Highlights:

  • Employment levels decline for African Americans – overall and by gender.
  • For both Hispanics and Whites, employment levels recover among both genders and overall.
  • For all races, current Index values continue to be below their pre-pandemic levels.

Welch Index by Race graph

Introduction

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 indicates that this adjusted full-time equivalent employment level is the same as what it was in July 2019.

Any decrease (increase) in the Index value over a particular period implies that the 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 increased 6.4 points for African Americans, from 87.5 to 93.9.  In other words, the level of full-time equivalent employment for African Americans has increased at a rate 6.4% faster than the increase in the U.S. African American adult population over the past year.  For Whites, the Index increased by 4.2 points, and by 7.8 points for Hispanics over the same period.

For all race groups, the bulk of the last one-year decline has 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 African Americans

The Welch Index for African Americans had been increasing steadily since March of this year. However, it declined in the last month by .4 points, from 94.3 points in June to 93.9 points in July. The African American Index is now 5.8 points lower than its pre-pandemic January value of 99.7 points. With this decline, the percent of the January-April 2020 decline that African Americans have recovered has fallen from close to 66% in June to 64% in July.

Welch Index by Race chart

The Index for both Whites and Hispanics has generally been on a path of recovery since the start of the year. The Index for Whites has increased by .9 points, from 95.4 points in June to 96.3 points in July. The increase in the Index for Hispanics was higher than in that of Whites. Employment levels for Hispanics increased by 1.2 points, from 95.3 points in June to 96.5 points in July.

The gap between January 2020 and July 2021 values is lowest for Whites. Their employment index value  would have to increase by 4.3 points to return to January 2020 levels, while the levels of Hispanics would have to increase by 5.5 points to close that gap.

Employment Levels Recover for Hispanics and Whites of Both Genders

Welch Employment Index by Race and GenderThe Index levels declined for both African American males and females in July compared to the previous month. However, the employment levels for Whites and Hispanics of both genders increased overall during the same period.

For White women, Index levels increased by 1.1 points, and by .8 points for White men between June and July. The July Index values for the two groups, White women and men, were 97.4 points and 95.4 points, respectively. Similarly for Hispanics, the Index recovered more for women than for men between June and July. The Index for Hispanic women rose by 1.3 points, from 93.8 points in June and 95.1 points in July.  For men, it rose by 1.1 points, from 96.4 points in June to 97.5 points in July.

Welch Index by race and gender chart

The African American Index for women was lower by .1 points between June and July of this year, and by 7.1 points compared to the pre-pandemic value of 100.7 points in January 2020. For men, the Index decline between June and July was .7 points. However, African American men have a narrower gap to close to return to their pre-pandemic employment levels. In January of 2020, their Index was 98.6 points, and a 4.4-point increase in employment levels is required to return to this value.

Underlying Factors Behind Employment Trends and Concluding Remarks

Our economic consulting experts are seeing overall improvements in employment levels, particularly in Leisure and Hospitality, Education and Professional and Business services. However, the recovery was not uniform across all races. Index levels increased for Whites and Hispanics, but declined for African Americans–overall and within each gender.

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 adjusts for the changing age distribution of the population by fixing the age distribution of adults to the distribution in the base year of 2004. Seasonal effects for the share of workers employed in part-time jobs are removed in a regression framework using monthly indicator variables.

References

Jobs report July 2021: Payrolls increase by 943,000, unemployment rate slides (cnbc.com)

Why the drop in the U.S. Black unemployment rate may not be good news | Reuters