Highlights:

  • Employment levels continued to recover for Hispanics, African Americans and Whites between September and October.
  • Hispanic women in particular experienced larger increases in employment levels between September and October than other groups.
  • As in previous months, October Index levels for African American men remained lower than the levels for other groups.
  • For all races, current Index values continue to be well below their pre-pandemic levels.

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 (increased) relative to the growth of the adult population during that period.

For example, over the past 12 months, the Index has fallen 9.3 points for African Americans, from 100 to 90.7.  In other words, the level of full-time equivalent employment for African Americans has increased at a rate 9.3% slower than the increase in the U.S. African American adult population over the past year.  This decline in the employment level is 3.9 points from the past year, and .7 points greater than the decline that Whites and Hispanics have experienced over the past year, respectively.

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.

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Employment Levels Recover Again Across Race

The Welch Index for race increased between September and October for Hispanics, African Americans and Whites. For Whites, the Index increased by 1 point, from 94.2 to 95.2.  After a .5-point decline between August and September, the Index for Hispanics increased by 2 points–from 91.1 in September to 93.1 in October. Similarly, the African American Index, after declining by .3 points in September, increased again by 2.3 points–from 88.4 points in September to 90.7 points in October.

With this increase in the Index values in October, Whites, African Americans and Hispanics respectively recovered approximately 60%, 44% and 54% of their initial January-April decline in employment levels. For Hispanics and African Americans, this is a significant improvement compared to employment levels in September, when the recovery rates for the two groups dropped to values of approximately 30% and 44%, respectively.

Higher Increase in Employment Levels for Hispanic Women

Hispanic women experienced greater Index level declines in September, but also a greater increase in October, compared to other groups. The Index for Hispanic women increased by 3.4 points, from a value of 87.7 in September to 91.1 in October. This was a value 2.4 points, 1 point, and 2.7 points higher than what Hispanic, African American, and White men experienced over the same period, respectively.

Similar to Hispanic women and African American men, White women also reversed the trend in October. Following a .6-point decline to a value of 94.1 in September, their Index levels increased to 95.5 in October.  As of October, the Index value for White women was higher than that of other groups.  On the other hand, the Index for African American men increased by 2.4 points, from a value of 87.2 in September to a value of 89.6 in October. Despite this recovery, as in previous months, their Index levels remained below that of other groups.

Welch Consulting Employment Index - Race and GenderBoth White women and men recovered close to 60% of their initial 7.5 point and 9.7-point decline respectively. Hispanic men and women recovered over 55% and 53%, respectively. Recovery rates were lower for African Americans. As of October, African American men had recovered over 42% and women over 45% of their initial January to April decline.

Underlying Factors Behind Employment Index Trends and Concluding Remarks

Our economic consulting experts find that the recovery in employment levels by race reflects the relaxation of COVID restrictions. In particular, certain sectors such as leisure and hospitality, retail, and construction experienced job gains in October. As a result, groups such as Hispanics, who constitute a larger proportion of the workforce in these sectors, also experienced an improvement in their Index values.

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 – The Impacts of COVID-19 on Minority Unemployment

The Wall Street Journal – U.S. Job Gains Slow as More Layoffs Become Permanent

U.S. Bureau of Labor Statistics – The Employment Situation – October 2020