Highlights:

  • Employment levels declined for Hispanics and African Americans, and remained unchanged for Whites between August and September.
  • Hispanic women in particular experienced larger declines in employment levels between August and September compared to other groups.
  • Among Whites, men had recovered a greater proportion of the initial employment decline by September than other groups.
  • For all races, Index values continue to be well below their pre-pandemic levels

Welch Consulting's Index by Race, Declines for Hispanic and African American Employees in SeptemberIntroduction

The Welch Index for Race is a data analytics tool used by our labor economists to measure full-time equivalent employment for Hispanics, African Americans, and Whites after adjustment for population growth. An Index value of 100.0 would indicate an adjusted full-time equivalent employment level equal to that of July 2019.

Any decrease (or increase) in the Index value over a particular period implies that full-time equivalent employment level has decreased (or increased) relative to the growth of the adult population during that period.

For example, over the past 12 months, the Index has fallen 12 points for African Americans, from 100.4 to 88.4.  In other words, the level of full-time equivalent employment for African Americans had increased at a rate 12% slower than the increase in the U.S. African American adult population over the past year.  This decline in the employment level is 5.6 points and 1.9 points greater than the declines experienced by Whites and Hispanics over the past year, respectively.

For all race groups, the bulk of the last one-year decline occurred between January and April 2020. This is attributable to the onset of the COVID-19 crisis and related lockdown measures.

Welch Consulting offers  data consulting services to help employers analyze and learn from large and complex data.

Employment Levels Decline for Hispanics and African Americans

Following a sharp decline between January and April 2020, the Welch Consulting Employment Index had been steadily recovering across racial lines from April to August.  This trend saw a reversal in September, with a slowdown in recovery. For Whites, the Index levels remained at 94.2 in both September and August.  For Hispanics and African-Americans, however, the Index values saw a decline. The Hispanic Index declined by .5 points, from 91.6 in August to 91.1, in September. The Index value for African Americans declined by .3 points, from 88.7 to 88.4, over the same period.

By August 2020, Whites, Hispanics and African Americans had respectively recovered over 53%, 47% and 32% of their initial January-April decline in employment levels.  With no change in Index values between August and September, the recovery rates for Whites have not changed either. However, the recovery rates for Hispanics and African Americans declined to approximately 44% and 30% in September, respectively.

Higher Decline in Employment Levels for Hispanic Women

With the onset of the pandemic, the largest declines in employment levels between January to April were experienced by Hispanic women. From August to September 2020, this group again experienced declines, with employment index values falling from 91.2 in August to 87.7 in September.  Index values also declined for White women by .6 points, from 94.7 to 94.1.  For Hispanic men and White men, the Index respectively rose by 1.5 points and .4 points in September.

Unlike the gender patterns for Whites and Hispanics, the Index for African American women increased by .6 points between August and September.  On the other hand, the Index levels for African American men declined by 1.3 points, from 88.5 to 87.2, over the same period.

White Men Recover a Higher Fraction of Their Initial Job Loss

As in August, recovery rates continued to be higher among Whites in September. That month, White men managed to recover over 53% and White women over 52% of their initial decline in January-April employment levels.

On the other hand, for African American men and Hispanic women, recovery rates fell significantly from August onward. For example, in August, Hispanic women had recovered over 54% of their initial 22-point decline from January to April. Following the Index value decline in September, their recovery rates fell to 38% approximately. For African American men, these percentages fell from over 36% in August to 28% in September–a lower recovery rate compared to that of other groups.

Underlying Factors Behind Employment Index Trends and Concluding Remarks

Our economic consulting experts find that the pace of recovery has slowed in September due to a number of factors: These include the fact that pandemic safety restrictions are no longer being relaxed at the same rate as they had been in the months after April.  Additionally, certain groups have experienced permanent layoffs at an increasing rate in September. A significant proportion of these long-term or permanently unemployed individuals are Hispanics and African-Americans.

Given this slow-down, the Welch Index values continue as they were in August–well below both their pre-COVID-19 levels and their levels in January, February, and March of this year.

Technical Note: Full-time equivalent employment equals full-time employment plus one half of part-time employment from the BLS household survey (the Current Population Survey). The data reported for a given month is generally from the calendar week that contains the 12th day of the month. The Welch Index for race is based on individuals who are 20 years old and over. Seasonal effects for the share of workers employed in part-time jobs are removed in a regression framework using monthly indicator variables.

SOURCES:
NATIONAL BUREAU OF ECONOMIC RESEARCH

U.S. Job Gains Slow as More Layoffs Become Permanent

THE EMPLOYMENT SITUATION —SEPTEMBER 2020