NC unemployment by race plus one idea to save and grow jobs
No one and no one group has been spared the wrath of the current economic slump. Not surprisingly, however, the unemployment rate for blacks is much higher than that of whites and the rate of increase in unemployment for black workers has been greater than the increase for whites. Here’s a chart that shows unemployment in North Carolina by race since the recession began through the most recent quarter and even into the 2nd quarter of 2010 when unemployment is expected to peak (using Moodys.com projections).
The unemployment rate for blacks when the recession began (4th quarter 2007) was 8.2%. By the 3rd quarter of 2009 that rate had climbed to 14.9%, an increase of 5.9 percentage points. The unemployment rate for whites was 4.0% in the 4th quarter of 2007 and by the last quarter it had reached 9.6%, an increase of 5.6 percentage points. Otherwise stated the gap in unemployment between whites and blacks was 4.2 percentage points when the recession began and is now 4.5 percentage points.
So what are the policy implications of this? First and foremost it is critical to provide basic supports to these workers and their families. The good news is we can do that and stimulate the economy at the same time. Congress is considering extending the length of time that unemployed workers can claim unemployment benefits – this would support these families directly and every dime will be spent in local communities. For more on the campaign to convince the Congress to do this you can go here.
Next to job creation which is a much trickier subject although there are plenty of ideas out there. Americans don’t seem quite ready to discuss the need for an old-fashioned yet very efficient WPA style public employment surge so we’ll leave that one out for now. The Center for Economic Policy Research has put forward one idea for spurring private job creation that is worth considering. CEPR proposes that the federal goverment should create a job sharing tax credit that would reduce layoffs and increase labor demand. Here’s how they describe their proposal:
Job sharing is a mechanism that could maximize the employment from each dollar of stimulus. The basic point is simple: job sharing would use tax dollars to pay firms to shorten the typical workweek or work year, while keeping pay constant. If workers’ purchasing power is held constant even as they work fewer hours, then labor demand will be held constant. This should cause employers to want to hire additional workers to make up for the fewer hours worked by their incumbent work force. For example, if the firm had all of its workers putting in 5 percent fewer hours, then it should want to hire approximately 5 percent more workers. Or, alternatively, if an employer was facing the difficult decision to layoff workers, this tax credit would provide an incentive to decrease total hours worked, rather than letting individual workers go. 2 The effects of this tax incentive could be dramatic. If employers of 60 million workers reduced work hours by an average of 5 percent, then it should lead to the creation of 3 million new jobs – before taking into account any multiplier effect. In principle, these jobs could be created quickly and would be in the private sector. (A similar payment, comparable to the tax credit, could also be extended to state and local governments.)
You can read the full report here.