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The limitations of remedies that target hard and soft skills
A related but somewhat different issue is skills training. As with education, it is doubtful that skills training alone is a powerful enough remedy to rectify the employment disparities between blacks and whites. An evaluation by Public/Private Ventures, a nonprofit research organization, reveals the effect of training on employment of African American workers (Maguire et al. 2010). The study evaluates the sectoral employment approach, which provides job seekers with training in the technical (“hard”) skills needed for specific growing sectors of a local economy. The organizations providing the training work closely with employers to ensure that training is relevant. In addition to technical skills, programs also provide some interpersonal (“soft”) skills training.
Public/Private Ventures used a rigorous experimental design to assess the effectiveness of the sectoral approach. A year after participants started the program, employment rates of women, people born abroad, and Latinos were higher than employment rates in the control group. In contrast, the program was not successful in improving the employment rate of African Americans. Although the skills of the African American participants improved, their employment rates did not. This study raises doubts that training is enough to improve black employment rates.
Many observers believe that employers reject African Americans, particularly African American men, because African Americans lack soft skills (see Hamilton, Austin, and Darity 2011, 6–7). The occupational and employment data do not support this view, however (see Allegretto and Pitts 2010, Appendix A; Hamilton, Austin, and Darity 2011, 6–7). African Americans, including men, are overrepresented in the service sector, a sector with relatively high soft-skills demands. They are very much underrepresented in the construction industry and slightly underrepresented in the manufacturing industry, both of which emphasize hard skills. Because these industries tend to pay higher wages than the service sector (Allegretto and Pitts 2010, Appendix A; Hamilton, Austin, and Darity 2011), it would be more beneficial for African Americans to increase their rates of employment in these sectors than in the service sector.
As with education, it is valuable for blacks to master both hard and soft skills. Unemployment disparities between blacks and white do not, however, appear to be caused primarily by the lack of these skills.
A spatial mismatch or a racial one?
Another common misconception about unemployment disparity is that it is driven by the spatial mismatch between African Americans and jobs. The claim is that African Americans live in urban areas whereas jobs and much of job growth is in suburban areas. The solution therefore is presumed to be moving African Americans to the suburbs or increasing urban African Americans’ ability to reach suburban jobs through transportation initiatives (Hellerstein and Neumark 2011). In fact, the mismatch driving the black-white unemployment disparity appears to be more racial than spatial (Hellerstein, Neumark, and McInerney 2007).
William Julius Wilson’s work is seen as supporting the spatial-mismatch hypothesis (see Foster-Bey 2006), but he also provides evidence of racial mismatch. Wilson shows that during the late 1980s, before the Internet became an important source of job information, more than 40 percent of employers in Chicago did not advertise their entry-level job openings in the newspaper (Wilson 1996, 133). These employers likely relied on word-of-mouth methods of advertising and recruiting for jobs. Because whites have higher rates of employment and interpersonal networks in the United States are not very integrated racially, informal recruitment methods disadvantage blacks seeking work. Wilson (1996) also shows that a large share of the employers who advertised job openings in newspapers did so only in white or Latino neighborhood newspapers. Thus, in many cases, even when jobs were advertised, blacks were unlikely to learn of the opening.
Wilson’s work suggests that African Americans were not able to learn about a large share of entry-level job openings in Chicago. Had employers been less discriminatory, African American employment rates would have been significantly higher. Chicago employers who advertised job openings in newspapers where African Americans might see them were twice as likely to employ African Americans in their entry-level jobs. African Americans in Chicago were blocked from obtaining many jobs because of race, not space.
This finding has been replicated with national data from the 2000 Census by Hellerstein, Neumark, and McInerney (2007), who find that less educated blacks live in areas in which less educated whites hold many jobs. They argue that “the problem is not a lack of jobs, per se, where blacks live, but a lack of jobs into which blacks are hired.” Thus, if there were equal employment opportunity for all races in urban spaces, black employment rates would be higher in those spaces.
Another reason to be skeptical about a spatial approach for addressing unemployment disparities is the fact that African Americans have suburbanized to a large degree—with no effect on employment disparity. In 1960 only 13 percent of the African American population lived in suburbs. By 2000, 35 percent did so (author’s calculations based on data from Wiese 2004 and Ruggles et al. 2010). In the 100 largest metropolitan areas, which are home to about three-quarters of the African American population, 51 percent of African Americans lived in suburbs in 2010 (Frey 2011). These increases in suburbanization have not been accompanied by a reduction in the gap between African American and white unemployment.
Even in metropolitan areas where only a small share of the black population resides in the central city, large unemployment disparities persist. In Washington, D.C., for example, only 21 percent of blacks in the metropolitan area lived in the central city in 2000, but unemployment was 3.5 times higher among blacks as whites. In Atlanta only 18 percent of blacks lived in the central city in 2000, but the rate of unemployment among blacks was 2.6 times that of whites.7 These data suggest that suburbanization alone will not solve the problem of African American joblessness.
Suburbanization has not reduced the disparities in unemployment because the suburbs in which African Americans live tend to be separate from the suburbs in which whites live. According to Turner (2008, 159), “In several metropolitan areas, suburban minorities are clustered in one or two counties. . . . The vast majority of those who have located in the suburbs live in the inner suburban communities, while a much larger share of whites live in the outer suburbs.”
Economic growth—and therefore job opportunities—appears to be most strongly connected to white middle-class communities. African Americans remain economically marginalized in the suburbs. As Turner (2008, 165–66) notes:
Although many minorities have gained access to suburban residential communities, these are often not the suburban jurisdictions that offer the most promising job opportunities. Correspondingly, black workers in particular are underrepresented in jobs that are located in predominantly white suburban communities. On the other hand, Hispanic workers are generally just as likely as non-Hispanic whites to find employment in the white suburbs. . . . residential segregation continues to put considerable distance between minority workers, especially blacks, and areas of greatest employment opportunity.
Other researchers find similar results. Harris (1999) finds that African Americans are overrepresented in suburbs with the lowest socioeconomic profile. Many of these low- status suburbs have high poverty rates. Indeed, many are poorer than the central city they surround. In contrast, whites are overrepresented in high socioeconomic status suburbs.
Economic growth seems to be correlated with the density of the white middle-class population rather than to any specific geography. It is not suburbs per se that show strong job growth but white middle-class suburbs. It is not cities per se that exhibit low job growth but cities or areas in cities with a low white middle-class density. The majority white and middle-class city of Seattle, for example, has experienced strong job growth (Turner 2008). Cities and areas of cities that have seen white gentrification have experienced economic revitalization (Hampson 2005; Kiviat 2008). Indeed, now that most African Americans in major metropolitan areas live in the suburbs, there are more discussions that the future of American economic growth is urban (Shellenbarger 2010; Wieckowski 2010).
There are many reasons why economic growth may be tied to a large white middle-class population. Relative to the black middle class, the white middle class has higher income, much greater wealth, and superior connections to the politically and economically powerful, who are disproportionately white. Middle-class blacks are also more likely to have poor relatives to support and to live in communities burdened with relatively high levels of poverty. As a result, white middle-class communities are more likely to be ripe with economic potential.
Another reason why suburbanization does not automatically translate into greatly improved job opportunities for African Americans is that African Americans probably still experience labor-market discrimination in the suburbs. Turner (2008, 166) reports that “the minority share of applicants for jobs in the white suburbs is significantly higher than the minority share of population in these areas, suggesting that blacks and Hispanics are trying to get jobs in white suburbs [but appear to be] disadvantaged in white central-city areas and white and integrated suburbs.” Employment discrimination, which has been well documented in urban areas, likely exists in suburban areas as well.
All of these factors point to a mismatch for African American workers that is much more about race than space. Suburbanization has eliminated neither residential segregation nor anti-black employment discrimination.
A plan for creating jobs in high-unemployment areas
The depth and the persistence of the African American jobs crisis can probably be solved only with intervention by the federal government. In the past 50 years, the normal working of the U.S. economy and the modest amelioration efforts that have been tried have failed to provide sufficient jobs for African Americans. Increases in educational achievement and suburbanization by blacks have also failed to spur change. If a bold new approach to the problem is not taken, it is likely that blacks will be condemned to unemployment rates that are twice those of whites into the foreseeable future.
On more than one occasion, the United States has responded to crises of joblessness with government intervention. The federal government intervened during the Great Depression, the recessions of the early 1970s, and the Great Recession. A sustained level of high unemployment for African Americans decade after decade should be recognized as a crisis as serious as periodic deep national recessions. White Americans regularly experience unemployment rates below 6 percent—a rate that blacks have never experienced in the past 40 years. An unemployment rate of more than 10 percent is considered extremely high for whites—but African Americans have had to endure unemployment rates of more than 10 percent for most of the past 40 years, according to analysis based on Current Population Survey data from the Bureau of Labor Statistics.
Given the intractability of high joblessness for African Americans, the federal government should support targeted job creation for communities experiencing persistently high unemployment. Job creation should be targeted to communities of 25,000 people or more in counties and metropolitan areas that have experienced unemployment of more than 6 percent every year in the previous 10 years. Eligible individuals must have resided in an eligible community for a prolonged period and have been unemployed or out of the labor market for at least six months. The program could be phased out in communities over a five-year period after the annual unemployment rate fell below 6 percent.
The proposed program is at a scale large enough to produce a significant reduction in unemployment. It is likely to improve communities plagued by persistent high unemployment in other ways, as well.
Types of programs
The federal government should support three separate programs for increasing employment in these high-unemployment areas: direct public sector employment, job training with job placement, and wage subsidies for employers who hire unemployed workers. Together these policies should significantly increase employment rates in African American communities with persistently high unemployment.
Direct public sector employment. The federal government should provide funds to local governments for job creation aimed at improving the quality of life in the community. Local governments, with community input, should create projects to improve the human and physical infrastructure, safety, health, and attractiveness of the community. Many African American communities experiencing persistently high unemployment need workers to clean, rehabilitate, and beautify the housing stock and green spaces; assist in the education of children; form auxiliaries to the police to help improve the safety of the community; and participate in many other community projects. These jobs would improve the quality of life of existing residents and make the community more desirable to middle-class households. Unemployed community residents would be hired and trained to perform all program jobs with the possible exception of supervision and training.
Job training and job placement. Black job applicants have a lower likelihood of being hired than equally qualified whites or Latinos (Pager, Western, and Bonikowski 2009; Morris, Sumner, and Borja 2008). Improving the skills of black workers is useful, but it may not be enough to lead to employment. Organizations providing training for black workers also need to provide services to help place those workers in jobs. These organizations need to develop strong relationships with employers and aggressively market qualified black job candidates. They also need to develop other strategies to help well-trained black workers find employment.
For-profit and nonprofit organizations should be eligible for funds for training residents of targeted communities in skills that are in high demand in the local economy and placing them in jobs. Programs should be assessed by the employment rate of their graduates six months after completing the training program. Programs that underperform should lose significant amounts of funding each year, with the freed-up funds redistributed among well-performing programs.
Wage subsidies. Private sector employers who hire residents from targeted communities in new jobs should receive a wage subsidy of 75 percent of the hourly minimum wage for each full-time worker receiving benefits hired and 33 percent of the hourly minimum wage for each part-time worker or full-time worker not receiving benefits hired. Employers located within the targeted community should receive an additional subsidy that is 10 percentage points higher.
Long-term effects of a jobs program in high-unemployment areas
The effects of the proposed program are likely to be felt for several years after it is phased out. Researchers find that positive economic effects last for many years after temporary jobs programs end (Bartik 2001: 141–146). Positive experiences with African American workers may also reduce employer biases, possibly leading them to institutionalize the outreach and hiring of African American workers (Bartik 2001, 141–46). Studies of public sector employment programs find that employers are surprised to find that workers from disadvantaged groups can perform as well as the workers they usually hire (Bartik 2001, 179–80).
This jobs proposal is designed to increase the overall economic resources in the community. Increasing the number of working and taxpaying individuals would increase the tax base for additional economic development activities while also decreasing local government social service and social welfare costs. It would make the community more appealing for locating a business. The proposal is also designed to increase the attractiveness of the community to middle-class households looking for a new place to live as well as to both new and existing businesses.
Significant growth in employment rates could also lead to increases in the educational achievement of the children in the community and reductions in crime. These improvements would attract more middle-class residents and further increase the economic resources of the community.
The U.S. economy should be one in which everyone who wants to work can find a job. This goal has been elusive for African Americans.
Given the persistence of high unemployment despite improvements in educational attainment and greater suburbanization by African Americans, a concerted national effort is needed to reduce racial disparities that leave blacks twice as likely as whites to be unemployed. Under the proposed plan, the federal government would significantly increase the number of jobs available to African Americans by creating public sector jobs, training and helping place participants in jobs, and subsidizing wages. By substantially increasing employment rates, it would help diminish poverty, improve educational achievement, and reduce crime rates.
This paper benefitted from discussions with Randell McShepard, board chairman of the Ohio-based think tank PolicyBridge.
1. A few predominantly white communities—such as Belleville, Illinois, and Niagara Falls, New York—have experienced unemployment rates of more than 6 percent for 10 consecutive years (author’s analysis of Local Area Unemployment Statistics data from the Bureau of Labor Statistics).
2. Author’s analysis of data from population and dissimilarity data from diversitydata.org. The statistic for the 100 metropolitan areas with the largest African American populations is weighted by the population size.
3. African American unemployment rates are from Austin (2011). Rates for whites are derived in the same manner using Current Population Survey and local unemployment area statistics from the Bureau of Labor Statistics.
4. Researchers do not understand why this relationship persists. As Duke professor William Darity notes, “I don’t know if there’s anybody out there who can tell you why that ratio stays at 2-to-1. It’s a statistical regularity that we don’t have an explanation for” (Kroll 2011; see also Conrad 2011).
5. Author’s calculations based on Current Population Survey data from the Bureau of Labor Statistics.
7. Data on the share of blacks residing in the central city are from Turner (2008). Unemployment rate ratios are derived from Economic Policy Institute estimates based on Current Population Survey and Local Area Unemployment Survey data from the Bureau of Labor Statistics.
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