Report | Race and Ethnicity

No relief in 2012 from high unemployment for African Americans and Latinos

Issue Brief #322

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Even though the U.S. recession officially ended in June 2009, the country’s unemployment rate remains devastatingly high. The situation is particularly dire for many African Americans and Latinos—and is not predicted to improve any time soon.

Among the states with sufficient data for reliable estimates, African American unemployment rates exceeded 10 percent in 24 states and the District of Columbia in the third quarter of 2011, while unemployment rates for Latinos exceeded this symbolic threshold in 14 states. If our political leaders fail to quickly enact bold measures to spur a faster economic recovery, the status quo of high unemployment rates for African Americans and Latinos is likely to persist throughout 2012.

From left, panelists Algernon Austin (EPI Director of the Program on Race, Ethnicity and the Economy), Valerie Rawlston Wilson (National Urban League Policy Institute Economist and Vice President of Research), Tanya Clay House (Lawyer’s Committee for Civil Rights Under Law Director of Public Policy), and Brandon Garrett (Congressional Black Caucus Policy Director) at the EPI event “Hit hard by the recession, left behind in the recovery: Achieving full employment for black workers” on Feb. 16.

This issue brief reviews the unemployment rates by state for whites, Latinos, and African Americans for the third quarter of 2011 and the projected rates for the fourth quarter of 2012. We find:

  • While the white unemployment rate remains high nationally, in each state and the District of Columbia, it is lower than the overall unemployment rate for each state. In the third quarter of 2011, the highest white unemployment rate was in Nevada (11.7 percent), and the lowest was in North Dakota (2.2 percent).
  • In the third quarter of 2011, the states with the highest Latino unemployment rates were in the Northeast: Rhode Island (19.6 percent), Connecticut (18.7 percent), and Pennsylvania (17.5 percent). The lowest rate was in Virginia (4.6 percent).
  • In each state, the black unemployment rate is higher than the overall rate. In the third quarter of 2011, it ranged from a low of 1.4 times the overall state rate in South Carolina to a high of 3.9 times the overall rate in Minnesota.
  • The highest unemployment rate for blacks—27.4 percent—was in Minnesota, where the overall unemployment rate was 7.1 percent. The lowest was in Maryland, which had a black unemployment rate of 11.2 percent, while the overall rate in the state was 7.3 percent.
  • The lowest black unemployment rate of 11.2 percent in Maryland is nearly equal to the highest white unemployment rate of 11.7 percent in Nevada.
  • In the fourth quarter of 2012, the unemployment rate for each race in nearly every state is projected to remain very similar to the level recorded in the third quarter of 2011.

White unemployment rates by state

Nationally, the unemployment rate for whites is lower than the rate for the country as a whole (Table 1). Similarly, the white unemployment rate for each state and the District of Columbia is lower than each state’s overall unemployment rate. (We will consider the District of Columbia a state in this issue brief.) In the third quarter of 2011, the highest white unemployment rates were in Nevada (11.7 percent) and California (10 percent), while the lowest rate was in North Dakota (2.2 percent). Nebraska, South Dakota, the District of Columbia, and North Dakota all had white unemployment rates below 4 percent.

The white unemployment rate for each state in the fourth quarter of 2012 is projected to be very similar to the rate for the third quarter of 2011. Only California is projected to have a change in white unemployment of more than one percentage point, dropping by 1.1 percentage points to 8.9 percent. This would give the state the fourth-highest white unemployment rate in the country, compared with the second-highest today.

Table 1

Unemployment rates for white and all workers, by state (third quarter, 2011, and projected fourth quarter, 2012)

Third quarter, 2011 Fourth quarter, 2012 (projected)
Rank State White All Rank State White All
1 Nevada 11.7% 13.2% 1 Nevada 11.8% 13.4%
2 California 10.0% 12.0% 2 Michigan 9.7% 11.2%
3 Michigan 9.6% 11.1% 3 Oregon 9.1% 9.7%
4 Rhode Island 9.1% 10.6% 4 California 8.9% 10.7%
5 Oregon 8.9% 9.6% 5 Rhode Island 8.7% 10.2%
5 South Carolina 8.9% 11.0% 5 South Carolina 8.7% 10.7%
7 Idaho 8.7% 9.2% 7 Arizona 8.0% 9.5%
8 Kentucky 8.6% 9.6% 7 Tennessee 8.0% 9.5%
9 Washington 8.5% 9.3% 7 Washington 8.0% 8.7%
10 Florida 8.4% 10.7% 10 Idaho 7.9% 8.3%
11 Illinois 8.2% 9.8% 10 Indiana 7.9% 9.0%
11 Tennessee 8.2% 9.8% 10 Illinois 7.9% 9.4%
13 Alabama 7.9% 9.9% 13 North Carolina 7.8% 10.3%
14 Georgia 7.8% 10.2% 13 Kentucky 7.8% 8.6%
14 North Carolina 7.8% 10.3% 15 Georgia 7.5% 9.8%
14 Arizona 7.8% 9.3% 15 Ohio 7.5% 8.8%
14 Ohio 7.8% 9.1% 17 Florida 7.4% 9.5%
18 Indiana 7.6% 8.7% 18 Massachusetts 7.3% 7.7%
18 New Jersey 7.6% 9.4% 19 New Jersey 7.2% 8.9%
20 Missouri 7.5% 8.7% 20 Alabama 7.1% 8.9%
21 Utah 7.3% 7.5% 21 Maine 7.0% 7.5%
22 Maine 7.2% 7.6% 21 Missouri 7.0% 8.2%
23 West Virginia 7.1% 8.1% 23 Pennsylvania 6.7% 8.0%
23 Colorado 7.1% 8.4% 23 Montana 6.7% 7.6%
25 Massachusetts 7.0% 7.4% 23 West Virginia 6.7% 7.7%
25 Connecticut 7.0% 9.0% 23 Delaware 6.7% 8.0%
27 Pennsylvania 6.9% 8.1% 23 Utah 6.7% 6.8%
28 Montana 6.8% 7.7% 28 Connecticut 6.5% 8.4%
28 Delaware 6.8% 8.1% 29 Alaska 6.4% 7.6%
30 Alaska 6.5% 7.6% 30 Colorado 6.3% 7.5%
31 Texas 6.3% 8.5% 30 Mississippi 6.3% 10.4%
31 Mississippi 6.3% 10.5% 32 New York 6.2% 8.2%
31 Wisconsin 6.3% 7.8% 33 Texas 6.1% 8.2%
34 Arkansas 6.2% 8.3% 34 Wyoming 6.0% 6.4%
35 New York 6.1% 8.0% 35 Arkansas 5.8% 7.8%
36 Minnesota 5.9% 7.1% 36 Wisconsin 5.7% 7.2%
37 Vermont 5.7% 5.8% 36 New Mexico 5.7% 7.5%
38 Maryland 5.6% 7.3% 38 Maryland 5.6% 7.3%
39 Iowa 5.5% 6.0% 38 Vermont 5.6% 5.7%
40 Hawaii 5.4% 6.2% 40 Minnesota 5.4% 6.6%
40 Kansas 5.4% 6.6% 41 Iowa 5.3% 5.8%
40 Wyoming 5.4% 5.8% 41 Virginia 5.3% 6.7%
43 New Hampshire 5.1% 5.3% 43 Hawaii 5.1% 5.9%
43 New Mexico 5.1% 6.6% 43 Kansas 5.1% 6.3%
45 Virginia 5.0% 6.3% 45 New Hampshire 4.9% 5.1%
46 Louisiana 4.5% 7.2% 46 Louisiana 4.4% 7.1%
47 Oklahoma 4.3% 5.7% 47 Oklahoma 4.0% 5.3%
48 Nebraska 3.6% 4.2% 48 Nebraska 3.7% 4.3%
48 South Dakota 3.6% 4.7% 49 South Dakota 3.4% 4.5%
50 District of Columbia 3.4% 11.0% 50 District of Columbia 3.2% 10.5%
51 North Dakota 2.2% 3.4% 51 North Dakota 2.4% 3.8%
United States 7.4% 9.1% United States 7.0% 8.7%

Note: States are ranked by highest to lowest white unemployment rate.

Sources: EPI estimates based on data from the Current Population Survey and the Local Area Unemployment Statistics from the Bureau of Labor Statistics, and December 2011 projections from Moody’s Economy.com

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Latino unemployment rates by state

In the third quarter of 2011, Northeastern states had the highest Latino unemployment rates, as shown in Table 2. (Note that, as mentioned previously, this analysis is limited to states with sufficient sample size for reliable statistics.) Rhode Island (19.6 percent) topped the list, followed by Connecticut (18.7 percent) and Pennsylvania (17.5 percent). This is surprising considering that the states with the highest overall unemployment rates are Nevada and California—both states in which a fairly large share of the labor force is Latino. Yet Nevada ranks sixth in Latino unemployment, and California ranks fifth. More research is necessary to understand the causes of high unemployment rates for Latinos in the Northeast.

Table 2

Unemployment rates for Latino and all workers, by state (third quarter, 2011, and projected fourth quarter, 2012)

Third quarter, 2011 Fourth quarter, 2012 (projected)
Rank State Latino All Rank State Latino All
1 Rhode Island 19.6% 10.6% 1 Rhode Island 18.8% 10.2%
2 Connecticut 18.7% 9.0% 2 Connecticut 17.3% 8.4%
3 Pennsylvania 17.5% 8.1% 3 Pennsylvania 17.2% 8.0%
4 Washington 15.3% 9.3% 4 Washington 14.4% 8.7%
5 California 13.7% 12.0% 5 Nevada 13.7% 13.4%
6 Nevada 13.5% 13.2% 6 Arizona 12.8% 9.5%
7 Idaho 12.6% 9.2% 7 Massachusetts 12.3% 7.7%
8 Arizona 12.4% 9.3% 8 California 12.2% 10.7%
9 Florida 12.3% 10.7% 9 Idaho 11.4% 8.3%
10 Colorado 12.1% 8.4% 10 New Jersey 11.3% 8.9%
11 New Jersey 11.9% 9.4% 11 Illinois 11.0% 9.4%
12 Massachusetts 11.8% 7.4% 11 New York 11.0% 8.2%
13 Illinois 11.5% 9.8% 13 Florida 10.9% 9.5%
14 New York 10.7% 8.0% 14 Colorado 10.8% 7.5%
15 North Carolina 9.1% 10.3% 15 New Mexico 9.0% 7.5%
16 Texas 9.0% 8.5% 15 North Carolina 9.0% 10.3%
17 Utah 8.3% 7.5% 17 Texas 8.7% 8.2%
18 Delaware 8.2% 8.1% 18 Delaware 8.1% 8.0%
19 New Mexico 8.0% 6.6% 19 Utah 7.6% 6.8%
20 District of Columbia 7.5% 11.0% 20 District of Columbia 7.2% 10.5%
21 Georgia 6.4% 10.2% 21 Maryland 6.4% 7.3%
22 Maryland 6.3% 7.3% 22 Georgia 6.1% 9.8%
23 Nebraska 5.5% 4.2% 23 Nebraska 5.6% 4.3%
24 Virginia 4.6% 6.3% 24 Virginia 4.9% 6.7%
United States 11.3% 9.1% United States 10.8% 8.7%

Note: States are ranked by highest to lowest Latino unemployment rate, based on states with sufficient data by race for reliable estimates.

Sources: EPI estimates based on data from the Current Population Survey and the Local Area Unemployment Statistics from the Bureau of Labor Statistics, and December 2011 projections from Moody’s Economy.com

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While four states had white unemployment rates below 4 percent in the third quarter of 2011, no state had comparably low Latino unemployment rates. The lowest rate was in Virginia, with a Latino unemployment rate of 4.6 percent.

As with whites, the projected Latino state unemployment rates for the fourth quarter of 2012 are very similar to the rates for the third quarter of 2011. The four states with the highest unemployment rates in the third quarter of 2011 are also projected to have the highest rates at the end of 2012, with the rank order of these states projected to remain unchanged. California and Florida are expected to see the largest reductions in Hispanic unemployment, but these decreases will likely not exceed 1.5 percentage points.

African American unemployment rates by state

While the white unemployment rate is consistently lower than the overall state rate, the black rate is consistently higher (as shown in Table 3). Indeed, the lowest black unemployment rate is about equal to the highest white unemployment rate.

In the third quarter of 2011, the unemployment rate for African Americans ranged from a low of 1.4 times the overall state rate in South Carolina to 3.9 times the overall rate in Minnesota.

Blacks in Minnesota experienced the highest unemployment rate in the third quarter of 2011, at 27.4 percent. Four other states had black unemployment rates of more than 20 percent: Michigan (21.8 percent), California (21.3 percent), the District of Columbia (21.1 percent), and Ohio (20.3 percent).

In the third quarter of 2011, the lowest black unemployment rates were in Maryland (11.2 percent) and Virginia (11.6 percent). These states encircle the District of Columbia, the area with the fourth-highest black unemployment rate. This finding suggests that there are significant demographic and economic differences between blacks inside and adjacent to the District of Columbia.

As with whites and Latinos, the projected black unemployment rates for the fourth quarter of 2012 are very similar to the rates for the third quarter of 2011. Most of the changes are within one percentage point in either direction. Again, the largest decline is in California, where the black unemployment rate is projected to decline 2.4 percentage points. Similarly, Florida and Minnesota are projected to see declines of 2 percentage points. But even with these reductions, these three states will all still have black unemployment rates higher than 15 percent, and, in the case of Minnesota, more than 25 percent.

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The Agenda to Raise America’s Pay

Tell all 2016 candidates to make raising America’s pay their top priority.

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To: All 2016 candidates

There is now widespread agreement across the political spectrum that wage stagnation is the country’s key economic challenge. We urge you to adopt these 11 policies in your campaign platform and make raising America’s pay your top priority.

Section 1: Labor market institutions, labor standards, and business practices

Several of these policies concern the anti-worker business practices, eroded labor standards, and weakened labor market institutions that have reduced workers’ individual and collective power to bargain for higher wages in recent decades. To raise America’s pay, policymakers should:

1

Raise the minimum wage

In 2015, the inflation-adjusted minimum wage is about 25 percent below what it was in 1968—even though productivity has doubled and the education and skills of those in the bottom fifth have greatly improved. Moving the minimum wage to $12 by 2020 would benefit about a third of the workforce directly and indirectly.

2

Update overtime rules 
Accomplished

The share of salaried workers eligible for overtime has fallen from 65 percent in 1975 to just 11 percent today. This is largely because only those earning less than $23,660 (a poverty-level wage) are covered by the Fair Labor Standards Act regardless of their workplace duties. Fortunately, President Obama has instructed the Department of Labor to revise this salary threshold. If we move the threshold to the value it held in 1975—roughly $51,000 today—we would provide overtime protections to 6.1 million more workers. This would provide them with higher pay and/or more leisure time, while providing incentives for companies to hire more workers.

3

Strengthen collective bargaining rights

The single largest factor suppressing wage growth for middle-wage workers over the last few decades has been the erosion of collective bargaining, which has affected both union and nonunion workers alike. Making it easier for willing workers to form unions, increasing penalties for corporate violations of labor laws, and halting and reversing the spread of so-called right-to-work laws will help give workers the leverage they need to bargain for better wages and benefits and set high labor standards for all workers.

4

Regularize undocumented workers

Undocumented workers are vulnerable to exploitation by unscrupulous employers. Consequently, they earn lower wages than workers who have greater access to legal protections and are able to switch jobs more readily. Executive actions to regularize undocumented workers, such as those the Obama administration is pursuing, or comprehensive immigration reform that provides a path to citizenship, are polices that will enable these workers to earn higher wages. Regularizing undocumented workers will not only lift their wages, but will also lift wages of those in the same fields of work.

5

Provide earned sick leave and paid family leave

The United States has failed to adopt new labor standards that respond to emerging needs. In particular, we need updated standards to assist workers and their families in achieving a better balance between work and family. Providing earned sick leave and paid family leave would help to raise workers’ pay—and would give them more economic security.

6

End discriminatory practices that contribute to race and gender inequalities

Generating broader-based wage growth must also include efforts to close race and gender inequities that have been ever-present in our labor market. We need consistently strong enforcement of antidiscrimination laws in the hiring, promotion, and pay of women and minority workers. This includes greater transparency in the ways these decisions are made and ensuring that the processes available for workers to pursue any violation of their rights are effective.

7

Support strong enforcement of labor standards

The enforcement of labor standards in the United States is so weak that hundreds of thousands of employers routinely fail to pay minimum wage or overtime, fail to protect employees from workplace hazards, fail to pay payroll taxes or worker’s compensation premiums, or fail to provide family and medical leave. Wage theft alone costs employees tens of billions of dollars a year, and lack of worker’s compensation coverage, unemployment insurance coverage, or Social Security coverage can cost them billions more. More enforcement and tougher penalties are needed to deter these violations, and access to the courts must be available to injured workers. Employers’ growing use of forced arbitration—where employees, as a condition of employment, give up their right to sue in the public courts and are shunted into secret, private proceedings that can both be more costly and provide poorer remedies—must be stopped and reversed. As government enforcement resources decline, it is vital that workers have effective remedies in state and federal courts for labor standards violations.

Section 2: Full employment

A necessary condition for ending wage suppression is economic policy that ensures every worker who wants a job can find one. The reason for this is simple. In the absence of full employment, employers do not need to offer significant wage increases to attract and retain employees, as the number of willing workers is far greater than the number of available jobs. To restore full employment and raise America’s pay, policymakers should:

8

Prioritize very low rates of unemployment when making monetary policy

Federal Reserve Board policymakers are now considering when and how much to raise interest rates. In essence, a decision to raise interest rates is a decision to slow the economy and weaken job and wage growth. Given that wages have stagnated and that many communities have yet to adequately benefit from the recovery, it is imperative that monetary policymakers keep their foot off the brakes and allow the recovery to proceed as quickly as possible. Policymakers should not seek to slow the economy until growth of nominal wages (wages unadjusted for inflation) is running comfortably above 3.5 percent (which is consistent with ongoing productivity growth of 1.5 percent and a target inflation rate of 2 percent).

9

Enact targeted employment programs and undertake public investments in infrastructure to create jobs

To obtain full employment for all, we need policies that can direct jobs to particular areas that suffer from high unemployment even when the national labor market is largely healthy. These policies can include public and nonprofit employment programs that create jobs by meeting unmet needs. Additionally, undertaking a sustained (for at least a decade) program of public investment can create jobs, raise our productivity, and spur economic growth.

10

Reduce our trade deficit by stopping destructive currency manipulation

Many of our major trading partners engage in intentional currency manipulation—buying up dollar-denominated assets on global financial markets simply to depress the value of their own currency. This depressed currency value makes imports cheaper in the U.S. market and U.S. exports more expensive. This results in a larger trade deficit and slower job growth. Eliminating currency manipulation could reduce the U.S. global trade deficit by between $200 billion and $500 billion each year, which could increase overall U.S. GDP by between $288 billion and $720 billion and create between 2.3 million and 5.8 million U.S. jobs. Congress and the president should reject any trade treaties that do not have enforceable provisions to combat currency manipulation.

Section 3: The top 1 percent

A final piece of the puzzle for raising wages for the vast majority is to restrain the growth of top 1 percent incomes. The major forces behind the doubling of the top 1 percent’s income share since 1979 have been the expansion of the finance sector (and escalating pay in that sector) and the remarkable growth of executive pay. Economic research indicates that the increased incomes in finance and for executives do not reflect a corresponding increase in their efficiency. Rather, they are simply a zero-sum redistribution away from the rest of the economy and toward finance and corporate managers. Restraining the growth of such income will not adversely affect the size of our economy. It will instead allow the vast majority to claim a larger share of economic growth. To raise wages for the vast majority, policymakers should:

11

Use the tax code to restrain top 1 percent incomes

Tax preferences for executive pay can be eliminated or their use tied to the executive’s firm giving wage increases equal to productivity growth. Others have recommended tying corporate tax rates to the ratio of executive pay to median worker pay, as well as changes to corporate governance procedures. Additionally, imposing a financial transactions tax can steer investments toward productive uses and away from speculation and restrain unproductive financial activity and pay. Finally, higher top marginal tax rates can reduce the incentive for financial-sector professionals and corporate managers to rig markets or suppress wage growth to make more income flow their way.

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States with unemployment rates of 10 percent or higher by race

Despite small positive signs, the nation remains in a period of very high unemployment. While all groups are experiencing significant economic hardship, the burden of high unemployment is not spread uniformly by race. Figure A shows the states where whites, Latinos, and blacks have unemployment rates of 10 percent or higher. In the third quarter of 2011, whites experienced this level of unemployment only in California and Nevada. Latinos, however, had unemployment rates at or above 10 percent in 14 states, while this was the case for blacks in 25 states. Blacks also have the misfortune of having unemployment rates above 20 percent in five states.

Figure A

States with white, Latino, and black unemployment rates of 10% or higher, third quarter, 2011, and projected fourth quarter, 2012

(Red highlighting indicates an unemployment rate over 20%)

Note: Based on states with sufficient data by race for reliable estimates

Sources: EPI estimates based on data from the Current Population Survey and the Local Area Unemployment Statistics from the Bureau of Labor Statistics, and December 2011 projections from Moody’s Economy.com

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In the fourth quarter of 2012, the unemployment rate for each race in nearly every state is projected to remain very similar to the level recorded in the third quarter of 2011. The white unemployment rate in California is projected to fall from 10 percent in the third quarter of 2011 to 8.9 percent in the fourth quarter of 2012, dropping it out of the 10-percent-or-above states for whites in Figure A.

For Latinos and African Americans, the states with unemployment rates of 10 percent or higher in the third quarter of 2011 are projected to have similarly high unemployment rates at the end of 2012.

However, the states with black unemployment rates above 20 percent are projected to change slightly by the fourth quarter of 2012. The black unemployment rate in California is projected to decline from 21.3 percent in the third quarter of 2011 to 18.9 percent in the fourth quarter of 2012. For blacks, the rate in Ohio is also expected to fall below 20 percent, while the rate in Indiana is projected to rise above 20 percent; however, in both states, the change is too small to be considered meaningful.

Conclusion

EPI economist Heidi Shierholz noted recently that “even at January’s growth rate, it would still take until 2019 to get back to full employment.” Current projections show that state unemployment rates by race will remain largely unchanged throughout 2012. To avoid this scenario, Congress should pass the American Jobs Act to help accelerate the rate of economic recovery.

This issue brief is supported by a grant from the Open Society Foundations

Methodology

The unemployment rate estimates in this issue brief are based on the Local Area Unemployment Statistics (LAUS) and the Current Population Survey (CPS) from the Bureau of Labor Statistics. The overall state unemployment rate is taken directly from the LAUS. CPS six-month ratios are applied to LAUS data to calculate the rates by race and ethnicity. For each state subgroup, we calculate the unemployment rate using the past six months of CPS data. We then find the ratio of this subgroup rate to the state unemployment rate using the same period of CPS data. This gives us an estimate of how the subgroup compares to the state overall.

For our projections, we use the same method but modify it slightly. We find the subgroup state ratios from the most recent six months of data, and then multiply this ratio by the projected state unemployment rate for a given quarter.

In many states, the sample size of these subgroups is not large enough to create an accurate estimate of their unemployment rate. We only report data for groups which had, on average, a sample size of at least 700 in the labor force for each six-month period.

Reference

Shierholz, Heidi. 2012. “U.S. Labor Market Starts 2012 with Solid Positive Signs but Fewer Jobs than It Had 11 Years Ago.” Economic Policy Institute Economic Indicators, February 3. http://www.epi.org/publication/labor-market-starts-2012-solid-positive/


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