The puzzle of black male unemployment

Public Interest, Wntr, 2004 by Harry J. Holzer, Paul Offner

THE last decade was a good one for low-income women, especially minorities and single mothers. Welfare reform pushed many of them into the labor force, and the strong economy helped others to find jobs. Initiatives to "make work pay," such as child-care subsidies and an expanded Earned Income Tax Credit (EITC), also raised the incentive to work. In all, policies stressing reciprocal obligations as well as incentives and work supports such as child-care assistance dramatically increased employment and reduced welfare dependency for this population.

Low-income men, however, did not fare so well. After declining throughout the 1980s, employment rates of young, less-educated white and Latino men remained flat during the 1990s. Among black men aged 16 through 24, employment rates actually dropped. In fact, this group's employment declined more during the 1990s (when it fell from 59 percent to 52 percent) than during the preceding decade (when it fell from 62 percent to 59 percent). By 2000, young black men worked only about two-thirds as much as comparable white and Latino men.

The downward trend is even more striking when one considers labor-force participation rates, which measure the desire to work rather than actual employment. Many young black men have given up on working in the regular labor market. Employment rates of young black women now exceed those of young black men, even though many of these women must also care for children. This is true even when one excludes incarcerated black men: If these were included in our estimates, the decline in employment in the 1990s would seem even more dramatic.

Why did work activity among young black men fall in the 1990s? Are the contributing factors similar to those of earlier decades, or is something new going on? And can policy makers do anything for this group to improve work incentives and obligations, as they did with considerable success for low-income mothers under welfare reform?

Factors at play

According to a large body of research, several factors contributed to the decline of employment among young black men in the 1970s and 1980s, including declining real wages, the skills gap between whites and minorities, other gaps or "mismatches" between employers and minority applicants, and the growing involvement of minority youth in crime.

Real wages for unskilled young men either declined in the 1970s and 1980s or stagnated, depending on which adjustments are made for inflation. Even under the most favorable assumptions, the wages of these men declined relative to those of women and more-educated workers. Part of the reason was the disappearance of manufacturing jobs, particularly in the industrial Midwest. Other blue-collar jobs also disappeared or offered lower wages. Thus the incentives for young, unskilled men to enter the workforce diminished.

To be sure, not all the news was bad. For instance, both educational attainment and test scores increased more rapidly among young blacks than among whites during this period. But that progress did not generate improved employment outcomes among blacks, since the labor-market costs associated with lower education and skills simultaneously rose dramatically. Since young blacks still fall well below whites in both areas, during this time their relative standing in the labor market actually worsened in spite of educational advances.

Fortunately, not all less-educated workers' employment rates fell as much as blacks' did. Indeed, Latinos today work at rates comparable to those of whites despite their lower skills. Thus other factors must have affected the ability or willingness of young black men to work. Among these were a growing "spatial mismatch," or geographical distance, between employers and low-income blacks and a growing employer preference for immigrants and black women over less-educated young black men.

As blacks remain heavily segregated in urban neighborhoods, and as jobs have left these areas, young men living there have found it increasingly difficult to find employment. In part, this is a transportation problem, especially for those who do not own cars and must rely on public transit which often fails to reach suburban job locations conveniently. But lack of information about job openings in the suburbs also contributes to the problem. Informal networks whereby employees refer friends and relatives to employers operate less successfully in black neighborhoods.

One reason for the weakness of these networks among blacks, and their strength among Latinos and Asians, is that employers prefer to draw workers from the latter groups. Employers perceive a stronger work ethic among immigrants of all racial groups, and a greater willingness to accept and retain low-wage jobs. As a result, they frequently seek out referrals from their immigrant employees, especially for jobs that do not require English or strong cognitive skills. Employers are also less reluctant to hire black women than black men, and are more wary of potential conflicts with the latter. Discrimination thus persists against black men at the hiring stage, especially at small establishments and those serving a largely white clientele.