The June jobs report released Friday shows an economy that has found its stride, albeit one still too slow to take us back to our pre-recession world any time soon.
By BEN UNGLESBEE
The Kansas City Star
The Labor Department said U.S. employers added 195,000 jobs last month, beating expectations but leaving the country’s unemployment rate unchanged at 7.6 percent as more people entered the workforce.
Despite the unchanged jobless rate, economists said June’s numbers reinforced several months of steady improvement in the labor market. The number of jobs created in April and May was revised upward. And this June’s numbers are well more than double the 87,000 jobs created in June 2012.
Not everybody is getting the newly minted jobs, though. Millions remain unemployed for long periods, and demographic disparities aggravated by the recession have been slow to reverse.
The unemployment rate for young adults aged 20 to 24 ticked up to 13.5 percent in June. For African Americans in that age group, the percentage is almost double.
The current monthly rate of job creation is still below the 360,000 needed each month to bring the unemployment rate to 6 percent within three years, according to Peter Morici, a professor of business at the University of Maryland.
Much of the jobs boost in June came from the leisure and hospitality sector as well as retail, which together created 112,000 jobs. Professional and business services jumped by 53,000, and health care jobs increased by 20,000.
After staying nearly flat in May, average hourly earnings jumped about 10 cents an hour, putting the average wage at $24.01 an hour and feeding a 2.2 percent increase since this time last year.
Added to a strengthening housing market, the growth in jobs and wages is likely to sustain consumer confidence and spending, economists said.
Stocks Friday got a boost with the jobs report, while Treasury yields rose on speculation that the encouraging numbers might push the Federal Reserve closer to unwinding its generous monetary programs.
Analysts said the report also shows that the automatic sequestration cuts in federal spending have not derailed the recovery as some feared. At the same time, overall economic growth has remained relatively slow at 1.8 percent for the first quarter.
Although the private sector has been creating jobs, the federal government dropped 5,000 jobs in June, adding to the 65,000 federal jobs shed from the economy during the last 12 months. State governments cut an additional 2,000 jobs last month.
Any loss of jobs hurts when people are still searching for work. The ranks of the long-term unemployed (those who have been jobless for 27 weeks or more) were left essentially unchanged at 4.3 million in June. The number of underemployed, those working part time who would prefer to be working full time, shot up by 322,000 in June, to 8.2 million overall.
For African Americans in their early 20s, the situation is still bleak. The unemployment rate for that group went up in June to 25.5 percent and has remained stubbornly above the 20 percent mark since February 2009. For African American men ages 20 to 24, the rate spiked more than 2 percent from May, putting it over 29 percent. It jumped for African American women in that age group as well, increasing from about 20.5 percent to 22 percent.
The recession may have made things wrose, but a disparity in employment between whites and blacks is nothing new. In 50 years, the gap between unemployment rates for whites and blacks has closed only 6 percentage points, according to the National Urban League’s 2013 Equality Index.
The gap is highest in the Midwest, with unemployment rates 2.6 times as high for blacks with high school diplomas than for whites with the same education level.
Accounting for those differences is no easy task. Factoring in education levels between blacks and whites explains only a fraction of the imbalance. Even at the highest levels of education, the unemployment gap persists.
Gwen Grant, president and CEO of the Urban League of Greater Kansas City, says that education is still crucial for getting young African Americans hooked up with jobs.
Her own organization tries to equip young people with analytical and technological skills needed for the modern, knowledge-driven economy.
“We must prepare African Americans for opportunities so that when we open those doors we have people ready to walk through them,” Grant said.
But finding those open doors hasn’t been easy. Although there has been some improvement in the job market for young African Americans, job searches can still take 12 to 18 months.
“It’s very difficult to find work,” Grant said.
Her organization did not hold its annual job fair the past two years because companies simply weren’t hiring. Now that the economy is slowly picking up and “employers are coming back to the table,” the event will resume this year.
With education explaining only part of the difference between unemployment numbers for whites and blacks, many point to race itself as the main factor behind discrepancies. But again, teasing out specifics isn’t straightforward or obvious.
Nancy DiTomaso, an author and professor at Rutgers Business School, looked at how employment inequities perpetuate themselves in her book “The American Non-Dilemma: Racial Inequality Without Racism.”
After hundreds of interviews, DiTomaso concluded that inequality is not reproduced through discrimination — in the sense that prospective employers reject applicants explicitly because of race — but through favoritism and the pervasive power of social networking on the employment landscape.
“Discrimination is illegal,” DiTomaso said. “Helping your friends is not illegal. If people help their friends or family members get jobs, they feel good about themselves.”
DiTomaso found that 70 percent of the jobs her interviewees held in their lifetimes were obtained with the help of people they knew. Because our social networks are still very much segregated along racial lines, and because whites have historically enjoyed economic advantages over other groups, that puts Africans Americans and other nonwhites at a disadvantage.
“It’s not just the same if blacks help blacks, because they’re not starting from the same place,” DiTomaso said.
Because access to economic resources remains unequal, companies must work to make their staff resemble the communities they serve, said Grant, who used a similar metaphor as DiTomaso to explain racial disparities.
“If we’re in a race and you have the lead, I can’t run at the same speed and close that gap,” she said.
To reach Ben Unglesbee, call 816-234-4072 or send email to email@example.com.