Highlights:

  • Employment levels recover for Whites, African Americans, and Hispanics, overall.
  • The Index levels declined marginally for White women.
  • After a decline in December 2020, the Index recovered at a similar pace for Hispanic and African American women.
  • Index levels were higher for White women at the start of this year compared to 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 full-time equivalent employment level has decreased (increased) relative to the adult population’s growth during that period.

For example, over the past 12 months, the Index has fallen 7.2 points for African Americans from 99.7 to 92.5.  In other words, the level of full-time equivalent employment for African Americans has increased at a rate 7.2% slower than the increase in the U.S. African American adult population over the past year.  This decline in the employment level is 2 points and 1.5 points greater than the decline that Whites and Hispanics have experienced over the past one 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.

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

Employment Levels Recover for All Races

The Welch Index for White increased steadily between May and October of this year, declined in November, and then recovered again at the end of the year. The general pattern of recovery continued into January of this year but at a lower rate than in December. The Index for Whites rose by .2 points from 95.2 in December to 95.4 in January. At the start of this year, Whites recovered over 62% of the initial decline between January to April.

After a decline in employment levels in December, the Welch Index for African Americans and Hispanics recovered in January. For Hispanics, the Index rose by .6 points from value of 92.7 in December to 93.3 points in January. For African Americans, the rise was higher. Their Index rose by 1.4 points from a value 91.1 in December to 92.5 in January.

With this recovery, the percent of the January to April employment level reduction that African Americans recovered rose from approximately 47% in December to 55% in January. Similarly, for Hispanics, rates of reversal rose from approximately 53% in December to 56% in January.

Over the last three years, the Index levels have declined by 3.9, 4.7, and 5.3 points for Whites, African Americans, and Hispanics.

A Decrease in Employment Levels for Whites Women

For White women, the Index declined marginally by .1 point from 96.2 in December to 96.1 in January. All other gender and racial groups experienced a recovery in January compared to the previous month. Despite the slight decline, the January Index value for White women remained higher than that of all others. At the start of the year, they recovered over 65% of the initial April to January decline in employment levels.

On the other hand, the pace of recovery was more considerable for African American men in January. Their Index rose from 90.3 points in December to 92.9 in January. With this recovery and similar to White women, they reversed close to 65% of the initial employment decline.

The Index values for both Hispanics and African American women rose by .2 points between December and January of this year. For Hispanic women, the Index rose from 92 to 92.2 between December and January. For African American women, it rose from 91.9 to 92.1 over the same period. Despite this recovery, African American women have reversed less than 50% of the 16.3-point employment decline they experienced from January to April.  For Hispanics, this reversal rate was higher at close to 58% as of January.

Underlying Factors Behind Employment Index Trends and Concluding Remarks

Our economic consulting experts find employment recovery slow due to the persistence in Covid-19 cases and its related impact. Unemployment levels increased in sectors such as Leisure, Hospitality, Health Care, and Retail Trade. The workers on temporary layoffs declined, but overall reentrants to the labor force also declined.  Racial differences in employment patterns reflect that Hispanics, Whites, and African Americans are differently situated across these various 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:
THE EMPLOYMENT SITUATION — JANUARY 2021 (bls.gov)