Don't applaud the drop in black unemployment just yet

US economy adds 313,000 jobs in February
US economy adds 313,000 jobs in February

Margaret C. Simms is an economist and institute fellow in the Center on Labor, Human Services, and Population at the Urban Institute, where she directs the Low-Income Working Families initiative. The opinions expressed in this article are her own.

At first glance, last week's jobs report seemed very upbeat.

The overall unemployment rate in February stayed at 4.1%, the lowest it's been in 17 years, according to the Labor Department's report.

And there were other near-record lows: Black unemployment ticked down to 6.9%, just slightly higher than the record hit in December.

Particularly noteworthy was the unemployment rate for adult black men, which at 5.9% is one-third of what it was at the height of Great Recession and more than one percentage point lower than it was a year ago.

Do the latest figures mean we should stop worrying about the plight of black workers? Before we applaud this decline, we should look behind the numbers.

What is driving the job gains by black men?

In the past year, the economy has added about 2.7 million jobs, with a significant portion of them in industries such as construction, transportation and warehousing.

These industries tend to be male dominated, so it's not surprising that employment among men overall increased significantly over the past year.

But what is noteworthy is that adult black men appear to have gotten about 19% of the new jobs even though they only account for about 6% of the civilian labor force.

Do these numbers represent some historic record?

The unemployment rate for black workers, viewed by some as "the lowest rate ever," is still nearly double what it is for white job seekers. And it's just one measure of the employment situation.

While we should applaud the fact that most people who are actively looking for work seemed to find jobs, a better measure of job-holding is the share of the working-age population that is employed. This measure, called the employment to population ratio, adjusts for the fact that some people may not be looking for work because they don't think it is available and have therefore withdrawn from the labor force.

Related: Black unemployment is at a record low. But there's more to the story

It also accounts for people who have "retired" early after losing a position and not getting another one. If we look at the share of working-age black men and women who were employed over the past year, versus over the past 10 years, our applause would be more muted.

The proportion of black men ages 20 and older that is employed today — about 65% — is virtually the same as the proportion employed 10 years ago, although up 2.5 percentage points from February 2017.

The story is very similar for black working age women, though their rate hovers around 59%.

What does this all mean?

How then do we reconcile the declining unemployment rate for black men and women with the fact that there has been almost no gain in the proportion of that population who now have jobs?

The answer partially lies in the way the unemployment rate is calculated. Since it is based on the number of people who have jobs or are actively seeking work, the unemployment rate can fluctuate based on whether people think jobs are available and decide to search for one. Herein lies part of the paradox.

It turns out that men's labor force participation has been dropping over the past decade, and the economic recovery has not lured all of them back into the workforce.

The labor force participation rate for white men dropped about 4 percentage points between 2008 and 2018 while the rate for black men dropped more than 3 percentage points, staying consistently below white men's.

With fewer people looking for work, it makes sense that those who are actively looking are now finding more success. But that doesn't mean those who are not looking are well off.

Do these numbers hold up?

Finally, it is necessary to ask: Is the unemployment rate valid? This is not a question of whether the Labor Department produces unbiased estimates. They do, but the numbers are just that — estimates — based on samples of the population.

In the case of small samples, which would be the case for black workers, the numbers can jump around from month-to-month. And you see this in the numbers for black workers.

Related: 1 in 5 black men did not work in 2016, study says

If you look at their unemployment rate over the past four months, it has moved from 7.2% in November to 6.8% in the following month, then 7.7% in January, then 6.9%. The numbers for specifically black men had slightly wider swings.

So don't celebrate the decline in black unemployment just yet. To see if black workers are truly a lot better off, we will have to wait and see if the low numbers hold up over the coming months.

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