![]() These forecasted losses must be avoided though targeted monetary and fiscal policies. Our simulation of the change in low-income Black earnings predicts that their annual earnings will fall at least 35 percent relative their actual 2018 level, almost fully reversing the gains that group made over the last expansion.In the past downturns we examined, the real earnings of low-income African Americans fell twice as fast as all low-income workers, driven mostly by the decline in their share working.Real incomes fall more quickly for low- relative to higher-income workers in downturns, and the declines are steepest for low-income workers of color.We expect the gaps caused by the current recession to be the largest on record. Because of their amplified response to the ups and downs in the business cycle, racial gaps in labor market variables narrow and widen in expansions and recessions.The comparable rates for Hispanic workers are 22 and 41 percent. We expect Black unemployment to peak at about 30 percent and Black underemployment at about 42 percent.Our forecast is that these gains will fully evaporate this year. It took 10 years for the African American employment rate for “prime-age” workers (25-54) to climb 10 points, from 66 to 76 percent.Our key findings are based on the historical relationships between overall slack measures (mostly unemployment) and those of workers by race and ethnicity. In fact, this is precisely what is predicted by forecasts we share below. Now, as near-full-employment conditions quickly unwind, these workers face a very steep risk of losing any gains they’ve made and potentially being relegated back to the sidelines of the labor market. and others have shown, persistently tight labor markets were lifting helping less advantaged workers, boosting the pay of lower-paid workers and pulling non-workers - disproportionately persons of color - in from the sidelines. ![]() Though the recently ended expansion began quite weakly in terms of job and wage growth, the labor market eventually tightened up considerably, and before the crisis, it was closing in on full employment. Structural racism has amplified the health and economic consequences of the current crisis on persons of color, but all those pressures predate the virus. But we want to emphasize that the groups on which we focus in this report have long faced high inequality, diminished mobility, and persistently slack labor markets, well before COVID-19 arrived here. Our research is clear that on every indicator of economic wellbeing, racial and ethnic minorities have larger-than-average responses to overall indicators this means that indicators of labor-market slack (like unemployment or employment rates) deteriorate faster and further for people of color and, depending on the strength of the recovery, can take longer to make up lost ground. Who are these highly exposed populations? Certainly, race and ethnicity are key determinants. In this unique recession, wherein conditions have deteriorated so quickly, this absence of insulation is particularly threatening the well-being of economically vulnerable households and communities. By design, certain groups of workers and their communities are more exposed to the economic pain of recession in general, as their jobs and incomes are inherently less secure and they’re less likely to have the necessary savings to fall back on. ![]() Though the April 2020 jobs report showed huge losses for all workers, regardless of race or ethnicity, history is clear that different groups experience downturns with significantly differing intensities. ![]() The most recent national jobs report, as of this writing, revealed a magnitude of payroll job losses - over 20 million in April alone - for which there exists no historical parallel. For context, consider that over the full Great Recession, payrolls declined by 9 million. In just six weeks, the number of layoffs, proxied by the increase in claims filed for Unemployment Insurance, spiked by over 30 million. This current recession began with alarming speed in March of this year, as measures to contain the virus required the shutting down of huge swaths of commerce, both here and abroad. The health response to the coronavirus has unquestionably caused one of the deepest economic downturns in our history. Views expressed within the report do not necessarily reflect the views of the Center. ![]()
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