BLACK WORKERS: CANARIES IN THE COAL MINE?

Keeping your eye on the Black unemployment rate can often provide invaluable insight into the underlying strengths and weaknesses of the economy. What’s more, watching for trends in the labor market status of Black workers can potentially alert the observer to economic inflection points. For instance, movements in metrics that are centered on Black workers might be transmitting signals about an economic slump that lies ahead and that’ll come to fruition unless proactive policies are enacted.

The Black unemployment rate, labor force participation rate, employment population ratio—all of these (and more), when carefully attended to, can provide the heads up about what might be getting ready to pop off, even before it registers in the metrics that we traditionally use to gauge the state of the labor market (e.g. the aggregate unemployment rate).

It’s because of this that the late economist William Spriggs analogized Black workers to the proverbial “canary in the coal mine.” Sprigg’s lifetime of research dedicated to racial and economic justice, both as a Howard University Professor and as chief economist at the AFL-CIO, led him to believe that just as that proverbial canary could alert miners to the presence of toxic gasses, the status of Black workers could apprise us of the possible presence of noxious threats to the economic security of the working class.

Because of the “Last hired, First Fired” phenomenon, Black and Brown workers typically take the first hit from a slow-down in job growth. Indeed, being the “last hired, first fired” is central to what it means when some economic analysts call Black workers the canary in the coal mine.

A STRONG BUT SOFTENING LABOR MARKET

To bring what’s being said above alive, consider the most recent Jobs Report. The top line number of that report is that the economy added 209,000 jobs between May 2023 and June 2023. That’s a healthy chunk of net private sector jobs and a strong reason for being, at the very least, skeptical of the plethora of doom sayers who see an imminent recession around every corner.

Still, over the last few months there’s been a slowdown in the increase in the jobs per month being added in the private sector. Between April and May, the labor market generated 306,000 jobs. During the subsequent two months—that is, between May and June— the economy added the 209,000 gigs that we’ve been hearing about recently.

Typically, it’s the most economically vulnerable workers— the “Last hired, First Fired”— who take the initial blow from a slowdown in job growth. That’s how the canary in the coal mine phenomenon works in matters economic. More pointedly, it’s Black workers that’ll be first amongst those in line to take the. initial hit from such a slowdown. And that hit, so to speak, will be registered as an increase in such metrics as the Black unemployment rate, a jump in the number of Black workers dropping out of the labor force, and an absolute rise in the numbers of Black workers experiencing joblessness.

What’s more, all of this can take place while the overall or aggregate rate of unemployment is stationary or even declining (that is, improving). That’s that canary in the coal mine thing at work.

YET ANOTHER RISE IN THE BLACK UNEMPLOYMENT RATE

Indeed, the most recent Jobs Report indicates that while the aggregate or overall unemployment rate held steady at about 3.6% between May and June, the unemployment rate for Black workers took a big jump, rising from 5.6% to 6%.

This is the second consecutive month that the Black unemployment rate has increased: Going from April’s 4.7% to May’s 5.6%.

And particularly astounding is this: Since April, the aggregate number of unemployed persons increased by 300,000. During that same April-June time period, the number of unemployed Black workers climbed by 267,000.

In other words, Black workers—wait for it— account for a whopping 90% of the recent rise in the number of the unemployed persons.

So, what’s going on here?

CONCLUSION AND HYPOTHESIS

Here’s what I think what may be going on:

The recent jump in the Black unemployment rate, along with the disproportionate representation of Black people amongst the recent rise in the numbers of unemployed persons, might just be picking up or registering the deleterious impact of the series of interest rate hikes that the Federal Reserve has been engaged in.

Black workers are disproportionately concentrated in those industries that are especially sensitive to interest rate hikes and, therefore, it’s not surprising that any rise in joblessness generated by such hikes would show up first and most visibly in the Black unemployment rate, not the overall or aggregate rate.

It’s not surprising that a strategy emphasizing hitting an inflation goal of 2 percent, while paying virtually no attention to a goal of economic security, would eventually manifest itself in Black workers accounting for a high percent of the increase in the number of the unemployed.

It’s not surprising that Black workers would be the first victims of a strategy that’s willing to sacrifice workers on the altar of price stability.

Just a hypothesis.

In any case, pay close attention to the Black unemployment rate.

For this much is sure:

Black workers are still the canary in the coal mine.

Catch you on the flip side,

Doc Greene