Unemployment Rates Fall

Black Unemployment Falls Below 5% for First Time Ever, but Participation Declines

Black unemployment in the United States hit a record low in April, but this decline was accompanied by a drop in labor force participation rates, indicating that Black workers are beginning to face difficulties in an otherwise strong U.S. labor market. According to a report from the Bureau of Labor Statistics released on Friday, the unemployment rate for Black workers dropped below 5% for the first time ever, to 4.7% last month. This decline was accompanied by a greater-than-expected increase of 253,000 nonfarm payrolls and a fall in the overall unemployment rate to 3.4%, a multi-decade low

Job growth was broad-based, with gains in healthcare, professional and business services, as well as leisure and hospitality. The unemployment rate for Hispanic workers also ticked down to 4.4% from 4.6% in March, but it remained unchanged for Asian workers at 2.8%. The white unemployment rate was at 3.1%, narrowing the gap between Black and white workers to 1.6 percentage points, the smallest since the government began tracking this data in the 1970s.

However, the lower unemployment rate for Black workers was accompanied by a decline in the share of Black people who are either working or looking for jobs. The labor force participation rate for Black workers fell by over one percentage point to 63% in April, from 64.1% in March. In contrast, the participation rate for white workers rose slightly to 62.3% from 62.1% the month before.

The decline in the participation rate for Black workers was driven by a sharp decrease in the participation rate for Black men, who dropped out of the labor force at the fastest rate in three years, reversing the strong gains made over the past year. Another metric, the share of Black men aged 20 or older who were employed, fell notably to 64.7% from 66.8% in March. In contrast, the share of Black women who were employed rose to 61.1% in April from 60.9% the previous month.

The drop in Black unemployment is “quite remarkable,” said Michelle Holder, Associate Professor of Economics at John Jay College, City University of New York. However, she warned that these gains could be quickly erased if the U.S. economy dips into a recession, as some expect, and the labor market begins to deteriorate. The U.S. labor market has stayed surprisingly strong despite the Federal Reserve’s aggressive interest rate hikes to tame high inflation rates. Policymakers lifted their benchmark target rate above 5% this week for the first time since 2007, up sharply from near-zero levels early last year.