Highlights:

  • Employment levels recovered for White and African American men but declined for other race and gender groups.
  • African American men experienced a larger increase in employment levels between November and December compared to other groups.
  • Overall Race Index declined for Hispanics and African Americans.
  • Year-end Index levels were highest for Whites, followed by Hispanics, and lowest for African Americans.
  • 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 (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 9.2 points for African Americans, from 100.3 to 91.1.  In other words, the level of full-time equivalent employment for African Americans has increased at a rate 9.2% slower than the increase in the U.S. African American adult population over the past year.  This decline in the employment level is 3.8 points and .8 points greater than the decline that Whites and Hispanics have experienced over the past year, respectively.

For all race groups, the bulk of the past one-year decline 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 for Whites and Decline for Hispanics and African Americans

The Welch Index for Whites increased steadily between May and October of this year, declined in November, and then recovered again at the end of the year. In December, the Index rose by .2 points, from 95 points in November to 95.2 points in December.  Whites have now recovered over 61% of the initial decline between January to April.

Hispanics and African Americans have experienced a similar employment trend over the last few months. For example, after a steady recovery between May and August, their employment levels declined in September but increased again in both October and November. In December, the Welch Index for Hispanics declined by .9 points, from 93.6 in November to 92.7 in December. The Welch Index for African Americans declined by .3 points, from 91.4 in November to 91.1 in December.

Welch Consulting Employment Index by Race

With a continued increase in the Index values, Whites recovered over 61% of their Index value in December. On the other hand, the percent of the January to April employment level reduction that African Americans had recovered fell again in December, from approximately 49% in November to 47%. Hispanics experienced similar rates of reversal, falling from approximately 58% in November to 53% in December.

Over the last three years, the Index levels have declined the most for African Americans, with an average rate of decline of 2.3 points per year. Hispanics and Whites have experienced an average rate of decline of 1.8 points and 1.3 points, respectively.

Increase in Employment Levels for Whites and African American Men

The Index values increased for White men, White women and African American men between November and December. All other race and gender groups experienced a decline in employment levels relative to November.

Continuing the trend of the last two months, the Index levels for White women increased by .3 points, from 95.9 in November to 96.2 in December.  Employment levels for White men steadily improved from May to November but declined by .6 points between October to November. Some of this November decline was offset in December with an increase of .2 points, from a level of 94.3 in November to 94.5 in December.  As of December, White men had recovered over 56% and White women over 66% of their initial January to April employment Index decline.

Welch Consulting Employment Index Race and Gender

After a generally steady improvement between May and November, both Hispanic men and women experienced a decline in employment levels between November and December. For Hispanic men, the Welch Index declined by 1.1 points, from a value of 94.4 to 93.3 between November and December. Hispanic women experienced a lower reduction of .6 points, from the Index value of 92.6 to 92 over the same period. As of December, Hispanic women recovered over 57% and Hispanic men over 49% of the initial 21.6 point and 18.7-point decline in Index levels.

Employment levels continued to increase well into December for African American men, but reduced for African American women.  For the former group, the Index levels increased .7 points, to a value of 90.3; for the latter group, they declined 1.1 points, to a value of 91.9 points in December. As a result, the percent of the January to April Index decline that African American men recovered increased, to about 49% in December. For women, the percent recovered was reduced to approximately 46% in December.

As before, the Index levels for African American men remained lower than those of African American women. However, the difference in Index values for the two groups reduced 1.8 points by year end compared to November.

Underlying Factors of Employment Index Trends and Concluding Remarks

Our economic consulting experts find a slowdown in employment recovery due to a surge in COVID-19 cases and increase in unemployment levels in Leisure, Hospitality, and among temporary workers. Racial differences in employment patterns reflect the fact that Hispanics, Whites, and African Americans are differently situated across these different sectors and workforce types.

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:
Jobs and unemployment | Economic Policy Institute (epi.org)