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2005 May 09 Monday
Black Unemployment Rate Has Risen During Economic Recovery

The Economic Policy Institute has released a new report stating that black unemployment is rising during an economic recovery.

The first chart shows the change in unemployment rates by race and gender over two time periods: the first 13 quarters of this recovery and the same time period over the early 1990s recovery. While the overall rate (i.e., the rate for all jobseekers) and the white rate specifically both fell by 0.4 percentage points in the first three years of the early 1990s recovery, the rate fell slightly faster, by 0.6 points, for African Americans. This relationship is the long-held historical pattern for minorities, as their employment opportunities tend be more responsive than whites to changes in economic conditions (e.g., minority unemployment rates tend to worsen faster in a downturn and improve more quickly in an expansion, where as white rates tend to be more stable).

Surprisingly, in this recovery, the opposite pattern has prevailed thus far. The overall rate is down slightly, as is the white rate. But the unemployment rate for African Americans is up by 0.8 percentage points overall, driven by the 1.4 point increase for African American men. By the first quarter of 2005, the overall African American unemployment rate was 10.6%, while the overall rate--5.3%--was half that level.

Blacks are doing worse in an economic recovery and so they will do even worse in the next economic downturn.

But conspicuous differences are apparent between the last two business cycles. In the early 1990s, the overall employment rate began to climb by around the 10th quarter, and the African American rate follows the overall rate fairly closely. In the current case, however, employment rates have yet to trend up very convincingly, and African American rates actually have continued to fall. Almost four years after the recession began in March 2001, employment rates remain down by 2 percentage points overall and almost twice that much (3.7 points) for African Americans.

The Economic Policy Institute's writers list a few unlikely causes for this phenomenon including racism. Meanwhile they predictably miss the elephant in the room: Massive amounts of Hispanic immigration. Edward Rubinstein points out why the EPI is wrong.

But if racial discrimination is such a factor, why has Hispanic job growth outpaced that of whites? (For example, Hispanics got 60 percent of the new jobs created in March; in the entire Bush II era Hispanic employment has grown 14.3 percent vs. just 0.3 percent for non-Hispanic employment growth).

In fact, discrimination is the best explanation for persistent Black unemployment - but not the sort of discrimination EPI has in mind.

Arguably the most racist policy in this country for the past quarter century has been immigration policy. The onslaught of poorly educated, mainly Hispanic immigrants has stymied good faith efforts of African Americans to climb up the economic ladder.

Blacks overwhelmingly vote for the Democrats while the Democrats strongly support massive Hispanic immigration that harms blacks economically. The Democrats correctly perceive Hispanics as mostly expanding the lower class and therefore see most Hispanics as future Democrats. The Democrats are willing to sacrifice black interests in order to ensure future Democratic Party majorities. Therefore the Democrats care far more about winning elections than helping the poor people we already have. (and I'm not saying the Republicans are ethically any better)

A new study from the Pew Hispanic Center reports that Hispanic salaries have fallen for the last 2 years in a row.

Washington, DC - Hispanic workers accounted for more than 1 million of the 2.5 million new jobs created by the U.S. economy in 2004. But Hispanics are the only major group of workers to have suffered a two-year decline in wages and they now earn 5 percent less than two years ago, according to a Pew Hispanic Center analysis of latest data from the Bureau of Labor Statistics and the Census Bureau. The report is available on the Center's website: www.pewhispanic.org.

Recently arrived Hispanic immigrants were a leading source of new workers to the economy but also among the principal recipients of wage cuts in 2004.

"Despite strong demand for immigrant workers, their growing supply and concentration in certain occupations suggests that the newest arrivals are competing with each other in the labor market to their own detriment," said the report's author, Rakesh Kochhar, a senior research associate at the Center.

The vast majority of new jobs for Hispanic workers were in relatively low-skill occupations calling for little other than a high school education. In contrast, non-Hispanic workers secured large increases in employment in higher-skill occupations requiring at least some college education.

The Hispanic wage decline is accelerating and only Asians are experiencing a wage gain.

• Real weekly earnings for Hispanics declined by 2.2 percent in 2003 and by another 2.6 percent in 2004. Latinos are the only major group of workers whose wages have fallen for two consecutive years.

• Meanwhile, wages of non-Hispanic white and black workers increased in 2003 but declined by 1.8 percent and 1 percent respectively in 2004. Asian workers are the only group to have increased their earnings each of the past two years.

• Recently arrived Latino immigrants saw their wages fall by 2.6 percent in 2004. This was matched by recently arrived non-Hispanic immigrants whose earnings fell by the same amount in 2004.

Edward Rubinstein again says basic economics explains why wages are falling.

The author of the Pew study professes "surprise" that Hispanic wages would fall at a time when they are having such "luck" in getting jobs.

A refresher course in Economics 101 is in order here.

Falling prices denote a surplus. That is a basic principle of economics. Falling Hispanic wages are thus a signal sent by a labor market that is saying what many of us have been saying for years: Immigrant workers are simply not needed. Far from doing the jobs that Americans "won't do," Hispanic immigrants are displacing low wage natives—Hispanic and non-Hispanic alike.

Immigration is growing the size of America's lower class. Why do that? This harms the interests of the vast majority of the American people. More people can not afford to pay for their own medical care. More people do not pay enough taxes to fund the education of their children. More people are criminals. The list of harmful consequences is long. We should stop the illegal influx, deport all the illegals who are here, and raise the standards on who can immigrate legally. We do not need more poorly educated and low skilled workers.

Share |      By Randall Parker at 2005 May 09 12:18 PM  Immigration Economics


Comments
Engineer-Poet said at May 9, 2005 1:22 PM:

This deserves a footnote in "How to Lie with Statistics".  To understand why, one must know what the unemployment rate measures:  the proportion of officially counted job-seekers to the sum of employed plus job-seekers.  People who are "not seeking work" are not counted as either employed or unemployed.

People whose job prospects are so bad that they've stopped looking are not counted as unemployed, and thus reduce the official unemployment rate.  IIRC, it's common for the unemployment rate to rise early in a recovery as the discouraged start looking again and rejoin the ranks of officially counted (vs. invisible) unemployed.

Randall Parker said at May 9, 2005 2:24 PM:

E-P,

I am not sure what point you want to make here. Note that the study looked at both unemployment rate and employment rate and found they both pointed in the same direction. So I hope you are not impyling that they have lied with statistics.

Jack said at May 10, 2005 5:31 AM:

Randall,
I think part of your post was cut off:

Blacks overwhelmingly vote for the Democrats while the Democrats strongly support massive Hispanic immigration that harms blacks economically. The Democrats correctly perceive Hispanics as mostly expanding the lower class and thereofre in

Ryan said at May 10, 2005 7:07 AM:

How is it possible that black leaders are so in the dark about this? Most of us didn't need this article to know this was the case, but how long will those african-americans, who are working to overcome centuries of oppression, put up with this deceit by the Dems and 'Publicans?

John said at May 10, 2005 7:44 AM:

Check out the graphs on the page below, Randall. Poor economic prospects for the poorer segments of society are the norm during Republican administrations.

http://www.washingtonmonthly.com/archives/individual/2005_05/006282.php

Invisible Scientist said at May 10, 2005 8:19 AM:

Deteriorating Black unemployment must almost certainly be connected with the new international labor arbitrage trend (a.k.a. "outsourcing"). But the Blacks are NOT the only victim of international labor arbitrage, for even the well educated people are suffering from unemployment and lower salaries, not to mention much longer work hours for the same salary.

John S Bolton said at May 10, 2005 1:24 PM:

Labor surplus is the norm for an economy in the antibiotics era. In 1942, productivity went up more than 20% in one year. An overall labor shortage has never existed in a large industrial economy since antibiotics and a number of vaccines, and pesticides, were introduced after 1945. This indicates that unskilled workers are not needed in such numbers. There having jobs does not indicate any economic necessity for that particular configuration of a mix of labor and machinery; productivity can go up by huge percentages in less than a year, as shown in wartime. In peacetime, the treuhand, a branch of the German government, raised productivity tenfold at numerous large industrial facilities, in just a few years. Without economic necessity of an absolute kind, all the aggressions and other negatives associated with unskilled immigration have no excuse.

crush41 said at May 10, 2005 10:03 PM:

When you're finished checking out John's link, check out this one for just as much rock-solid, bullet proof analysis!

John,

Republican-controlled Senates have seen 34% greater per capita income growth than Democratically-controlled Senates since 1968, and Richard Nixon enjoyed the greatest growth of any President during that time, beating even Bill Clinton. Not to mention the ridiculous sample size... See how easy it is to play with numbers and then spin it as some sort of perspicacious, profound insight when it clearly is meaningless?

Randall Parker said at May 11, 2005 7:12 AM:

John,

I am skeptical of attempts to generalize about economic growth rates or wealth distribution in Democratic versus Republican Admnistrations. One reason for my skepticism is that if we ignore who is President there are trends regarding wealth distribution on-going for decades which have changed little from Administration to Administration.

For example, the ratio of salary for most skilled to least skilled jobs has been rising since at least the early 1970s. It rose under Carter. It rose under Clinton.

Also, the low skilled immigrant influx accelerated under Clinton and has continued under Bush. This hurts poor folks in a big way. What is the difference between Bush and Clinton on this score? I do not see a difference.

The decline of factory jobs as a source of higher wage jobs for the less skilled did not slow under Carter or Clinton.

Also, the President is just the head of the Executive Branch. What goes on in Congress is just as important for the economy as who is in the White House. But I would argue that the biggest cause of shifts in wealth within a society is technological innovation. Smarter people are becoming economically more valuable. Decline in transportation costs and communications costs are creating world markets where previously there were national and subnational markets.

After technological innovation I'd put aging populations and immigration as the next two biggest causes of shifting wealth.

Well, do you want to argue against technological innovation? Or perhaps stop aging? (I'm in favor of doing that btw) Or how about stopping and reversing the low skilled immigrant influx?

Bob Badour said at May 11, 2005 9:14 AM:

To amplify Randall's distrust of comparisons under different administrations, I note many economic influences have huge lag times. Even when one looks at direct economic influences with very plausible mechanisms for action (e.g. changes to the money supply or interest rates), the correlated outcome often appears a year or more after the initiating event--and frankly economists consider those fast acting.

Proborders said at May 12, 2005 7:23 AM:

Pedro Nicolaci da Costa's "Employment jump masks deeper ills in U.S. job market" is posted here.

John S Bolton said at May 13, 2005 1:09 PM:

The NYT reported on 5-12-05 that teenage employment has fallen to a fifty year low. This was in Herbert's oped column. It was even noted that "immigrants seem to have accounted for the entire net increase in jobs from 2000 through 2004". In Chicago in '04, merely 10% of black teenagers could find jobs. This explains to some extent the recent heightening of conflicts between blacks and latinos in the high schools. The employment percentage of 20 to 24 year olds fell 4 points, from 72 to 68 %, in just four years. The officials know what they are doing; they are using antimerit immigration to maximize conflict between groups. Power is to be won by this means. Teenagers and the young are the most violent cohorts; get them unemployed and angry at another group, if you want trouble and dictatorship. This is the reason for the immigration policy; not any fictitious labor shortage that is even more preposterous to claim when massive displacement of low paid unskilled workers is happening, just to make room for foreigners on net public subsidy.

Another UNEMPLOYMENT Brother said at June 6, 2005 2:38 AM:

it may be hard for older Brothers to get a job, but its even harder young cats,like me to find work. i mean are weed and crack sales the only way to make money??????


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