Expanding U.S. Job Market Is a Boon for Minorities

0 Comments | Insight on the News, Sept 27, 1999 | by Patrice Hill

While some economists argue that unskilled immigrants are holding down wages for American workers, others claim blacks and Hispanics are benefiting from the tight labor market.

Today's economic expansion is setting records not only in length but in creating jobs for America's most disadvantaged groups. The teeming job market in turn brings a wealth of social blessings, analysts say, from big reductions in inner-city crime rates to an unprecedented drop in welfare rolls and a homeownership boom.

Lee Hammond, for one, dreams of owning his own restaurant, though for now he's content working odd jobs earning $6.50 to $8 an hour to support the lifestyle he wants and possibly pay his way through college. The 20-year-old Washington resident sees no lack of job opportunities these days. He's even toying with joining the Army, though he got kicked out of a military academy in Aberdeen, Md.

"There are a lot of options," says Hammond as he waits for work at a temporary agency, Labor Ready, which funnels odd jobs his way. "If I put my mind to it, I can find what I want. It's not about the money to me. The reason I work is I love doing it. Otherwise, I just sit at home doing nothing, and my mom's always fussing at me."

Things weren't always so good for young black men in America, a group that consistently has racked up the highest unemployment rates, averaging around 30 percent since the 1970s. But the longest-running peacetime economic expansion has drawn down the jobless rate for black teen-age boys and men in recent months to record lows of 22.4 percent and 5.8 percent, respectively.

Other minority and disadvantaged groups -- from Hispanics and immigrants to the disabled and ex-convicts -- also have seen their unemployment rates drop to new lows. And wages are rising for these groups after stagnating or declining for years.

"A full-employment economy is still the best social program," says Robert I. Lerman, analyst with the Urban Institute, noting that the unemployment rate for the most disadvantaged group of all -- black men who are high-school dropouts -- has plummeted to 10.5 percent, "about the unemployment rate of Europe as a whole."

Some economists worry that 35 percent of the roughly 9 million immigrants who have arrived in the United States since 1990 have less than a high-school education (see "Opportunity's Hard Knocks," Sept 20, 1999). Many of them remain mired in poverty. Because they are desperate enough to work hard for meager pay, they reportedly are suppressing wages for all unskilled workers.

But other analysts point to America's long economic expansion, stretching now for 8 and a half years. "The job market always improves during a peak in the business cycle, but the reductions in unemployment are larger in this one," says Lerman, noting that jobless rates have reached lower levels and stayed there longer than they did in the 1970s and 1980s. That gives almost everyone a chance to get a job and to gain valuable experience, making them less vulnerable to layoffs in the next recession.

The reason the expansion has run so long, analysts say, is that inflation has remained remarkably low, near 2 percent, enabling the Federal Reserve to stay on the sidelines and refrain from raising interest rates. Most modern business expansions ended when the Fed choked off growth through higher rates.

Fed Chairman Alan Greenspan is aware of the awesome power in the central bank's hands. "The business expansion has done more for those at the periphery of our workforce than any other program that we could contemplate," he said recently in congressional testimony. "I think it is therefore important for us to focus on whatever we can do to sustain this."

Analysts say other changes have made work more attractive for minorities, most notably the sweeping reforms in the welfare system enacted in 1996, which require able-bodied adults to work and cut off cash benefits after five years. The law spurred a whopping 40 percent jump in employment among unmarried mothers between 1996 and 1998.

While wages for former welfare recipients remain low, mostly near the $5.15 federal minimum wage, states now have more flexibility to supplement the incomes of working-poor families with health-care benefits, food stamps, child care and transportation services, says Lerman. A federal program to supplement low wages through the tax code also has made work more attractive to those with low earnings. The earned income-tax credit enabled 1.1 million blacks and 1.2 million Hispanics to escape poverty in 1997.

Despite low wages, researchers are finding that people who used to be chronically unemployed or on welfare believe they are better off when they are working and paying their own way. The better job prospects have inspired hopes in entry-level workers. Laura Askew, a former welfare recipient who works in the White House's mail room, is proud to be off welfare. "It's like a wonderful heaven has been opened, and blessings flowed out," she says. "It's something I always wanted -- a stable job."