Jobless Rate: A Look Behind African American, Hispanic Youth Unemployment Rates

When the Bureau of Labor statistics released its monthly jobs report in September, the memo didn’t come with an explanation as to why 18-29 year old African Americans and Hispanics had double-digit unemployment.

But when asked what are the causes of African American youth unemployment at 22.4 percent and 13.7 percent for Hispanics, two experts on labor and economics expressed two different views.

Paul Conway, the president of Generation Opportunity, a non-partisan non-profit organization dedicated to educating and mobilizing 18-29 year olds on the close and long-term economic challenges facing the United States, focused on education reform and graduation rates.

“One of the issues that goes on a lot of times is directly related to education and graduation rates,” Conway said in light of his experience with working on welfare reform.

“That’s a major, major issue in both of these communities,” he continued.

Conway, who served as Chief of Staff of the U.S. Department of Labor in the 2000s, explained that many high school graduates who do go on to trade school or college but lack large professional networks could have a negative impact on the unemployment numbers.

“If they don’t have large peer groups, or professionals they can tap into or work with closely,” he said, then that too can have an impact on the unemployment numbers.

Additionally, what often is missing from youth in these two demographics are “leadership examples — examples that people can draw from,” he argued.

Conway noted that while the official non-seasonally adjusted unemployment rate was 22.4 percent for African American ages 18-29, if that number included all the people in that demographic not in the labor force–165,000–then the unemployment rate would be higher at 24.3 percent.

Likewise, if the total number of Hispanics not counted in the labor force–331,000 for the month of August–were included in the unemployment statistic, then the non-seasonally adjusted unemployment rate would rise from 13.7 percent for Hispanics ages 18-29 to 17.5 percent.

Whites ages 18-29 had a lower unemployment rate (10.9 percent) than both Hispanics and African Americans the same age, but when all 1,294,000 out of the labor force are factored into the unemployment figure, then the unemployment figure rises to 15 percent.

Conway noted that its important to look at the underlying factors behind those unemployment numbers, and not just focus on creating a better business environment, but to focus on equipping people “to be able to realize the full extent of their abilities and make access to opportunity,” which he says can be done through education and reform of the education system.

“You cannot have high drop out rates and not have high levels of people choosing not to finish school and hope to have great progress made getting people into the workforce,” he said.

The former Chief of Staff to Labor Secretary Elaine Chao also said that in places where school choice–giving parents the ability to choose which charter or magnet schools their children can attend–is blocked by political opposition, the outcome of that is “paid for by the students themselves.”

Employment Policies Institute economist Michael Saltsman, who has done academic work in labor economics, noted that the unemployment rate for “true youth” not ages 18-29 but ages 16-19 is much higher than the former group’s rate.

According to BLS, the unemployment rate for Hispanics ages 16-19 is 29 percent, and the unemployment rate for African Americans ages 16-19 is 38.8 percent.

“Employment for young adults is affected by labor cost increases like the minimum wage,” Saltsman said.

In his study, which didn’t address the 16-19 age range or the 18-29 range but the 16-24 range, Saltsman said that he and a few other economists focused on those people who may be coming to the workforce with less skills, may have less education, or may have been a high school dropout.

What they found is that the minimum wage had a higher impact on black young adult males than it has on either white or hispanic males.

“Their bottom line result was that each 10 percent increase in the federal or state minimum wage decreases employment for black males by 6.5 percent. That’s compared to 2.5 percent for white males and 1.2 percent for Hispanic males,” he said.

And while the minimum wage plays a role in unemployment, Saltsman says it is “by no means a determining role.”

Additionally, his study, which uses over 20 years of government data, found that African Americans males ages 16-24 were more likely to be paid closer to the minimum wage.

“Over 27 percent were paid closer to the minimum wage,” he says of the findings in his study. He added that Hispanic males were the least likely to be paid closer to the minimum wage.

“Their number was closer to 19 percent,” he said.

Because African American youth are more likely to be paid closer to the minimum wage, they were more likely to be affected by the rule.

Saltman’s study found that a third of black males (without a high school degree) in this age group were getting employment in places like eating and drinking establishments, and another 10 percent were working in grocery stores, all jobs likely to pay closer to the minimum wage.

Hispanic youth (without a high school degree), on the other hand, tend to work in construction. But because construction wages were above the minimum wage, Hispanics were less likely to be effected.