The new unemployment numbers are out and despite a significant slowdown in hiring in August, the U.S. is nearing a state of “full employment.” After reaching a 16-year record low unemployment rate of 4.3 percent, we moved up a tenth of a percent. If you live in certain cities and if you’re black you probably missed the good news. Nevertheless, there’s an emergent discourse around our below-5 percent unemployment rate, which economists deem as full employment.
A recent Reuters article citing a sharp decline in home sales offered a caveat: “The housing market remains underpinned by a strong labor market, which is near full employment.” A CNBC article quoted a Goldman Sachs economist as saying the job market is doing so well it could "overshoot" full employment. If you heard the term but felt removed from the conversation, don’t worry.
We have more jobs in the U.S. than we have people to fill them. This is what economists mean by full employment and it should be a cause for celebration. When more people are working, wages increase—especially for low-wage earners, according to a Federal Reserve report. Very low unemployment (referring to people who do not have a job, but have been actively looking for work in the past four weeks) can foreshadow price inflation as employers make up for lost profits due to increased personnel costs. Consequently, the Federal Reserve can increase interests rates as an attempt to curtail that behavior, but in general the more people working the better it is for families, communities and the country.
However, the discourse on full employment not only masks severe racial disparities in employment in different cities, it accepts social inequality as a given.
In Chicago, blacks are 52 percent of the people who are considered unemployed and post a 12.7 unemployment rate. That’s in comparison to whites who are 16 percent of the total number unemployed and have a 3.5 percent unemployment rate, according to data compiled by my colleagues at the Brookings Institution, a nonpartisan think tank. In Baltimore, blacks are the majority of the population, are 81 percent of the unemployed, and have a 9.5 percent unemployment rate compared to whites, who are 11 percent of the unemployed but have a 2.7 percent unemployment rate.
If such high levels of black unemployment are part of the criteria for “full employment,” then this is unacceptable. African Americans can’t be the sacrificial lambs of the labor force.
In theory, higher rates of unemployment can and do also exist in different regions or cities while the country is in a state of full employment. But there doesn’t seem to be an escape for black and brown folk. What’s happening in Baltimore and Chicago occurs across the country. Moving from one city to the next can be like jumping out of a frying pan and into another. This is why eliminating racial inequality should be a national priority. Structural inequality and racial stratification stifle social mobility.
Since the feds are colorblind when considering how to adjust interest rates to full employment (they still mainly consider the horribly blunt national unemployment rate), and because most who are in the conversation are gainfully employed, the language of full employment covers up the serious problem of racial inequality. The jargon of full employment masks the substantive racial disparities that economists are seemingly willing to live with.
But the issue is less about semantics and more about determining the federal government’s responsibility when blacks and other groups pay the price for full employment by any other name. In other words, if the cost of doing business is black unemployment, then what services and supports is the country obligated to provide to blacks?
Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities, has offered no less than reparations as an obligation to people trapped outside of full employment. In an American Prospect article this summer, he wrote, “Bold ideas like a federal job guarantee and Medicare for All would, if enacted and realized, substantially reduce disparities in unemployment and health outcomes by guaranteeing that every American had access to a job and health care.” Bernstein and Spielberg also recommended raising the minimum wage to $15 by 2024 and expanding the safety net programs of SNAP (food stamps), Medicaid, and the Earned Income Tax Credit.
If we accept racialized exclusion as a condition of full employment, then we must accept a permanent safety net.
As a small first step, let’s be mindful of our words. What does full employment really mean to a black man in Baltimore? If you’re going to use the term full-employment loosely, then follow it up with Bernie Sanders talk—free healthcare for all. We simply can’t accept racial inequality as a condition for full employment.