Hit Hardest: Racial Inequity in Job Market Recovery

Nearly two years after the initial shock of the pandemic, its impact on the workforce is still distributed unevenly across racial lines. 

The January 2022 Employment Situation report from the Bureau of Labor and Statistics showed that Black and Hispanic workers were unemployed at significantly greater rates than their white and Asian peers.

Racial disparity drags down economic growth by an enormous degree — in 2018 alone, the US economy could have been $2.3 trillion stronger if there had been no racial gaps in wages or employment for working-age people, according to the Advancing Workforce Equity report released by the National Fund for Workforce Solutions, in collaboration with PolicyLink and the USC Equity Research Institute, Burning Glass Technologies, and JPMorgan Chase. 

The reports also found that “occupational segregation” — where workers of color are crowded into low-wage jobs — makes the situation worse. In an era where good, stable jobs are harder to find across the board, people of color are least likely to have them. That instability puts workers at a disadvantage when work is disrupted, as the past few years have shown. 

In 2020, minority populations felt the economic impact of the pandemic most acutely. The steepest declines in employment opportunities were in non-essential jobs paying less than $35,000 per year, and workers of color and immigrants were overrepresented in those fields. For example, Emsi Burning Glass data showed 40% of waiters and waitresses were people of color, and job postings in that field had declined by 77% as of June 2020. 

Later that year, it was clear that those trends had continued. By November, a report from the National Equity Atlas partnership between PolicyLink and the USC Equity Research Institute, Burning Glass Technologies, the National Fund for Workforce Solutions, and JPMorgan Chase showed that Black workers in particular had not recovered from the early spike in unemployment as quickly as other workers—even though demand was higher than average for the jobs they had held before the crisis.

As the current labor shortage began to gain traction, trends like automation gained momentum, and that, too, hurt workers of color disproportionately. According to that same report, Latinx workers were 28% more likely than white workers to lose their jobs to automation, while Black and Native American workers were, respectively, 18% and 21% more likely to face that risk. 

This inequity presents a complex challenge, but that’s not to say nothing can be done. The Advancing Workforce Equity report also presented actionable solutions that businesses, education institutions, and communities can pursue to reduce inequity in the workforce, including recommendations to:

• Use skills-based hiring, retention, and advancement strategies to reduce hiring bias and degree inflation, which puts workers of color at a disadvantage;
• Focus on improving the quality and stability of low-wage jobs;
• Invest in worker training programs to remove barriers to entry; and
• Connect workforce development programs to specific equity targets and outcomes.

Some of these trends are already happening, such as a major shift away from degrees and other traditional requirements in favor of skills-based hiring. 

In the current job market, employers are struggling to find talent because many individuals have left the workforce entirely, as shown in the series of The Demographic Drought reports issued by Emsi Burning Glass. To entice those workers back, companies need to invest not just in higher wages, but in taking down other tangible barriers that keep people from being able to work, like childcare or transportation difficulties — areas where racial inequity still presents a massive challenge.

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