African Americans Disproportionately Hurt by Public-Sector Crisis

Following the post-recession period that began in June 2009, overall unemployment dropped from 9.4 to 9.1. Yet black unemployment increased in this period from 14.7 to 16.2 percent. In the last 22 months, the black unemployment rate has not fallen below 15 percent, according to labor department statistics. The June numbers are just 0.3 percent lower than March-April 2010 when black unemployment peaked at 16.5 percent. In comparison, whites saw their unemployment rate rise less sharply at 9.4 percent six months earlier.

The high unemployment rate is partly attributed to the large reduction of public sector jobs, which is the largest employer of black workers. One out of every five working African Americans are employed by the government, according to the labor department. That comes out to 19.8 percent of the black workforce, compared to 14.6 percent for whites and 11 percent for Hispanics.

As governments continue to trim budgets, the mass layoffs of public employees have disproportionately impacted the African-American community. Since January 2009, more than 429,000 workers employed by state and local governments have lost their jobs, according to labor researchers at the University of California at Berkeley.

In places like Wisconsin, where Governor Scott Walker ignited an anti-union firestorm and threatened to layoff public workers, African-American unemployment was the highest in the country last year at 25 percent.

Moreover, state and local government employment is already at its lowest levels since 2006. But more and more public-sector jobs are disappearing. Overall, there are 1.9 percent fewer government jobs than when the recovery began, according to the Economic Policy Institute. In June, state and local governments shed 25,000 jobs. And it may get worse. Some analysts are predicting that as many as 800,000 to one million public sector jobs will be cut for the next fiscal year.

Such a large reduction in the public workforce will have long-term implications for the black middle class. Wealth disparities between blacks and whites were already staggering before the Great Recession, but the gap has widened even in the aftermath. The Associated Press writes:

In 2004, the median net worth of white households was $134,280, compared with $13,450 for black households, according to an analysis of Federal Reserve data by the Economic Policy Institute. By 2009, the median net worth for white households had fallen 24 percent to $97,860; the median black net worth had fallen 83 percent to $2,170, according to the EPI.

Algernon Austin, director of the EPI’s Program on Race, Ethnicity and the Economy, described the wealth gap this way: ​“In 2009, for every dollar of wealth the average white household had, black households only had two cents.”

Public-sector jobs helped to mitigate the inequalities mentioned in the Economic Policy Institute study. The University of California at Berkeley report, published in April, wrote that the public sector is ​“the single most important source of employment for African Americans.”

Based on data from 2005-2007, researchers found that a greater concentration of black men and women were employed in higher-paying jobs in the public sector compared to their counterparts in the private sector. In other words, there was a smaller concentration of African Americans in lower-wage jobs. Black women in public administration even had the highest proportion of women in the top-tier income scale than other sectors. African Americans also earned better median wages than other industries; and the wage gap for black and white workers was much smaller.

The lack of jobs in the community prompted the Congressional Black Caucus last week to criticize the Obama administration for the lack of attention given to the crisis. The Huffington Post reports:

“Can you imagine a situation where any other group of workers, if 34 percent of white women were out there looking for work and couldn’t find it?” asked Rep. Emanuel Cleaver, a Missouri Democrat and chairman of the caucus. ​“You would see congressional hearings and community gatherings. There would be rallies and protest marches. There is no way that this would be allowed to stand.”

Even though the private sector has added almost 980,000 jobs after the official end of the recession, the gains have been offset by nearly half a million public sector cuts. Minorities in particular were already been hit hard by the recession and African Americans have faced historically higher jobless rates than other racial and ethnic groups.

Now, with so many people of color depending on the public sector, further reduction of government jobs might compromise decades of economic progress if new jobs aren’t created soon.