Economics
Black workers are enjoying a jobs boom in America
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It is a grim fact of American life that black people have long lagged well behind white folk in the world of work, with higher unemployment, lower wages and a larger share giving up on job searches altogether. A much more hopeful fact is that many of these inequalities now appear to be shrinking. In the half-century before the covid-19 pandemic, the black unemployment rate was on average twice as high as the white one. At the end of last year jobless rates were, respectively, 5.2% for black Americans and 3.7% for white people—equalling the narrowest gap on record.
Even more striking are shifting tides in labour-force participation. About 63% of black Americans are now deemed to be either in work or searching for jobs, more than the 62% level for white Americans—an inversion of the pattern seen in previous decades. In part this reflects demographic differences, because the median white American is about a decade older than the median black American and thus more likely to be retired. But it also testifies to better job prospects for black Americans: their median earnings were about 84% of those of white Americans at the end of 2023, a sharp rise from the 79% average of the preceding two decades.
The underlying cause of all of these changes is America’s run of economic strength. The labour market has been so tight for the past couple of years that it has benefited all workers but especially the most marginalised, helping to create opportunities that were once much harder to come by. Although it is only natural to worry whether these advances will endure when growth eventually slows, it is important to recognise that, for the moment, they are reducing some of America’s most persistent inequalities.
The improvement for black Americans has been broad-based, with gains for blue-collar and white-collar workers alike. Eddie Smith in Charlotte, North Carolina was struggling to get by with occasional jobs mixing concrete until last summer, when he took a four-week course to obtain his commercial driver’s licence. Now he pilots an 18-wheeler and delivers crates of beer around the city for a base salary of about $60,000. “It’s the best job I’ve ever had. The pay is good, and I work at my own pace on my own schedule,” he says. He is not alone. According to official data, the economy has added about 1.6m jobs in “transportation and material moving”—a category which includes driving delivery trucks—since the end of 2019, and about 20% of these have gone to black Americans, above their 14% share of the population.
At the opposite end of the labour market is Lloyd Bolodeoku, a senior in computer science at Bowie State University, one of America’s historically black universities. He has already accepted a job offer from Adobe, a software company, and will start in a cyber-security role in May, mere days after he graduates. Mr Bolodeoku recalls the words of a teacher from his high school just outside Baltimore, where the student body was more than 90% black: “His saying was you either want the router or you want the spatula.” That is, if you do not learn about technology, you may end up flipping burgers. Although black Americans are still underrepresented in high-tech work, they have gained about 130,000 jobs in computer-related occupations in the past three years.
One reason that a strong labour market is valuable for black Americans is that many work in highly cyclical sectors such as freight delivery. That makes them vulnerable to recessions but also well placed during periods of growth (a similar dynamic exists for Hispanics). A tight labour market also blunts some of the discrimination that black applicants may face when looking for jobs. “During cyclical downturns employers can afford to pick and choose, but when workers are really needed, they are penalised for their biases,” says Michelle Holder, an economist at John Jay College, City University of New York.
The evolution of America’s economic structure is probably also playing a role. Concentrated in lower-skill jobs, black men were hit especially hard by the decline of factories and unions from the 1970s on. But lower-skilled workers are once again in high demand in a range of occupations that are increasingly central to the economy, from stocking warehouses to assisting nurses. Real-wage growth for the bottom 10% of earners has consistently outstripped all others since 2020—a boon for black Americans.
Another factor is a decline in incarceration. About 590,000 black adults were in prison in 2021, down by more than a quarter from a decade earlier. Black Americans are still nearly five times more likely than white ones to go to jail, but a lower incarceration rate is progress nonetheless, freeing more people for work.
Sam Schaeffer, head of the Centre for Employment Opportunities, which helps Americans find work after leaving prison, has also seen increased openness to “second-chance hiring” by companies. He says that stems in part from executives making commitments to racial justice but also, crucially, from the tight labour market. One of his organisation’s success stories is Mr Smith, the beer-delivery man in Charlotte. He was behind bars for 34 years before getting parole. Many firms were afraid to hire someone with his background, but thankfully not all. “It’s just hard for them to find drivers these days,” he says.
A strong labour market is, by itself, far from a cure-all for racial inequality. Although the black-white wage gap has narrowed in the past two years, the wealth gap has widened over the same period, because white Americans own more stocks than black Americans and so have benefited more from the market rally.
What’s more, unfairness goes well beyond hiring decisions. For decades the received wisdom was that black Americans would pull closer to white Americans if they had similar academic qualifications. But Valerie Wilson of the Economic Policy Institute, a think-tank based in Washington, DC, has shown that wages for black and white college graduates have instead drifted further apart in recent decades. “In addition to pay discrimination, a lot has to do with disparities in the jobs that people go into and in opportunities for promotion,” says Ms Wilson.
One question is whether historically black colleges, which produce about 40% of America’s black engineers, can help reverse this dismal trend for graduates. The computer-science department at Bowie State, where Mr Bolodeoku is finishing his degree, has built up an internship-placement programme that links students with companies and government agencies, starting in their first year and continuing throughout their studies. “They get to be mentored and get the confidence they need,” says Rose Shumba, chair of Bowie’s computer-science department. Not coincidentally, its enrolment has more than doubled from 190 in 2019 to about 500 today.
For black women more generally, investment in early education would be even more significant. A big stumbling block for their careers is the need to raise young children. Nearly 50% of black children live only with their mothers, compared with less than 20% of white children. That is one of the motivations for the Biden administration’s proposal to subsidise child care and make pre-kindergarten free, a policy which would need a Democratic sweep in the election later this year to get through Congress. “You would get a return on investment both in terms of lifting kids out of poverty and freeing up their parents to be able to pursue more opportunities,” says Lael Brainard, director of the National Economic Council in the White House.
For now, the test of whether black Americans are truly faring better in the workplace will arise whenever the economy next hits a soft patch. Historically, many have fallen prey to a “last hired, first fired” mode of employment. But William Rodgers of the Federal Reserve’s branch in St Louis is cautiously optimistic that a future downturn may play out differently. He has homed in on some of the workers most likely to be fired—young black Americans with no college degrees—and found that their unemployment rate has barely risen since 2022 even as the number of job openings has fallen. This, he thinks, may be a sign that gains of the past few years are sustainable. “People have come in, gotten a toehold and built up experience,” he says. With any luck, more black Americans will go from last hired to lastingly hired.■
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U.S. President Donald Trump speaks alongside entertainer Kid Rock before signing an executive order in the Oval Office of the White House on March 31, 2025 in Washington, DC.
Andrew Harnik | Getty Images
President Donald Trump is set Wednesday to begin the biggest gamble of his nascent second term, wagering that broad-based tariffs on imports will jumpstart a new era for the U.S. economy.
The stakes couldn’t be higher.
As the president prepares his “liberation day” announcement, household sentiment is at multi-year lows. Consumers worry that the duties will spark another round of painful inflation, and investors are fretting that higher prices will mean lower profits and a tougher slog for the battered stock market.
What Trump is promising is a new economy not dependent on deficit spending, where Canada, Mexico, China and Europe no longer take advantage of the U.S. consumer’s desire for ever-cheaper products.
The big problem right now is no one outside the administration knows quite how those goals will be achieved, and what will be the price to pay.
“People always want everything to be done immediately and have to know exactly what’s going on,” said Joseph LaVorgna, who served as a senior economic advisor during Trump’s first term in office. “Negotiations themselves don’t work that way. Good things take time.”
For his part, LaVorgna, who is now chief economist at SMBC Nikko Securities, is optimistic Trump can pull it off, but understands why markets are rattled by the uncertainty of it all.
“This is a negotiation, and it needs to be judged in the fullness of time,” he said. “Eventually we’re going to get some details and some clarity, and to me, everything will fit together. But right now, we’re at that point where it’s just too soon to know exactly what the implementation is likely to look like.”
Here’s what we do know: The White House intends to implement “reciprocal” tariffs against its trading partners. In other words, the U.S. is going to match what other countries charge to import American goods into their countries. Most recently, a figure of 20% blanket tariffs has been bandied around, though LaVorgna said he expects the number to be around 10%, but something like 60% for China.
What is likely to emerge, though, will be far more nuanced as Trump seeks to reduce a record $131.4 billion U.S. trade deficit. Trump professes his ability to make deals, and the saber-rattling of draconian levies on other countries is all part of the strategy to get the best arrangement possible where more goods are manufactured domestically, boosting American jobs and providing a fairer landscape for trade.
The consequences, though, could be rough in the near term.
Potential inflation impact
On their surface, tariffs are a tax on imports and, theoretically, are inflationary. In practice, though, it doesn’t always work that way.
During his first term, Trump imposed heavy tariffs with nary a sign of longer-term inflation outside of isolated price increases. That’s how Federal Reserve economists generally view tariffs — a one-time “transitory” blip but rarely a generator of fundamental inflation.
This time, though, could be different as Trump attempts something on a scale not seen since the disastrous Smoot-Hawley tariffs in 1930 that kicked off a global trade war and would be the worst-case scenario of the president’s ambitions.
“This could be a major rewiring of the domestic economy and of the global economy, a la Thatcher, a la Reagan, where you get a more enabled private sector, streamlined government, a fair trading system,” Mohamed El-Erian, the Allianz chief economic advisor, said Tuesday on CNBC. “Alternatively, if we get tit-for-tat tariffs, we slip into stagflation, and that stagflation becomes well anchored, and that becomes problematic.”
The U.S. economy already is showing signs of a stagflationary impulse, perhaps not along the lines of the 1970s and early ’80s but nevertheless one where growth is slowing and inflation is proving stickier than expected.
Goldman Sachs has lowered its projection for economic growth this year to barely positive. The firm is citing the “the sharp recent deterioration in household and business confidence” and second-order impacts of tariffs as administration officials are willing to trade lower growth in the near term for their longer-term trade goals.
Federal Reserve officials last month indicated an expectation of 1.7% gross domestic product growth this year; using the same metric, Goldman projects GDP to rise at just a 1% rate.
In addition, Goldman raised its recession risk to 35% this year, though it sees growth holding positive in the most-likely scenario.
Broader economic questions
However, Luke Tilley, chief economist at Wilmington Trust, thinks the recession risk is even higher at 40%, and not just because of tariff impacts.
“We were already on the pessimistic side of the spectrum,” he said. “A lot of that is coming from the fact that we didn’t think the consumer was strong enough heading into the year, and we see growth slowing because of the tariffs.”
Tilley also sees the labor market weakening as companies hold off on hiring as well as other decisions such as capital expenditure-type investments in their businesses.
That view on business hesitation was backed up Tuesday in an Institute for Supply Management survey in which respondents cited the uncertain climate as an obstacle to growth.
“Customers are pausing on new orders as a result of uncertainty regarding tariffs,” said a manager in the transportation equipment industry. “There is no clear direction from the administration on how they will be implemented, so it’s harder to project how they will affect business.”
While Tilley thinks the concern over tariffs causing long-term inflation is misplaced — Smoot-Hawley, for instance, actually ended up being deflationary — he does see them as a danger to an already-fragile consumer and economy as they could tend to weaken activity further.
“We think of the tariffs as just being such a weight on growth. It would drive up prices in the initial couple [inflation] readings, but it would create so much economic weakness that they would end up being net deflationary,” he said. “They’re a tax hike, they’re contractionary, they’re going to weigh on the economy.”
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