Black unemployment rate dips, labor force participation rises in January

The January jobs report showed some signs of optimism for the U.S. labor recovery, particularly for Black workers, who have been disproportionately impacted by the pandemic.

U.S. payrolls added 467,000 jobs in the first month of the new year, the Labor Department reported Friday, surprising economists who expected Covid omicron outbreaks to impact hiring. The unemployment rate held fairly steady at 4% in January versus 3.9% in December.

For Black workers, the unemployment rate dipped to 6.9% last month from 7.1%. What’s more, the Black labor force participation rate rose to 62% in January — the same as white workers.

“We’ve seen this really encouraging closing of the Black-white labor participation gap, and it appears to have fully converged,” said Bradley Hardy, an economist at Georgetown University. “This is very much a result of the Black labor participation rate rising on a gradual basis, really throughout this pandemic over an almost two year period.”

The labor force participation rate “can oftentimes be a proxy for optimism and willingness to participate in the labor market,” Hardy said. “The fact that that’s actually a gap that is — for now, at least — closed is quite important.”

The improvement in unemployment was felt most acutely by Black women, whose unemployment rate fell to 5.8% last month from 6.2%.

The drop in the Black female unemployment rate in January comes after Black women were the only race and gender group whose unemployment rate worsened in December.

The month-to-month economic readings for Black women and other minority groups can be particularly volatile due to smaller population size, according to Elise Gould, senior economist at the Economic Policy Institute.

“The longer-term story is that Black workers have remained at an unemployment rate about twice as high as white workers and white workers’ unemployment rate is far lower than Black workers have ever experienced,” Gould said. The white unemployment rate was 3.4% in January.

Hardy also recommended looking at data over a two- to three-month basis.

“It’s cautious optimism that … the trend is continuing to head in the right direction. It’s good news,” Hardy said. “But at the same time, I think we have to remain vigilant about how we interpret the trend.”