Why high levels of minority unemployment will continue: Economist

Another 1.877 million Americans filed for unemployment benefits for the week ending May 30. Labor economist and Rutgers University Professor Bill Rodgers joins Yahoo Finance's On the Move panel to discuss.

Video Transcript

ADAM SHAPIRO: We want to turn our attention back to the economy and putting people to work. Tomorrow, we get the Labor Department numbers, but we got the initial claims for unemployment. And Bill Rodgers is a labor economist, Labor Department Economist, former, and Rutgers University professor. He is joining us now. It's good to see you.

BILL RODGERS: Adam, great to see you, as always.

ADAM SHAPIRO: Are we missing anything in these numbers? We're-- you know, we can all guess that the unemployment figure for May is going to be around 20%, or could it even be worse?

BILL RODGERS: Yeah, this is that challenge, again, where the-- the unemployment insurance claims, right, are the leading indicator, and tomorrow, we're going to get what's the labor markets lagging indicator. Be that as it may, I think if we focus on today's UI claim number, still very high, but from a standpoint of we compare it to previous weeks, it's starting to get smaller, or the amounts of people filing is getting smaller, which does suggest that-- middle of May, 32 states are-- not 32-- 19 states have reopened or moved to reopen. In the last week, pretty much all states are now reopening, and they're moving at some kind of stage or phased opening. So in New Jersey, Governor Murphy-- I serve on his commission, Restart Commission-- he just announced that we're going to be moving to stage two as long as we continue to hit our-- our health indicators.

Now, for tomorrow, I agree with you, tomorrow the unemployment rate, the official unemployment rate could be close to about 20%. But again, because of the way people are answering the questions or-- in particular, what were you doing over the last four weeks, well, my business was closed, I've been laid off, so they may say I'm not working. So we-- make sure you look at the employment population ratio, the share of people who are-- who have a job, because that could either be going down because of continued losses, but it could also be starting to rise back up because there is some opening going on.

JULIE HYMAN: Bill, I want to ask you about stimulus and the interplay between stimulus and employment because there has been a thought among some members of Congress, for example, that they should pull back on the stimulus or end the existing stimulus because it's an incentive for people not to work. In some cases, they're making more than they were at their pre-existing jobs. How are you thinking about that and getting people back to work in terms of whether stimulus is indeed a disincentive?

BILL RODGERS: Yeah. So the stimulus has been and will continue to be very important. Why? In particular because this was a consumer or a consumption-driven recession or downturn, and that in order for consumption to return to previous levels or near previous levels, we actually have to have more confidence. Workers have to have more confidence that they can go into their workplace and be safe. Consumers have to have more confidence that they can go to those-- instead of shopping online that they can go to their-- to their favorite stores like they were-- like they were before the pandemic.

And we're not there yet. And so as a hedge, that's what-- and I'm not going to call it-- I'm not correcting you, but other people, a lot of people are saying stim-- I'm calling it relief, right, we're still in the relief phase, and-- and now-- and moving into the recovery phase. So this-- this relief is providing that bridge, that bridge to the recovery. And until we start to see that-- that confidence in workplaces, that confidence consumers have, that's when you-- I think you could start to pull back some of the stimulus.

The HEROES Act does a nice job of acknowledging that hey, the trig-- let's have some triggers, that we'll start to pull back when we see the economy actually getting better. And I would like to see that-- that type of movement. And then the other part of what you call stimulus, but again, relief, we know there's another wave coming. And it's not-- it's not the COVID wave coming. It is the wave of state and local governments.

And my governor, Governor Cuomo, many other governors have already been talking about the major hits that their budgets are going to be taking. And they can't print money. They have to balance budgets. And this is not an era-- a time, right, for raising taxes, so you're going to see cuts. And-- and these are cuts that will have a disparate impact on women and minorities because that's where many work-- many workers with those backgrounds are concentrated.

INES FERRE: And Bill, Ines Ferre here. And speaking of women and minorities, African Americans and Hispanics have been particularly hit hard by the pandemic. Do you expect unemployment for those sectors, for African Americans, for Hispanics to be as high in this next jobs report? And what can be done to remedy that?

BILL RODGERS: Yeah, I do think that we'll continue to see increases in tomorrow's report. Why? Because during the survey-- between the survey week in April and in May, there were about 14 more million-- 14 million more people who did apply for unemployment insurance. So we will get a spiking up.

And-- and as similar to previous recessions, previous downturns, it's those jobs at the lower part of the ladder or upper and in the middle part of the ladder that are hit first, and they have a higher concentration of minorities and women. So-- so we probably will still-- still see some-- some more movement. The hopeful piece is that because UI claims are trending down and there are some other data, not necessarily government data, that is suggesting we may have bottomed out.

And-- and as long as we can, again, grow and improve confidence in the workplace and in the buyer place, we'll start to see those place-- those-- the leisure or hospitality retail, those will come back. And now the hope will be that women and minorities who are representing those occupations and industries will get pulled back just as quickly as their white counterparts or their male counterparts.

BRIAN CHEUNG: Bill, it's Brian Cheung here. Obviously, just looking at the unemployment headline number isn't enough either. We want to know the types of jobs that have been lost and whether or not as-- hopefully, if we bottomed out, whether or not those jobs will come back. So when we look at those lower-income jobs, which has really been the focus of this particular recession because on one hand, a lot of people have lost their jobs, but then secondly, a lot of people that are in those lower-income jobs are actually still being required to risk their lives to go out to work, how are you kind of parsing through that when you look at the jobless claims numbers every Thursday morning, but then also the BLS report that we expect tomorrow?

BILL RODGERS: Yeah, with the jobless claims, it's really difficult because you don't see that data, right, by race. I mean, the most filtered out we can see is by state. So you really are relying on the Friday jobs report to really look across race, ethnicity, gender, and industry. And then you also have a different report that comes to-- comes through-- comes in a few weeks, and that's the state picture.

The-- the other statistic that I focus on, and unfortunately, you-- also you don't get breakouts by race on it, but it is a-- I think connects to your question, and that's people who-- that's the U-6 unemployment rate, and many people call it the real unemployment rate. It's those people who are-- it adds those people who are working part time but want to work full time. And it also adds those people who've stopped really searching, but if offered a job they'd take it.

I think you actually may see more of a spike up in that number tomorrow more so than in the official unemployment rate. And my reason for that is that you have, on one hand, individuals who still could be losing their jobs or are getting moved from full time to part time because those companies or businesses aren't getting enough-- getting enough revenue. But then you also have the reopening that's going on, too, where businesses-- because of the government sort of saying how we're staging this, 25% threshold, 50%, right, that they may not be able to-- can't bring people back full time right away. So you're-- so that-- that U-6 unemployment rate is going to also be another really important indicator to watch. And--

JULIE HYMAN: Bill?

BILL RODGERS: Yes.

JULIE HYMAN: Bill, apologies. It's Julie here. While we have you, I also want to ask you, because I know one of the areas of your research has been African American unemployment, given what's going around-- on around the country with the Black Lives Matter protests right now, I want to take the opportunity to ask you what economic policies you think could be instituted to fight systemic racism, especially at a time when we have seen that black unemployment rate tick back up?

BILL RODGERS: Right. Right. I have two pieces that I've written recently, one in "The Conversation" that hopefully maybe you'll get-- viewers will go check out or also a piece that just came out in "Barron's" this morning. But in terms of policies, we have to have a two-- two-pronged approach. One is we have to get back to enforcing the rate-- enforcing anti-discrimination laws.

We also-- particularly at the EEOC, their budgets have been gutted-- or not gutted, but they've been really squashed over the last few years. The #MeToo movement actually did help to bring-- bring some revenue back to that agency. But they have tremendous backlogs in terms of people have-- filing grievances with their employers. So-- so that's-- that's the number one in terms of race, and gender, and actually any-- any disadvantaged group who've-- person who feels that they've been-- been discriminated against.

But then the economy, right, has changed so much to where you have-- you have many-- many whites who are now feeling the same kind of economic anxieties that have been traditionally, have been historically in many-- in many black families. In New Jersey, our ALICE population, where ALICE stands for Asset Limited, Income Constrained, Employed, it's basically families who don't have enough resources to make ends meet in our community, that number has risen to almost 40%. And now-- and if African Americans make up 12% of the population, a larger share of that-- that ALICE population are low and moderate-income whites.

Again, above poverty, but they've shifted down. They've had difficulty with rising childcare costs, rising health care costs, stagnating wages. And-- that's what I think is a little bit interesting about the protests. They-- to me this time, they seem to be much, much more diverse. And it's also probably capturing a bunch of people who have lost their jobs. And so they're feeling that anxiety. And the sort of middle class has been shifting.

ADAM SHAPIRO: Bill, it's always good to see you. Bill Rodgers is a labor economist, former Chief Economist at the Labor Department, and a Rutgers University professor. All the best to you, my friend.

BILL RODGERS: Peace. Thank you, Adam.