What Drove a Sudden, Steep Drop in Black Unemployment? Nobody Knows

Black unemployment dropped a whopping 3 percent in January, fueled by hiring of black men. Economists who've tracked black joblessness are waiting for the other shoe to drop--was it a statistical quirk, or is there a jobs renaissance afoot in black America?

By Shani O. Hilton Feb 09, 2012

When the Labor Department released the January unemployment rate last week, there was finally some good news to celebrate–and some news that seemed almost too good to be true. Black unemployment saw its steepest drop since the recession began, dipping more than two points. Apparently, that happy improvement was largely driven by black men being hired in larger numbers than anyone can remember. So what, exactly, is happening here? Nobody saw it coming, and there’s no immediate explanation. I talked to Algernon Austin, director of the Race, Ethnicity, and the Economy program at the Economic Policy Institute, to get some insight. **Colorlines: So, the interesting thing about January’s unemployment rate was that the unemployment rate for black men dropped 3 percent–from 15.7 percent to 12.7 percent–even though workforce participation stayed about the same. That’s not something we’ve seen before, is it?** **Algernon Austin:** Such a large drop in the unemployment rate is quite surprising. Certainly, we haven’t seen a drop that large any time recently. There was a slight decline in workforce participation, but even looking at that, we’re talking about a very large decline for blacks, and particularly black men, which is quite unusual. **What are the fields–or are there any–where it’s more likely that black men were hired?** It’s a real mystery to figure out what might be going on here. The public sector dropped jobs, so that’s not likely to be it. Restaurants and bars–that’s not likely. Retail, maybe some retail; maybe some health care. Maybe temporary health services, construction. But really, I don’t know. Even in a sector that’s losing jobs…If 10 people lose a job in a sector, and five people gain, there are five new jobs. One sector that has been fairly strong for black men has been transportation. **How long does it take analysts to figure out what happened?** The thing is that, because this is such a large drop, people are kind of expecting that we’ll see an increase next month or the month after. I think we’re all a little skeptical that this is real until we see that it sort of persists for maybe two months. And yeah, I don’t know that anyone has any plans to try to tease out what’s going on. Month to month, the numbers fluctuate, especially among small groups. Until we see a trend for several months, we’re thinking this could just be some statistical noise and not something that’s really real. **An increase in unemployment isn’t always a bad thing if workforce participation is also increasing, right?** Actually, we’d expect that to happen. Assuming that the economy sort of starts to recover, it would not be surprising for the unemployment [rate] to increase. Right now the economy as a whole is missing millions of workers. People who should be unemployed, but aren’t being counted as unemployed because they’re not looking for work. An increase in unemployment in the coming months could be a good thing–meaning that people are feeling more optimistic about finding a job.