The tightest job market in generations is transforming the employment prospects for Black Americans in ways that could be more long-lasting than in past economic expansions.
The unemployment rate for Black workers fell to a record low of 4.7% in April. That was still above the national average but below 5% for the first time in Labor Department records of employment for Black Americans, which began in 1972. About 1.1 million more Black Americans held jobs last month than in February 2020, just before the pandemic took hold. That increase accounts for nearly half the total gain in employment during that time.
Black workers have long been at the bottom of the ladder in terms of wages and job security. But the confluence of strong demand for labor and demographic shifts in the country over the past few years, when many older, white workers retired, benefited Black Americans. Many moved into occupations that pay more, demand more skills, and offer better long-term stability.
When businesses widely reopened from pandemic lockdowns, historic labor shortages swept across the U.S. Those have largely persisted in the past year, despite the Federal Reserve’s aggressive interest-rate increases, which would normally be expected to discourage hiring. In April, the overall jobless rate fell to 3.4%, matching the lowest level since 1969, while wage growth remained hot.
It is too soon to conclude that Black workers’ gains are permanent. The unemployment rate for Black Americans also fell in 2019 to a then-record low of 5.3%, only to soar to 16.8% in May 2020, soon after the pandemic. Black Americans have less job security, shown by greater increases in unemployment during recessions, and less wealth than white Americans, leaving them especially vulnerable. Many economists forecast a new recession could arrive just months from now.
There are signs, though, that some of the improvements could last, in part because many Black workers moved into higher-paying industries and occupations during the pandemic.
Employment change from February 2020
10%
Black employment recovered faster.
5
Non-Black employment outpaced Black employment earlier in the pandemic.
0
–5
–10
–15
–20
Feb. 2020
'21
'22
'23
Black Americans accounted for 11.4% of professional and business services workers in the first quarter of this year, up from 9.6% in the same period in 2019, according to the Labor Department. Workers in that industry, which includes consulting and accounting firms and some tech companies, make an average of about $40 an hour, compared with $33 for all private-sector employees.
Black Americans were 11.6% of financial industry workers in the quarter, up from 10.4% four years earlier. Finance workers, including at jobs in banking and insurance, make an average of $43 an hour. Black workers made up 7.5% of the construction industry in the first quarter, which also pays above-average wages, compared with 6.3% in the same period in 2019.
Across the economy, Black workers moved in recent years to better-paying fields than the ones they left, a White House report found. And last year, Black workers saw faster wage growth overall than other Americans.
Upgraded jobs
The labor-market recovery following the pandemic downturn was unusually fast, said Cecilia Rouse, an economist at Princeton University, who until recently served as chair of the White House’s Council of Economic Advisers.
“Black workers have really benefited from that,” she said. “Hopefully, some of these gains will stick—whether it’s through the upgrading of their jobs…or whether it’s because they have been able to generate more seniority.”
During the pandemic, Shakira Townsend, a 43-year-old single mother of three children, made a career leap into utilities, a sector that pays among the highest wages, at nearly $50 an hour on average.
After Townsend helped remodel her mother’s kitchen in 2021, she decided to pursue construction training through Goodwill Industries, which offers training for job seekers. That allowed her to switch from a social-assistance job, in which she aided disabled people, to a construction role with a municipal water provider in Charlotte, N.C., that pays her about 30% more.
Now she dons a hard hat, goggles, and rubber boots as she sets out to repair water leaks. She cuts gravel driveways with a saw and pulls up concrete with an excavator.
“My daughter…thinks it’s the coolest thing that Mom drives dump trucks,” she said of her 12-year-old.
The hiring surge and wage gains raise the prospect that Black workers are better positioned to weather the next downturn. That could break the cycle where Black Americans typically suffer disproportionate economic pain during recessions and are among the last to enjoy the fruits of expansion.
In the seven recessions since 1972, the Black unemployment rate jumped about 60% more on average than the rate for non-Black workers. The unequal impact on Black workers “is very much a legacy of exclusion from education, labor, and capital markets,” said Bradley Hardy, an economist at Georgetown University. “Many Black families continue to face varying forms of discrimination.”
The long, slow recovery from the 2008-09 recession hit Black workers especially hard. Black workers earned about 80% of white workers’ pay in 2010. The wage gap widened, with the typical Black worker earning 75% of the typical White employee in 2018. Gains in the past few years have narrowed the pay gap to 2010 levels.
The Black homeownership rate was 45.8% in the first quarter of 2023, far beneath the 74.4% rate among white households. And Black households are less likely to have a second earner present compared with other families. In 2019, the typical Black household had around one-fifth the amount of emergency cash on hand as the typical white household, according to the Fed’s Survey of Consumer Finances.
Black households’ lower wealth levels will make them especially vulnerable to the next recession, said Darrin L. Williams, chief executive of Southern Bancorp, which operates in many predominantly Black communities in the South. “The minority community will be the first to be laid off when the recession hits,” he said.
Some Black Americans, such as Regina Welch, are back at work but still financially recovering from the pandemic.
The 58-year-old was laid off from her bartending job at a Washington, D.C., hotel for about a year following pandemic lockdowns. Her income has risen in recent months, thanks to more tips from a surge of travelers, allowing her to work toward paying off late fees on rent and credit-card debt that accrued while out of the job.
“At least I can see myself accomplishing my goals, because I would like to own my own house one day,” she said.
When she started out as a bartender about 35 years ago, Welch found it hard to break into the field, with mostly white men working in the profession, she said. Now she is encouraged to see more minority women alongside her at the Embassy Suites bar.
‘Trend is improvement’
The gap between the unemployment rate for white Americans, which was 3.1%, and the higher rate for Black Americans was 1.6 percentage points in April, the narrowest on record. The gap has become smaller in each economic expansion since the 1980s.
“The underlying trend is an improvement—not just in this cycle, but also over time,” said Karin Kimbrough, chief economist at LinkedIn.
Long-running forces are reshaping the U.S. labor market and could mean the growth of the Black workforce will endure beyond short-term ups and downs in the economy. Black workers are growing as a share of the overall U.S. workforce, making up 13.1% of the civilian labor force in April, up from 12.7% in December 2019, before the pandemic.
That shift is driven in part by the aging white population. In 2021, the typical white American was about 43 years old, versus 35 among the Black population, according to the Census Bureau.
The pandemic accelerated the shift to e-commerce, driving a hiring boom in transportation and warehousing, an industry in which Black Americans make up about 24.1% of employees. The Labor Department forecasts that healthcare and social assistance—in which Black workers make up about 17.4% of workers—will add the most jobs of any industry over the next decade as nursing homes, hospitals, and therapy centers seek to serve the rapidly aging U.S. population.
Wages in those sectors have also climbed.
Kimbrough noted that racial gaps in professional networks, which have in the past been a barrier to career mobility, have been closing, too. Black members added professional connections last year at a fast rate.
“We know that having a strong network really helps your access to employment opportunities,” she said. “These micro-improvements may help preserve…resilience in a downturn.”
Pandemic labor shortages also caused employers to hire differently, such as tapping new recruitment channels and dropping college-degree requirements. Those hiring shifts could prove long-lasting in part because worker shortages will likely persist as the U.S. population ages.
Henry Gage is among those who were able to recently move into a higher-paying professional job without a college degree.
He was working part-time in the electronics department at a Target store for $15 an hour when the pandemic began. Not wanting to expose his elderly parents to Covid-19, he decided to leave the in-person job.
Gage, 24, had always wanted to work in tech. Family members would call Gage for help when they got a new phone or computer. His uncle used to pay him to burn CDs for his jukebox. In the summer of 2020, he completed job training with the nonprofit Merit America, which helped him move into the field.
At the end of last year, he started a job providing technical support for Cisco Meraki, an IT company that is part of Cisco Systems. He earns an annual salary of $65,000, the highest pay he has ever made. That helped him meet income requirements to rent an apartment with a friend in Huntington, Va., that has stainless steel appliances, hardwood floors, and access to a pool.
“The job has given me the opportunity to be able to live on my own,” he said. “In the next five years, I’ll be able to take care of my parents comfortably.”