The U.S. unemployment rate rose in August, and Black workers’ labor force participation declined

Commuters arriving at Grand Central Station during the morning rush hour of New York City, Nov. 18, 2021
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In August, there was an increase in the U.S. jobless rate. Black workers were the only group to experience a decline in their participation in the labor force.

It unemployment rate rose 0.2 percentage point to 3.7% in August, according to data released Friday by the U.S. Bureau of Labor Statistics. The nonfarm payrolls were 315,000, which is in line with the estimates of 318,000.

Although all age groups experienced a slight increase in unemployment, the rate rose faster for Hispanic workers (from 3.9% to 6% in July) and Black workers (6.4% and 6.5%, respectively).

However, Black workers marked the only group that saw labor force participation decline, while their employment-population ratio, which measures what percentage of the population holds a job, also fell.

Elise Gould is a senior economist at the Economic Policy Institute. “While there are some fluctuations in these numbers, seeing a downward trend of employment and participation in this area is worrying.”

For August, Black labor force participation fell to 61.8% from 62% in July, while the employment-to-population ratio dipped to 57.9% from 58.3%

William Spriggs, chief economist at the AFL-CIO, said that looking at Black workers is one way to gauge what’s really happening among employers.

Spriggs stated that black workers are subject to more discrimination than other groups. A potential slowdown in hiring — as evident through this week’s ADP private payrolls data — could also be contributing to the results.

Spriggs explained that Black workers are most affected by slowing down their hiring rate because they wait the longest in order to get a job. The result is that the waiting list has gotten longer, which means the discouraged worker effect for Black workers is more severe.

Although it is too soon to pinpoint the cause of the decline in labor force participation among Black workers’, Gould suggested that the downward trend seen over the past few months could be indicative of something more than a statistical anomaly.

The Federal Reserve’s drive to increase rates as quickly as possible to contain surging prices could be doing more damage to labor markets, especially those that are historically less fortunate, such Black workers.

“Black workers are beginning to feel the brunt of it in a disparate fashion,” said Michelle Holder, a distinguished senior fellow at Washington Center for Equitable Growth. Although this report is only one, it is enough to believe that the Fed will continue to implement aggressively its policy in the months ahead.

Holder agreed with others that the cause of Black unemployment is not yet clear. But she pointed out rising rates among Black female workers.

Its unemployment rate rose from 5.3% in July, to 5.9% by July. Comparatively, the unemployment rate for white women rose to 2.8% in July from 2.6%.

Hispanic female workers saw a dramatic increase in their unemployment rates, increasing to 4.3% from the 3.2% prior month.

Hispanic workers saw a higher rate of joblessness than white workers, but their labor force participation rate is lower and their employment trends are similar to the wider market.

She said, “We are seeing this increase in unemployment accompanied with a significant rise in participation and then an upward trend in employment.” I believe that this is a positive sign. It isn’t troubling that the unemployment rate has risen.

Gabriel Cortes from CNBC contributed to this report.

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