A job layoff notice and an application for unemployment insurance benefits.
By Alexander Monge-Naranjo, Research Officer and Economist
The unemployment rate—the fraction of workers who are both out of work and actively seeking employment—is followed closely by policymakers and observers of the economy’s overall performance.
The unemployment rate is not the converse of the employment rate—the fraction of the population (not just workers) who are employed—since many nonemployed individuals are out of the labor force because they have health issues or are studying, or simply because they are retired or dedicated to activities outside the labor market. So, the unemployment rate closely measures the fraction of available workers who are not being utilized and, as such, provides a crucial indicator for the overall economic activity.
In a previous post, we examined the substantial disparities in the unemployment rates of different groups of workers before and during the COVID-19 crisis. The crisis ravaged almost all sectors of the labor force, at least in the beginning, but the impact has been tougher on women and on workers of color.
In this post, we go beyond the unemployment rates and look at two other indicators of labor market engagement for the same six groups, as defined by gender (female and male) and race and ethnicity (white, Black and Hispanic).
The first indicator is the employment-to-population (E/P) ratios—i.e., the percentage of the individuals within a group who are employed. The second indicator is the ratio of part-time workers to full-time workers.
In both cases, we examined the observed trends before the pandemic, in particular since the Great Recession (2007-09). Then, we zoomed in on the observed behavior during the year 2020, from the onset of the pandemic to the partial recovery as recorded until now.
The first and second figures below display the monthly series of E/P ratios for male and female American adults (age 20 and older) from 2000 to 2021. In each figure, the series for white, Black and Hispanic Americans of that gender are reported, as indicated by the red, black and blue lines, respectively.
There are interesting similarities in these series. In particular, in all observed recessions (2001, 2007-09 and 2020) all series declined, as workers of all types, on average, lost their employment or opted to leave the labor force. For the first two recessions, the declines were remarkably stronger for Black and Hispanic Americans, both male and female.
Likewise, after the Great Recession, we observe an upward trend in the E/P ratios, but these trends were stronger for people of color, particularly for Black and Hispanic women. Compared with these trends, those of white men and women were rather negligible. Up until the 2020 crisis, the E/P ratios were much more stable for white men and women, with less dramatic falls during recessions and less notable upticks during expansions.
Pre-2020, the most interesting patterns are in the disparities in the ratios’ levels across the different groups of workers. The E/P ratios were much higher for Hispanic men than for white men, while the ratios for white men were higher than for Black men. For women, the differences across racial and ethnic groups were also remarkable. Most notably, however, Black and Hispanic women exhibited much higher E/P ratios than white women at the onset of the crisis.
Overall, the E/P ratios of men were higher than those of women in their respective racial or ethnic group. However, a pattern worth highlighting is that while Black women had the highest E/P ratio for their gender, Black men had the lowest E/P ratio among men.
During 2020 and early 2021, the most interesting pattern is the sharp decline in the E/P ratio for all groups. The drop for all groups was much more abrupt than anything observed in previous years. A second remarkable observation is that the decline was larger for people of color, especially for Hispanic men and women. In particular, Hispanic women were by far the group with the most drastic drop in the E/P ratio, falling from 59.1% in February 2020 to 45.2% in April of that year.
A complementary set of indicators can help explain these differences in E/P ratios. The third and fourth figures below display the ratio of part-time to full-time workers for the six demographic groups. The third figure reports on male workers and the fourth on female workers. The three different racial and ethnic groups are represented by lines using the same colors as in the previous figures.
First, there are very large differences between men and women. Part-time work was much more prevalent for women than for men in all three racial and ethnic groups. The smallest gender difference was among Black workers, but even for that group, part-time employment was substantially more common for women. Second, the incidence of part-time employment seemed to increase during the downturns, most notably during the Great Recession, and this was strongest among Hispanic women. Third, the behavior for white and Hispanic workers within the same gender was remarkably similar, at least for the years since the Great Recession.
The big difference lies with Black workers. On one hand, part-time employment was higher for Black men than for other men. On the other hand, part-time employment was much lower for Black women than for white or Hispanic women.
All in all, the data discussed in this post suggest two hypotheses that deserve further exploration. First, the larger incidence of part-time employment and the fact that the E/P ratios only surged in the past three years can be relevant in explaining the larger collapse in the employment of Hispanic women during 2020. Second, the higher E/P ratios and higher incidence of full-time employment (i.e., lower part-time/full-time ratios) might have partially helped Black women avoid job loss and also recover faster during the crisis of 2020, while the reverse might explain the outcomes for Black men.