Reaching maximum employment will help close the racial wealth gap, in response to AFL-CIO chief economist and Howard University economics professor William Spriggs.
In an interview with CNBC, Spriggs said the impact of discrimination against Black employees is less acute when the labor market operates at full employment.
“When now we have a extremely poor labor market, white highschool dropouts do higher than Black individuals with associate degrees,” Spriggs explained.
“When the labor market tightens,” however, “Blacks with associate degrees do higher than white highschool dropouts.”
While Black Americans do withdraw from the labor market when the market collapses, Spriggs said this isn’t all the time reflected in the info on Black labor force participation.
He noted that in the course of the Covid-19 pandemic, the Black unemployment rate dropped. But the info might be misleading, with the gap between white men and Black men within the employment-to-population ratios remaining at its typical ratio of 1.2:1, Spriggs warned.
Implicit bias may affect economic data and policy by dictating the questions that analysts ask, Spriggs said. For instance, improperly phrased questions can fail to account for gig work, causing analysts to miscalculate the labor force participation rate in communities where such work is more common.
“When there may be an economic slowdown,” Spriggs said, “then you definitely do see it within the Black unemployment rate first because when the economy slows down, what’s slowing down initially is hiring.”
“When now we have these Black employees with associate degrees sitting around searching for jobs,” he warned, “we put a few of one of the best players on the bench.”
Watch the video to learn more about how the Federal Reserve can close the racial wealth gap and the way an economic slowdown might affect Black employees.