California workers of all races, genders, and ages worry about how they will pay for basic needs and support their loved ones if they are laid off from work or struggle to secure a job. And all workers need a job market that provides ample opportunities for stable work with fair pay and work conditions. But the job market over the past three years has been a rollercoaster for workers.
Early in the COVID-19 pandemic, many businesses closed, and unemployment skyrocketed to a record-breaking peak, devastating the economic security of millions of California workers and their families. Policymakers acted to stabilize the economy, and strategies for living with the pandemic evolved, allowing businesses to reopen — and employers rapidly rehired workers and added new jobs, bringing California’s overall unemployment rate as of fall 2022 down to a level similar to the low level of unemployment in the months immediately before the pandemic. More recently, as federal policymakers have taken actions intended to slow down inflation, economists expect that employers will slow hiring and increase layoffs, bringing the hardship of unemployment once again for many workers and their families.
Throughout these recent job market upswings and downswings, one thing has remained constant: not all California workers have been hit equally by the devastation of job insecurity. The wide-ranging inequitable effects of structural racism and discrimination are clear when examining the unemployment experiences of Black, Latinx, Asian and white California workers.1As described below in more detail, data limitations prevented detailed analysis of unemployment rates for California workers with race or ethnicity other than Asian, Black, Latinx, and white, and analysis of the diversity of experiences of workers within these race/ethnicity categories. Black and Latinx Californians — particularly Black men — have consistently been most likely to be hit by the damaging impact of unemployment, with its cascading effects on their families and communities.
“Racist policies and practices in the past and in the present, in the workplace and across many other arenas, drive the inequitably high rate of unemployment for these Black and Latinx workers.”
This inequity is not new. For decades, Black and Latinx workers have been blocked from equitable access to job security, whether the job market is booming or bottoming out. Racist policies and practices in the past and in the present, in the workplace and across many other arenas, drive the inequitably high rate of unemployment for these Black and Latinx workers. These inequities may be especially harmful for young Black and Latinx workers, since young workers risk especially harsh long-term consequences if they do not secure stable work early in their careers.
State and federal policymakers have many opportunities to tackle inequities in job access and job security, and to address the effects on California workers and families. Specifically, policymakers can adopt policies that reduce overall unemployment, push back against the drivers of inequitable racial disparities, and strengthen support for the Black, Latinx and other workers who experience the highest rates of unemployment in good economic times and bad.
Racial Inequities in Unemployment Reflect Structural Racism, Discrimination
Black and Latinx Californians’ more precarious access to secure employment results from explicitly and implicitly racist policies and practices, past and present, across many different areas:
All of these factors have funneled workers of color disproportionately into occupations and industries with lower wages and less job security.6Olugbenga Ajilore, The Persistent Black-White Unemployment Gap Is Built Into the Labor Market (Center for American Progress, 2020); Marina Zhavoronkova, Rose Khattar, and Mathew Brady, Occupational Segregation in America (Center for American Progress, 2022); Danyelle Solomon, Connor Maxwell, and Abril Castro, Systematic Inequality and Economic Opportunity (Center for American Progress, 2019).
Workplace discrimination also plays a direct role in driving the persistent inequities in which Californians are most likely to experience the devastation of unemployment. This is particularly true for Black workers. A recent national survey found that about 1 in 4 Black workers, and about 1 in 4 Latinx workers, had experienced discrimination at work in the past year, compared to 18% of workers overall — with younger workers most likely to report discrimination, and Black workers most likely to name race as central to the discrimination they experienced.7Camille Lloyd, One in Four Black Workers Report Discrimination at Work (Gallup, 2021).
“Research finds that there has been no decline in anti-Black discrimination in hiring over the past few decades, and only a modest decline in anti-Latinx discrimination in hiring.”
Research finds that there has been no decline in anti-Black discrimination in hiring over the past few decades, and only a modest decline in anti-Latinx discrimination in hiring.8Lincoln Quillian, Devah Pager, Ole Hexel, and Arnfinn Midtboen, “Meta-analysis of field experiments shows no change in racial discrimination in hiring over time,” PNAS 114, no. 41 (2017): 10870-10875, https://doi.org/10.1073/pnas.1706255114. Other research demonstrates that Black workers are more likely to face unemployment at every education level, and their higher unemployment rate largely cannot be explained by other differences in worker characteristics like age, education, marital status, or place of residence.9Tomaz Cajner et al., “Racial Gaps in Labor Market Outcomes in the Last Four Decades and over the Business Cycle,” Board of Governors of the Federal Reserve System, Finance and Economics Discussion Series 2017-071 (2017); Jared Bernstein and Janelle Jones, The Impact of the COVID19 Recession on the Jobs and Incomes of Persons of Color (Center on Budget & Policy Priorities, 2020); Jhacova Williams and Valerie Wilson, Black Workers Endure Persistent Racial Disparities in Employment Outcomes (Economic Policy Institute, 2019).
Unemployment Hit Black and Latinx Californians Hardest During Recent Job Market Upswings and Downswings
California workers of all races and ethnicities saw unemployment rates rise dramatically from where they were during the strong labor market right before the pandemic to the high rates during the peak period of pandemic layoffs and business closures.10The official unemployment rate reported each month by the Bureau of Labor Statistics is widely understood to have underreported the extent of joblessness during the pandemic. This is because a large number of workers who reported being employed, but absent from work, were in fact on temporary layoff and should have been counted as unemployed. Unemployment rates during the peak of the pandemic are considerably higher when these potentially misclassified workers are counted as unemployed: 15.5% for Black Californians, 14.1% for Latinx Californians, 12.4% for Asian Californians, and 11.5% for white Californians. In this analysis we present the official unemployment rate, excluding these potentially misclassified workers, for consistency across the full long-term time period examined. But the effects of structural racism and discrimination are clear in the fact that unemployment rates were highest for Black and Latinx workers pre-pandemic, and their rates shot up to the highest levels when unemployment peaked early in the pandemic. As the job market overall recovered quickly after the pandemic peak, unemployment declined for all racial groups — yet Black workers especially, and Latinx workers to a lesser degree, continued to be hit hardest by the devastation of unemployment.
For California’s Black workers, in particular, unemployment during the post-peak pandemic period remained extremely high, at 8% for the 12 months from October 2021 to September 2022. That rate is almost twice California’s 4.5% overall unemployment rate during that period. The overall state unemployment rate has only reached this level in the past during periods of peak unemployment in the wake of major recessions.
Due to data limitations, it is not possible to report reliable California unemployment figures for these time periods for workers who are American Indians and Alaska Natives, Native Hawaiians and other Pacific Islanders, or people who identify with more than one race or ethnicity.11Data limitations also mean it is not possible to report reliable estimates that would show the diverse range of experiences within the groups of Californians presented in this report, such as Asian or Pacific Islander Californians. National studies show that unemployment rates among the diverse communities who identify as Asian or Pacific Islander varied widely during the pandemic. Joint Economic Committee, The Economic State of Asian Americans, Native Hawaiians and Pacific Islanders in the United States (May 26, 2022). However, national data suggest that unemployment rates for these workers likely remained high in California as well, despite job gains since the peak of the pandemic. The unemployment rate for American Indians and Alaska Natives nationwide was 6.3% for the 12 months ending September 2022, compared to the overall national unemployment rate of 4.0%.12Budget Center analysis of Bureau of Labor Statistics data. For consistency with other data shown, these data do not include American Indians or Alaska Natives who identify with more than one race or ethnicity, though more than 3 in 5 people who identify as Native American identify with at least one other race or ethnicity. See Robert Maxim, Randall Akee, and Gabriel R. Sanchez, For the first time, the government published monthly unemployment data on Native Americans, and the picture is stark (Brookings Institution, February 9, 2022). The Federal Reserve Bank of Minneapolis’s Center for Indian Country Development’s data dashboard provides more complete labor market data for American Indians and Alaska Natives, including individuals who report being American Indian or Alaska Native, whether alone or in combination with other races and ethnicities. However, the dashboard does not provide unemployment rates for the specific time periods examined in this analysis. Similarly, the national unemployment rate was 5.8% for people who identify with more than one race during that period, and it was 4.1% for Native Hawaiians and other Pacific Islanders.
Young Black and Latinx Workers Are Especially Likely to Suffer the Toll of Unemployment
Californians of color who are young workers are especially likely to be blocked from job security, with young workers overall consistently hit by higher unemployment than older workers. Young California workers ages 16 to 24 were especially likely to lose their jobs or be unable to find jobs during the peak of the pandemic recession. Their unemployment rate spiked to 19% at the height of pandemic job losses. This was nearly twice the unemployment rate of prime-age workers (ages 25 to 54) in California. Although the unemployment rate for young workers essentially fell back to the pre-pandemic level as jobs returned, it remained more than double that of prime-age workers.
National data show that young Black and Latinx workers continued to bear a heavy burden of unemployment post-peak pandemic, as employers added back jobs. The unemployment rate for Latinx workers ages 16 to 24 was 8.5% for the 12 months ending September 2022 — about the same as the national rate for young workers overall (8.2%). For young Black workers (including those who also identify as Latinx), the rate was 13.8% — more than one and one-half times the rate for all young workers.13Budget Center analysis of US Bureau of Labor Statistics data. The national unemployment rate for young white workers, including those who identify as Latinx, was 7.0% — lower than the overall national unemployment rate for young workers. The national unemployment rate for young Asian workers, including those who identify as Latinx, was 8.2% — the same as the overall national unemployment rate for young workers.
This inequitable access to job security for young Black and Latinx workers is particularly cause for concern because young people can face harsh long-term consequences when they are blocked from work opportunities early in their careers. Research shows that young people who do not have stable employment by their early twenties are likely to have lower earnings and face a higher risk of joblessness over the long term.14Kristen Lewis and Rebecca Gluskin, Two Futures: The Economic Case for Keeping Youth on Track. (Measure of America, Social Science Research Council, 2018).
High Unemployment for Black and Latinx Californians — Both Women and Men — Has Persisted Over Decades
The inequitable pattern of higher unemployment for Black and Latinx Californians has been persistent for decades, and this pattern holds for both women and men. Over the past 20 years, for both female and male workers, Black and Latinx Californians have consistently been most likely to be blocked from access to job security and pushed into unemployment, whether employers overall are hiring many workers or are laying off workers.
For California women, differences in unemployment rates by race and ethnicity have become somewhat smaller in more recent years, but Black and Latinx women have been hit hardest by unemployment in every period.
For men, inequitable disparities in unemployment by race-ethnicity are even more pronounced. Black men, in particular, have borne a dramatically greater burden of unemployment than other California men (and women) in every year going back decades. Latinx men have also been hit harder by unemployment over the past 20 years, though their rate has been lower than the rate for Black men.
Comparable long-term unemployment data for Californians with other gender identities besides women and men are not available, pointing to the need for policymakers to invest in more equitable and inclusive data collection. National data during the pandemic show that LGBT individuals overall, and transgender individuals especially, were more likely to report that they or someone in their household had lost employment income — with especially high rates of lost income among LGBT individuals of color.15Caroline Medina, Lindsay Mahowald, Rose Khattar, and Aurelia Glass, Fact Sheet: LGBT Workers in the Labor Market (Center for American Progress, June 1, 2022).
The long-standing inequities apparent in experiences of unemployment, with Black and Latinx California workers — particularly Black men — persistently blocked from access to job security demonstrate the pervasive and devastating effects of structural racism and discrimination. No person’s race, gender, or other individual characteristic should affect their opportunity to secure stable work. Addressing these inequities is imperative, and policymakers have many opportunities to make a difference.
Policymakers Can Reduce Racial Inequities in Access to Employment
For too long, Black and Latinx Californians have borne an inequitable burden of unemployment. All Californians — of all races, genders, and ages — deserve to have access to stable jobs that provide enough income to meet basic needs. State and federal leaders can help to achieve this vision through policies that tackle the drivers and effects of racial inequities in unemployment and access to jobs.
Both state and federal policymakers have options to tackle the drivers of inequitable racial and gender disparities in unemployment. Some of these policy options include:
- Advancing racial equity
- Establishing dedicated funding
- Strengthening workplace anti-discrimination laws
- Addressing inequities in education attainment
- Investing in programs with strong practices
- Removing employment barriers
Black and Latinx workers also particularly benefit when policymakers support a strong labor market by incentivizing businesses to create more jobs. As the “last hired” workers because of racial discrimination and other barriers, they often see the greatest relative gains in employment when the job market is especially strong. Policymakers at the Federal Reserve hold the primary tools to influence the overall rate of unemployment nationwide. Their goal is to keep unemployment low while also preventing inflation from getting too high. They have traditionally set employment goals based on the overall unemployment rate, without taking into account racial inequities.
Federal Reserve policymakers could instead adopt policies that specifically aim to achieve a low Black unemployment rate, by proactively working to reduce racial disparities in unemployment rates, rather than simply targeting a low overall unemployment rate. This approach would achieve low unemployment for all workers while also reducing racial disparities, as some economists have recommended.19Jared Bernstein and Janelle Jones, The Impact of the COVID19 Recession on the Jobs and Incomes of Persons of Color (Center on Budget & Policy Priorities, 2020).
State and federal policymakers also can reduce the negative impact of unemployment on workers who lose jobs or struggle to secure work — which is especially important for Black and Latinx workers, because they bear the greatest burden in dealing with the devastating impact of unemployment. Some of these policy options include:
- Investing in the state unemployment insurance system
- Providing financial support to undocumented immigrant workers
- Improving public safety net supports
Lawmakers can also invest in better publicly accessible data because equity in access to economic security cannot be achieved if information on inequities is not collected. Federal unemployment data do not allow for sufficient disaggregation for racialized communities, and only allow for limited analysis by gender and no analysis by sexual orientation. Information about the experiences of LGBTQ+ people has recently been incorporated into some Census Bureau data collection, but needs to be extended to other federal data, including unemployment data. Without adequate data, the experiences of many communities become invisible, making it difficult to identify where policy change is needed or can be targeted to better serve Californians.
Every Worker Needs Equitable Access to Employment — in Good Times and Bad
All California workers deserve respect and support to ensure access to opportunities for secure employment. Long-standing inequitable racial disparities in unemployment in California — with Black and Latinx workers persistently most likely to be blocked from job security — call for urgent action by policymakers. This urgency is heightened given federal policymakers’ ongoing actions to slow down inflation, which are expected to lead employers to slow down hiring and push more workers out of jobs. As in the past, Black and Latinx workers are likely to be hit the hardest by the damaging effects of layoffs and loss of job opportunities. Young workers may face especially harsh consequences.
State and federal policymakers have many opportunities to fight back against these inequities and address their effects, through policies that target the drivers of racial disparities in unemployment rates, promote lower overall unemployment with attention to race, and strengthen supports for workers who experience unemployment. Tackling these challenges now can help disrupt the long-standing inequitable burden of high unemployment for Black and Latinx Californians, in the process building an economy and system of support that creates more prosperity for all Californians.
Support for this report was provided by the Conrad N. Hilton Foundation.