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Economist explains how the U.S. labor market and mass incarceration are interwoven

Adriana Belmonte
·Senior Editor
·5 mins read

While President Trump has boasted about how Black employment numbers increased dramatically under his presidency, the Black unemployment rate is still double that of whites.

And according to Gbenga Ajilore, a senior economist at the Center for American Progress, when it comes to talking about whether the economy is good for Black Americans, the conversation should start with opportunity — or relative lack thereof.

“You look at the criminal justice system,” Ajilore told Yahoo Finance (video above). “One of the biggest impacts on a labor market, especially for African-Americans, is mass incarceration.”

GUANTANAMO BAY, CUBA - OCTOBER 22: (EDITORS NOTE: Image has been reviewed by the U.S. Military prior to transmission.)   Razor wire lines the fence of the "Gitmo" maximum security detention center on October 22, 2016 at the U.S. Naval Station at Guantanamo Bay, Cuba. The U.S. military's Joint Task Force Guantanamo is still holding 60 detainees at the prison, down from a previous total of 780. On his second day in office in 2008 President Obama issued an executive order to close the prison, which has failed because of political opposition in the U.S.  (Photo by John Moore/Getty Images)
Razor wire lines the fence of the "Gitmo" maximum security detention center on October 22, 2016 at the U.S. Naval Station at Guantanamo Bay, Cuba. (Photo: John Moore/Getty Images)

‘They’re always the ones impacted the hardest’

Although the Black imprisonment rate has fallen by one-third since 2006, there were still over 1,500 Black prisoners for every 100,000 Black adults at the end of 2018, according to a report from the Bureau of Justice Statistics (BJS).

Black men, in particular, are likely to be imprisoned at higher rates: There were 2,272 prisoners per 100,000 black men in 2018. In comparison, there were only 268 white prisoners for every 100,000 white adults in that same period, with white men imprisoned at a rate of 392 per 100,000.

In terms of how that related to opportunity, a report from the Prison Policy Initiative (PPI) found that formerly incarcerated people are unemployed at a rate of over 27%, “higher than the total U.S. employment rate during any historical period, including the Great Depression.”

Part of the problem has to do with the barriers put in place that prevent formerly incarcerated people from being hired, which PPI described as a “perpetual labor market punishment,” creating an endless cycle of release and poverty.

Black imprisonment rate in the U.S. has fallen by a third since 2006 (Chart: Pew Research Center)
Black imprisonment rate in the U.S. has fallen by a third since 2006 (Chart: Pew Research Center)

And because Black Americans are incarcerated at higher rates than any other racial groups, they’re more likely to encounter employment issues as a result of this.

Throughout the research “I’ve done over the last 50 years,” Ajilore said, the incaceration rate for Black men has “always been about double” that of White men. “The problem is that whenever you hit a recession, they are always the first fired but then the last hired. And so, that’s something that we’ve seen throughout the presidency and even beforehand.”

2020 is no different in that regard.

“If we look at what’s happened during this pandemic, and even if you think about the Black Lives Matter movement, it’s kind of a longstanding structural issue, that we have this structural racism where African-Americans have always had difficulties in the labor markets,” he added. “So whenever we have these business cycles, they’re always the ones impacted the hardest.”

‘Focus on not just the top 1% or top 10%’

Black Americans have faced record numbers of job losses throughout the coronavirus pandemic, but particularly in the early months of the U.S. outbreak, from March to May 2020, when unemployment rates spiked across the country.

“In March, when we first started seeing unemployment rates go up, African-Americans were the first ones to lose their jobs,” Ajilore said. “Now that we’ve seen some muted recovery and some decrease in unemployment rates, the unemployment rate for whites has dropped much more than for African-Americans.”

The most recent jobs report indicated that the U.S. unemployment rate fell to 8.4% for the month of August with over 1.371 million non-farm payrolls added. Yet, the Black unemployment rate is at 13%, the highest among all racial groups.

The Black unemployment rate is coming down, but not fast enough. (Chart: FRED)
The Black unemployment rate is coming down — slowly. (Chart: FRED)

Ajilore criticized how President Trump and his administration have boasted about the economic recovery over the past few months.

“They have to focus on not just the top 1% or top 10%,” Ajilore said. “One of the things that you see the administration always touting is the stock market. And given what’s happened to the stock market during this pandemic, it’s made the administration and many policymakers think that we’re ok.”

On March 9, 2020, global markets saw the biggest drop since the Great Recession back in 2008. Since then, the stock market has seen significant improvements, which Trump has used as part of his re-election campaign. But, that hasn’t necessarily translated to all market participants, particularly African-Americans.

U.S. President Donald Trump speaks with U.S. Treasury Secretary Steven Mnuchin at his side during a press briefing on the U.S. economy and new U.S. employment and unemployment numbers in the Brady Press Briefing Room at the White House in Washington, U.S., July 2, 2020.  REUTERS/Tom Brenner
U.S. President Donald Trump speaks during a press briefing on the U.S. economy and new U.S. employment and unemployment numbers at the White House, July 2, 2020. REUTERS/Tom Brenner

“One of the things that [the Federal Reserve looks] at is they look at the unemployment rate,” Ajilore said, in regards to how government stimulus is determined. “They usually look at 4% or 5% — that that’s going to be good for the economy. The problem there is when you look at the disparities, a 4%, 5% national unemployment rate usually translates to a 7%, 8%, 9% unemployment for African-Americans.”

Adriana is a reporter and editor covering politics and health care policy for Yahoo Finance. Follow her on Twitter @adrianambells.

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