Reducing Racial Employment Gaps for Young Adults without College Education

Several factors have aligned to make the current jobs recovery one of opportunity for noncollege-educated youth, despite this group—especially Black and Latino young adults—having experienced uneven employment gains. See my On the Economy blog post, "Young Adults without College Education See Uneven Jobs Recovery,” which is the first of this two-part series published as part of the vulnerable workers initiative from the Institute for Economic Equity. The initiative examines the challenges facing vulnerable workers during the recovery and discusses potential ways to improve their economic security and resiliency in an economy reshaped by the pandemic. This, then, begs a new question: How strong must the macroeconomy be to reduce racial disparities in employment among noncollege-educated young people?These young adults are 16- to 24-year-olds with no more than a high school degree, not enrolled in school and have no more than 10 years of potential work experience (age minus years of schooling minus 6). Adults are 25 to 64 years old, with no restrictions on educational attainment.

The current jobs recovery provides another opportunity to see how sustained economic growth in the form of a tight labor market can single-handedly erode persistent racial and ethnic disparities in employment.The previous periods of sustained growth and low unemployment rates occurred in the late 1960s, late 1980s, late 1990s and the period just prior to the pandemic. During the nation’s jobs recovery (April 2020 to April 2022), the overall civilian unemployment rate fell from 14.7% to 3.6%. Payroll employment has almost returned to its pre-pandemic level. Most notable, the U.S. unemployment rate has been at or below 4.0% for the last five months.

Yet the evidence presented in this post indicates that the labor situation for young Black adults without a college education continues to be a source of concern.The samples are not large enough to generate reliable estimates that break down race or ethnicity by gender. As of March 2022, the overall unemployment rates for these men and women sit at 14.7% and 17.2%, respectively.

What Economic Strength is Needed to Reduce Racial Disparities in Employment

To identify the strength of the labor market needed to narrow racial differences in employment, we estimate the average employment-to-population ratios for noncollege-educated young adults in three types of employment recoveries experienced in various states:

• Top Recovery—Four states (Nevada, South Dakota, Utah and Vermont) where the unemployment rate was at or below 4.0% in every month from October 2020 to March 2022
• Modest Recovery—Twenty states where the unemployment rate was above 4.0% in every month from October 2020 to March 2022
• Rapid Recovery—Twenty-four states where the jobless rate fell by at least 10 percentage points from April 2020 to March 2022

In the case of the top and modest recoveries, October 2020 was chosen as the starting point because that was when a significant number of states saw their jobless rates fall to or below 4.0%, which indicates tight labor markets.

Job Gains Made in Top Recovery States

The top recovery states are of particular interest since they have jobless rates that are several percentage points below what economists call the nonaccelerating inflationary rate of unemployment (NAIRU). Unemployment rates in these four states range from 2.0% to 2.7%, whereas NAIRU estimates range from 5% to 6%. Past research has shown that “tight” labor markets have a disproportionately positive impact on young adults without a college education, especially those belonging to nonwhite groups. In their search for workers, employers adjust their attitudes about noncollege-educated young adults.

Indeed, the following figure presents evidence that noncollege-educated young Black adults in top recovery states experienced large absolute and relative employment gains. These estimates are through March 2022 because the micro data from which these estimates are calculated are only publicly available through March 2022 and not April 2022. Even Black adults (ages 25-64) made absolute and relative gains. For young Black adults, there is some variability due to sample size, but for the most part, they are at parity with their white counterparts.

Employment-to-Population Ratios in Top Recovery States

SOURCES: Current Population Survey and author’s calculations.

NOTES: The x-axis represents three-month averages, with a two-month average for the final observation. Top recovery states are states where the unemployment rate was at or below 4.0% in every month from October 2020 to March 2022. The vertical line marks October 2020, the month when a significant number of states saw jobless rates fall to or below 4.0%.

The next figure reports that in modest recovery states, young Black adults do not narrow the gap with their white counterparts.

Employment-to-Population Ratios in Modest Recovery States

SOURCES: Current Population Survey and author’s calculations.

NOTES: The x-axis represents three-month averages, with a two-month average for the final observation. Modest recovery states are 20 states where states where the unemployment rate was above 4.0% in every month from October 2020 to March 2022. The vertical line marks October 2020, the month when a significant number of states saw jobless rates fall to or below 4.0%.

The figure below suggests a similar conclusion is reached for rapid recovery states. While the ratio for the young Black adults has recovered to its pre-pandemic levels, a gap with other population groups remains.

Employment-to-Population Ratios in States with Rapid Recovery

SOURCES: Current Population Survey and author’s calculations.

NOTES: The x-axis represents three-month averages, with a two-month average for the final observation. Rapid recovery states are 24 states where the jobless rate fell by at least 10 percentage points from April 2020 to March 2022. The vertical line marks October 2020, the month when a significant number of states saw jobless rates fall to or below 4.0%.

What might have led to the larger relative gains in the top recovery states? First, similar to past recoveries, young Black adults benefit disproportionately from sustained employment growth. Second, they were able to recover more rapidly from the downturn in April 2020 than young Black adults in “modest recovery and rapid recovery states. Third, noncollege-educated young adults may have been more willing to take jobs that older workers and parents had quit. Finally, even though these four states had modest downturns, noncollege-educated young adults also benefited from the federal government’s relief and recovery measures (e.g., the American Rescue Plan and CARES acts).

The final figure compares young Black adults without a college education in the top recovery states with those in modest and rapid recovery states. A clear series of contours is revealed. Young Black adults in the top recovery states rebounded faster than young Black adults in the other two recoveries. Further, even with the variability due to sample size, the employment-to-population ratio for those in the top recovery states was roughly 10 to 20 percentage points higher than the ratio for those in the modest and rapid recovery states.

Black Employment-to-Population Ratios by Type of Recovery and Age

SOURCES: Current Population Survey and author’s calculations.

NOTES: Top recovery states are those where unemployment rate was at or below 4.0% in every month from October 2020 to March 2022; modest recovery states are those where the rate was above 4.0% in every month from October 2020 to March 2022; and rapid recovery states are those where the jobless rate fell by at least 10 percentage points from April 2020 to March 2022.

Improving the Economic Position of Noncollege-Educated Young Adults

The job situation of young Black adults without a college education remains a major source of concern. As of March 2022, their unemployment rate stood at more than 10%. Only young Black adults in the top recovery states experienced absolute and relative improvement in their employment. Unfortunately, this strong and sustained growth has a limited impact on the overall welfare of all Black Americans because only 0.4% of the country’s Black population lives in the four top recovery states.

The evidence suggest that combined with the strong economy, the relief and recovery assistance and general societal “goodwill” have yet to reduce the persistent racial inequities that predate the pandemic and persists through the recovery. It is possible that it’s too early to observe the collective effects of efforts to lessen racial inequity. Still, the lack of relative improvement for young Black adults without a college education may present an opportunity for society to target further support toward this current cohort of young people.

Notes and References

¹ See my On the Economy blog post, "Young Adults without College Education See Uneven Jobs Recovery,” which is the first of this two-part series published as part of the vulnerable workers initiative from the Institute for Economic Equity. The initiative examines the challenges facing vulnerable workers during the recovery and discusses potential ways to improve their economic security and resiliency in an economy reshaped by the pandemic.

² These young adults are 16- to 24-year-olds with no more than a high school degree, not enrolled in school and have no more than 10 years of potential work experience (age minus years of schooling minus 6). Adults are 25 to 64 years old, with no restrictions on educational attainment.

³ The previous periods of sustained growth and low unemployment rates occurred in the late 1960s, late 1980s, late 1990s and the period just prior to the pandemic.

⁴ The samples are not large enough to generate reliable estimates that break down race or ethnicity by gender.

⁵ These estimates are through March 2022 because the micro data from which these estimates are calculated are only publicly available through March 2022 and not April 2022.