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What Today’s Unemployment Numbers Reveal About Social Exclusion in the Labor Market

Amy Traub

It’s not a bad time to be looking for work in America. The job numbers released this morning show an overall unemployment rate of just 3.9 percent in July. For white men over the age of 20, the rate of joblessness is even lower: 2.9 percent. But the picture is entirely different for black job seekers, who face an unemployment rate more than twice as high. In July, 6.6 percent of African Americans in the workforce were unable to land a job. 

The enormous disparity between black and white unemployment rates is unlikely to make headlines for one simple reason – there’s nothing new about it. For decades, black unemployment has remained roughly twice the rate of unemployment for white workers, regardless of a job seeker’s level of education. Social exclusion shows us why.

Social exclusion is “a set of decisions and actions [by the] economically and politically powerful.” Social exclusion includes deliberately deploying white supremacist and racist ideas to justify and naturalize the economic and political disadvantages faced by people of color. In the labor market, social exclusion drives the notion that workers of color are less deserving of employment.

This deeply racist idea propels broad policy decisions and individual actions that strip workers of color of equal opportunity in the labor market. Middle managers and human resources directors enforce and perpetuate social exclusion in the labor market even though they did not originate these discriminatory ideas and may not be aware that they are propagating them. For example, companies adopt ostensibly race-neutral screening policies that disproportionately filter out job applicants of color (more on these below). At the same time, employers absorb implicit (and sometimes explicit) biases that result in discriminatory hiring decisions.

Inequality in American labor markets was maintained by law for much of U.S. history. Before the Civil Rights Act of 1964, employers in many states were legally allowed—and in some contexts, required—to discriminate on the basis of race and color (as well as sex, religion, and national origin). Today federal law forbids these types of discrimination, yet evidence of persistent discrimination remains widespread. A meta-analysis of recent research finds that employers still give white job applicants 36 percent more callbacks for a job interview than equally qualified black applicants, and 24 percent more than equally qualified Latino applicants. The analysis includes a study finding that resumes with white-sounding names are more likely to be asked for an interview than identical resumes with black-sounding names, an effect that does not differ across occupations and industries. Discrimination persists even among employers that claim to value diversity.

Other forms of social exclusion intersect with and reinforce employment exclusion. After gains from civil rights-era policies, today’s state and local policymakers are re-segregating American education and providing inadequate funding to schools that serve students of color, creating stronger headwinds for young people of color looking for good jobs than for their white counterparts. Policymakers’ racially-biased criminal justice policies, including the over-policing and mass incarceration of communities of color, mean that black and brown job seekers are disproportionately affected when employers refuse to consider job applicants with an arrest or conviction record. And because banks and other lenders have long targeted black communities for predatory financial products and other forms of racial discrimination, African Americans tend to have lower credit ratings than whites, so employers who use credit checks in hiring disproportionately block African-American applicants from job opportunities. Superficially race-neutral hiring policies thus reinforce social exclusion in the labor market.  

Social exclusion is visible not only in rates of unemployment, but also under-employment—situations where workers want full-time employment but instead work part-time because of slack business conditions or because they were only offered part-time jobs. At Walmart and other large employers, part-time workers are speaking out about concerns that managers’ favoritism results in racially-discriminatory decisions about which employees have an opportunity to work full-time hours. While workers have not succeeded in getting Walmart to release demographic information about its part-time workforce, federal statistics support the perception that employers as a whole are more likely to deny full-time work to black and Latino employees: In 2017, 21.7 percent of black workers who were employed part-time would have preferred full-time work and 22.7 percent of Latino workers employed part-time would have preferred a full-time job, compared to 13.9 percent of white part-time employees. Involuntary part-time work is especially problematic because employers often offer part-time workers fewer benefits and less pay for the same work as full-time employees. In addition, it is frequently more difficult for part-time workers to advance within the company.

A history of social exclusion in the labor market lays the foundation for continued social exclusion. Because workers of color experience higher rates of unemployment than white workers, they must more often take on debt or tap into any assets they have accumulated to make up for lost income when they are between jobs—draining their already limited wealth to a greater extent than white households. Employers’ social exclusion that keeps black and Latino workers out of a job thus also contributes to the racial wealth gap, undermining the overall economic security of black and Latino households. And, since wealth is passed down across generations and can promote upward social mobility (for example, by paying for a child’s higher education or investing in a new business venture), the increased drain on wealth due to higher unemployment limits mobility across generations. The same decisions and actions that deny workers of color of equal opportunity in the labor market today also pave the way for economic deprivation across generations.

In addition to unemployment, social exclusion in labor markets impacts the quality of jobs available to people of color. I’ll explore this further in my next post.