Jobs aren't bouncing back for Black Americans — and it could be worse than reported

Last month's improving jobs outlook extended to everyone except Black workers, the only group to see their unemployment rate increase. Even worse, the rate may be higher than the official one because of undercounting.

The unemployment rate for Blacks increased by 0.7 percentage point to 9.9% in February, reversing two months of improvements and widening the gap between the white unemployment rate, which fell 0.1 percentage point to 5.6%, according to the latest jobs report from the Bureau of Labor Statistics.

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"It was a really bad month for Black workers," Michael Madowitz, an economist at the Center for American Progress, told Yahoo Money. "It is alarming to see that moving in the wrong direction at this point. The whole narrative of 'we can just open the economy and everything will be fine' isn't compelling."

'Hard to be happy about 9.9% unemployment'

Black workers were the second-hardest hit group when the pandemic hit — following Hispanics — with their unemployment rate hitting 16.7% in April. Since then, the gap between theirs and the white unemployment rate has mostly grown.


The February jobs report was no exception. While the overall number exceeded expectations with the economy adding 379,000 jobs and the unemployment rate falling to 6.2%, the recovery remained uneven.

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"We have a general story where the black unemployment rates are close to twice the white unemployment rate," Dean Baker, chief economist at the Center for Economic and Policy Research, told Yahoo Money. "It's hard to be happy about 9.9% unemployment."

The unemployment rate increased 0.8 percentage point for Black men reaching 10.4% in February and 0.4 percentage point for Black women reaching 8.9%.

'Missing a larger share of the population'

NEW YORK, NEW YORK - JULY 07: A store advertises a sale on July 07, 2020 in the Brooklyn borough of New York City. A report issued by the Center for New York City Affairs last week noted that the city's unemployment rate surged from an historic low of 3.4 percent in February to 18.3 percent in May, with the analysis pointing out that the rate would be an even higher 26 percent in May if unemployed workers who haven't looks for jobs during the pandemic were included. The May umployment rate is twice as high for Black, Latino and Asian New Yorkers as for White New Yorkers.  (Photo by Spencer Platt/Getty Images)

Making matters worse, the Black unemployment rate might be much higher, according to a new analysis by the Institute for New Economic Thinking.

The unemployment rate is calculated using data from the Current Population Survey. But that survey has a much lower response rate from Blacks than from white Americans, leading to more misclassifications in the official unemployment rate. For Blacks, the response rate is 72%, while the response rate is 90% for whites.

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Factoring that in, the unemployment rate for Black workers could be at least 2.6 percentage points higher than the monthly rate by the BLS, leaving it at 12.5% in February, the analysis found. For whites, the increase is much smaller at 0.7 percentage point.

"The Current Population Survey has been missing a larger share of the population over time, particularly among Blacks," said Baker, who is also an author of the analysis. "You have to ask what's the situation for the people they're not talking to."

A person walks by a boarded-up shop in Oakland, California on February 12, 2021. - Racial minorities have borne the brunt of the Covid-19 pandemic in the United States, with higher rates of death, unemployment and business failure, and less success obtaining federal government assistance intended to provide relief. (Photo by JOSH EDELSON / AFP) (Photo by JOSH EDELSON/AFP via Getty Images)

For instance, the CPS may miss people if they're in a situation where they're changing homes, are homeless, or staying with a relative. This group of people is less likely to be employed than the people included in the CPS, according to Baker.

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The falling participation rate also is masking the real unemployment rate, according to economists. For instance, the White House Council of Economic Advisers estimates that the real Black unemployment rate is at 14.6% in February, making it the group with the largest gap between real and official unemployment rate at 4.7 percentage points. The gaps are 3.9 percentage points for Hispanics, 3.2 percentage points for Asians, and 3.1 percentage points for whites.

"The unemployment rate went up, and the participation rate went down for both black men and black women," Madowitz said. "Those two together give you a really bad picture."

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Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova

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