African American Unemployment Increases As More Blacks Enter the Labor Force

African American Unemployment Increases As More Blacks Enter the Labor Force

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Friday’s job situation report confirmed what many Americans feel, that the country has a ways to go in terms of an economic turnaround.

Overall, the unemployment rate increased to 9.8% from 9.6% for the month of November.  Although there was positive job growth of 39,000 non-farm payroll jobs, this was at least 100,000 less than estimated by analysts and economists.  Most analysts attributed the increase in unemployment to an increase in the number of people between the ages of 16 and 64 participating in the labor force.

Labor force participation is defined as the number of individuals between the ages of 16 and 64 who are either working or not working but looking for work. In November, approximately 154,007,000 Americans were in the labor force, according to the U.S. Department of Labor.  That number increased from 153,904,000 in the month of October.

The African American unemployment rate also climbed to 16% in November, up from 15.7% in October.  The number of Blacks looking for work increased, as evidenced by an upsurge in the number of Blacks participating in the labor force.  The number of Blacks either working or looking for work increased to 18,031,000 in November from an October total of 17,936,000.

The consensus among most economists is that 125,000 to 150,000 jobs need to be created each month in order to absorb a growing labor force. This is another reason why the jobs number was disappointing.

The paltry growth in jobs will not likely contribute to a happy holiday season. Compounding the unemployment news is the inability of Republicans and Democrats in the Congress to negotiate an extension of financing for jobless benefits. For example, The New York Times reports that 3 million Americans are set to run out of unemployment benefits by the end of January 2011.

A report released on December 2 by President Obama’s Council of Economic Advisors describes not only a stark picture for the unemployed but for the economy overall.  According to the report, a total of 7 million Americans will lose unemployment benefits by November 2011. Without the benefits financed by the federal government, the typical household will see a reduction in income by at least one-third, according to the CEA.

Because beneficiaries tend to spend versus save their unemployment benefits, consumption is injected into the economy almost immediately.  According to the CEA, unemployment benefits received in September 2010 accounted for 800,000 people who otherwise would not have been employed and an additional .8% in the growth of national income and output, also known a gross domestic product (GDP).

The CEA expects that without an extension of benefits, the country will see 600,000 fewer employed and a reduction in GDP of 0.6%.

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