Labor Market Outcomes

The most fundamental indicator of a group’s involvement in the economy is the employment rate, otherwise known as the employment-to-population ratio, which reports the fraction of a group that is employed at any given time. Historically, there are marked differences in the employment rate by race, with the greatest differences between Black and white populations. These differences reflect longer-term variances in opportunities; however, they also reflect the greater sensitivity of minority employment to recessions. That is, minority employment tends to be affected more deeply by recessions than does white employment. Racial disparities in the employment rate tend to grow during recessions and shrink during expansions. Both the pandemic-related decreases in employment and the subsequent recovery have been broad-based, but employment losses have tended to be more persistent for white and Hispanic populations.

An individual is participating in the labor market if he or she is either working or actively looking for work. Individuals considered not participating in the labor market may be, for example, students, family caretakers, retired, or unable to work because of a disability. Differences in the participation rate by race tend to be smaller than differences in the employment rate by race and usually show little change in pattern during recessions. However, the pattern has shifted during the pandemic. Both the pandemic-related decreases in employment and the subsequent recovery have been broad-based, but participation rate declines have tended to be more persistent for white and Hispanic populations.

The unemployment rate refers to those without a job who are actively looking for work or are waiting to be recalled from a temporary layoff. The rate highlights the effects of recessions and recoveries on workers. Historically, Black unemployment has been significantly higher than white unemployment. Furthermore, racial discrepancies in unemployment tend to grow during recessions and shrink during recoveries. Both the pandemic-related decreases in unemployment and the subsequent recovery have been broad-based, although only Black populations are currently experiencing lower unemployment rates than prior to the pandemic.