2012. Based on the AfricanAmerican male unemployment rate forecasts, I then develop forecasts for African-American childhood poverty, Unemployment Insurance (UI) and food stamp usage. The latter two are key components of the stimulus-recovery package. A scenario with a stimulusrecovery package of $750 billion is compared to a scenario without a package. According to a report by Mark Zandi at Moody's Economy.com (see note 4), $750 billion is a good benchmark because it is consistent with estimates of the "direct economic costs of the financial panic," representing five percent of the nation's gross domestic product (GDP). The actual amount of the stimulus-recovery bill signed by President Obama on February 17, 2009 was $787 billion. Therefore, the estimates and forecasts presented in this essay represent lower limits of the potential effects of the economic stimulus-recovery package.3

Over the forecast period from 2009 to 2012, compared to no stimulus, a $750 billion package spent equally in 2009 and 2010 will:

* Keep the African-American male unemployment rate from surpassing 20 percent, though the jobless rate will still rise to 18 percent,

* Keep approximately 2. …

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