The U.S. unemployment rate rose in August, and Black workers saw declining participation in the labor force

Commuters arriving at Grand Central Station during the morning rush hour of New York City, Nov. 18, 2021
Jeenah Moon | Bloomberg | Getty Images

In August, there was an increase in the U.S. jobless rate. Black workers, however, were the only population to witness their labor force participation decline.

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.

All demographics saw the unemployment rate rise slightly. However, Hispanic and Black workers experienced an even faster increase to 4.5% and 6.4% from 3.9% in July.

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

Elise Gould (senior economist, Economic Policy Institute) stated that although there is volatility in the numbers, she is concerned about a decline in participation and employment.

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Black labor force participation dropped to 61.8% in August from 62% July. The employment-to-population ratio fell to 56.9% from 58.3%.

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

His explanation was that Black workers face discrimination more than any other group. A potential slowdown in hiring — as evident through this week’s ADP private payrolls data — could also be a contributor to these results.

Spriggs stated that when firms reduce their hiring rates, it hits Black workers instantly because they are already waiting in the queue for the longest time to find work. The result is that the Black worker is more discouraged because the waiting list has gotten longer.

It’s still too early to attribute a cause for the drop in Black labor force participation, but Gould believes that it may be more than just a statistical anomaly.

However, it is possible that the Federal Reserve’s push to raise interest rates quickly to control surging costs may cause more harm to the labor market. This tends to be the case for historically disadvantaged workers like 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 Holder did call attention to Black female joblessness.

This group’s unemployment rate increased from 5.3% to 5.9% in July. Comparatively, the unemployment rate for white women rose to 2.8% in July from 2.6%.

Hispanic women workers experienced an even sharper increase in unemployment, going up to 4.3% from 3.2% during July.

Hispanic workers experienced a higher unemployment rate than those of white workers. However, their labor force participation rate is much lower and seems to mirror the wider market.

According to her, the rise in unemployment is being accompanied by an increase in participation as well as uptake of 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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