Why the racial unemployment gap hasn't gone away

At a news conference last month, President Barack Obama got hammered about one of the recession's ripple effects:

"Why not target intervention now," the questioner asked, "to stop the bloodletting in the black unemployment rate?"

Black Americans always have had a significantly higher jobless rate than white Americans. But the economic plunge, as it drives up unemployment, has made the gap more conspicuous.

More than 2.5 million blacks were out of work in June, the federal government reported. That translated to a 14.7 percent unemployment rate. For whites, it was 8.7 percent.

The U.S. government does not provide breakdowns by race of unemployment rates by city. But another statistic from the Virginia Employment Commission confirms the racial unemployment gap locally.

Blacks make up nearly one-third of the Hampton Roads population, according to VEC statistics, but accounted for 49 percent of those applying for unemployment insurance last month. Whites make up 60 percent of the population but 41 percent of the applicants for unemployment.

Why the discrepancy? Researchers point primarily to educational differences.

In Virginia, 12.6 percent of black students who should have graduated from high school last year dropped out, double the 6.3 percent rate for whites, the state Department of Education said.

Nationwide, 30 percent of white adults have at least a bachelor's degree, according to U.S. census data from last year. Twenty percent of black adults do.

A college degree doesn't guarantee a job, but it ups the odds considerably: Of nearly 14,000 unemployment-insurance applicants last month in Hampton Roads, more than 10,000 didn't have a bachelor's, the VEC data showed.

"The economy is super-sensitive right now to wage and employment differentials based on education," said James Koch, a professor of economics at Old Dominion University. "The individuals who are most likely to lose jobs in the current recession are in manufacturing and physical occupations."

Macki Sissoko, an associate professor of economics at Norfolk State University, added: "Many jobs that used to hire people that had lower levels of educational attainment are being lost to Third World countries, which are able to provide labor at lower cost."

Victor Phillips was laid off this month from a temporary job he'd picked up at the Norfolk Naval Shipyard in Portsmouth after he was released from jail in the spring.

"The root of it is education," said Phillips, 36, of Chesapeake. "I did 6-1/2 years. You'd be surprised at how many guys didn't get GEDs or diplomas. I just didn't understand it."

Phillips regrets his own missed opportunities. He said he went to Norfolk State for two years in the mid-1990s but didn't graduate. "I kept saying I'd go back next semester," he said. "Even with a little bit of college, it's not enough."

Now he plans to attend Tidewater Tech to become a heating and air conditioning technician.

An analysis from the Economic Policy Institute, a Washington think tank, cautioned, however, that education levels don't entirely explain the rac e gap. Among college-educated workers, the jobless rate in March stood at 3.8 percent for whites and 7.2 percent for blacks, the institute said.

Koch and Sissoko noted that's partly because of relatively fewer blacks pursuing high-demand majors, such as engineering. But they agreed that other factors contribute to the race difference. Among them:

Entrepreneurship. "There are fewer black-owned businesses relative to other populations," Koch said. "If you own your own business, you're probably not going to fire yourself. You may not take as much money home or you might tighten your belt, but you'll keep your job."

Minimum-wage increases. The minimum wage increased Friday to $7.25 an hour, the third consecutive annual rise. That might cause some struggling businesses to cut low-wage jobs, which would disproportionately affect black workers, Koch said.

Racism. Sissoko and Koch cited discrimination as a secondary reason for the unemployment difference.

Koch said studies show racism accounts for 5 percent to 10 percent of the employment gap. "That's not to be sneezed at," he said, "but it's not the predominant explanation for why these things are occurring."

Patrick Wilson, 27, of Virginia Beach thinks it's the crux of his problem.

"We're still behind the times in this area in terms of racism," Wilson said. "Not only do you have whites discriminating against us, you have other ethnic groups."

Wilson described himself as a former retail-store and hotel manager who's been out of work since February. He recalled going to a Norfolk hotel and an Alexandria fast-food restaurant that had signs advertising openings. The Indian and Hispanic managers, he said, would not give him applications.

Wilson suspected racism.

It's difficult to gauge whether the race gap locally is larger or smaller than nationally. But economists said the trends that have depressed Hampton Roads' unemployment rate - it was 7 percent in May, compared with 9.1 percent nationwide - also probably shrink the racial unemployment gap.

The area has been shielded from deeper job losses because of its heavy concentration of military and other federal jobs. That also "tends to diminish black unemployment effects," Koch said. "Government, for the most part, has not been laying off workers and tends to be viewed as less discriminatory."

It might be cold comfort to unemployed blacks, but both the regional and national statistics show a slight narrowing of the gap even as the recession deepened.

Nationally, the black jobless rate was 1.9 times as large as the rate for whites in June 2008 and 1.7 times as large last month. Regionally, the percentage of unemployment-insurance applicants who were black fell from 56 percent in January 2008 to 47 percent in February 2009, though it later rose to 49 percent in June.

Sissoko cautioned that the numbers exclude unemployed blacks who have given up looking for work.

Added Koch: "White men are bearing a surprisingly large proportion of the employment adjustments now. A decent number of black men didn't have jobs to begin with."

If education is considered the most powerful cause of the unemployment gap, it's also seen as the best answer to close it.

Parents and community leaders must encourage blacks to attend college and pursue degrees in high-demand fields, Sissoko said. "There is a mismatch in terms of the skills in demand and the skills provided by college students," he said. "We have to change that."

Obama, too, "should use his situation as an example of what you can achieve," Sissoko said.

He and William Johnson, a University of Virginia economist, said racial inequities must also be erased in public schools and blacks encouraged to take math and science courses. In his classes, Sissoko said, "most of them have a fear of math."

Koch said the government should expand Pell Grants for needy students and offer "incentive-based grants," contingent on completing a semester. Last week, the House Education Committee approved Obama's proposal to increase the maximum Pell Grant from $5,500 to $6,900 over the next decade.

As for the question at last month's news conference, Obama said he had to concentrate on the big picture.

"The best thing that I can do for the African American community or the Latino community or the Asian community, whatever community, is to get the economy as a whole moving," Obama responded. "... If I don't do that, then I'm not going to be able to help anybody."

Koch agreed: "When the economy is at or near full employment, employers don't have any choice. They have to hire the people that are available. Right now, employers can be fairly choosy. They may well choose not to hire African Americans."

Philip Walzer, (757) 222-3864, phil.walzer@pilotonline.com