Bureau of labor Statistics graph of black unemployment rates 1982-2011

The Bureau of Labor Statistics has kept data on unemployment among American blacks since 1972. The record high rate of unemployment was in June 1983, 20.7%. The record low was in April 2000 at 7%. For June 2011 the black unemployment rate is 16.2%.

The last thirty years have seen four peaks for black unemployment and three troughs.

The highest rate of black unemployment in the Obama era was 16.5% in March and April 2010. It has now been fourteen months since that peak. Black unemployment has dropped to 16.2%.

In comparison, after the first peak in the table, black unemployment had dropped from 20.7% to 16% in fourteen months. After the second peak it went from 14.7% to 12.7%. The fourteen months after the third peak saw black unemployment go from 11.5% to 10.5%.

The last Census report on poverty in America was released in September 2010 for the year 2009. Black poverty was up from its record low rate in 2000 of 22.5%. In 2009 just over one in four American blacks lived in poverty. For blacks living in a household headed by a woman, 40% lived in poverty.

Over the last generation, reductions in black unemployment have become increasingly more difficult to achieve. Even the record low rate set in 2000 was the highest of any minority and came during the one of the greatest economic upturns since World War Two. In the midst of an economic boom, seven percent of blacks remained unemployed.

Black unemployment, like black poverty, contains a core group that may not be reachable by economics and the free market as we know it. This hardcore cluster of poor blacks was created by social dynamics and governmental policies that may have created a permanently disenfranchised class lacking the ability to change their own condition.

Economic analysis is a tricky business. By selecting the right data, an analyst can make any premise appear correct. One of the most blatant ways of doing this is to select the most recent data that supports the premise you want to illustrate.

The overall unemployment rate in the United States in September has been initially reported as 6.1%. This rate and the numbers behind it will be revised several times over the next few months, but let’s work with what we have.

The highest unemployment rate under George Bush was 6.3% in June of 2003. The highest under Bill Clinton was 7.3% in January 1993. June of 1992 was George Bush the elder’s high, 7.8%. Reagan’s high was in the two months of Novermber and December 1982, 10.8%.

The Economist defines full employment as:

Jobs for all that want them. This does not mean zero unemployment because at any point in time some people do not want to work. Also, because some people are always between jobs, there will usually be some frictional unemployment. Full employment means that everyone who wants work and is willing to work at the market wage is in work. Most governments aim to achieve full employment, although nowadays they rarely try to lower unemployment below the nairu: the lowest jobless rate consistent with stable, low inflation.

What unemployment rate can be considered “full employment”? Not zero, because there will alwyas be people changing jobs – frictional unemployment. There may not be a “full employment” rate because conditions change in the labor market, and in the business cycle overall that affect the labor market.

The Organisation for Economic Co-operation and Development (OECD) took a stab at it in 1999, with a “full-employment unemployment rate” of 4 to 6.4%. The problem with this estimate is that the extremely low unemployment rates of the late 1990′s failed to produce the expected inflation, suggesting that full employment may be an even lower rate, or else some major economic theories were all wrong.

The United States is now a post-industrial economy. The theories and norms for such an economy are new and untested. Most of what we have to work with are theories developed for an industrial economy and, as just described, they may no longer apply. The ties between inflation and unemployment may no longer be as they were in the 1960′s.

That statement has profound implications for the interest rate policies of the Federal Reserve, but that is another post indeed.

The following statements are true according to the data as presented.

An overall unemployment rate of 6.1% is well below all but one of the peaks in the last 28 years.

The September 2008 Black unemployment rate of 11.4% would have been a low from 1980 to mid 1994.

The September 2008 rate of Hispanic unemployment of 7.8% would be a low for all the months and years from mid 1980 through mid 1997 other than for a few months in 1990.

Unemployment rates have been worse in the last thirty years. For Blacks and Hispanics, the current rates are as close to record lows as they are to peak unemployment rates. Overall, it appears that unemployment rates are trending lower if you consider the period 1980 to date.

In this new economy, is there a trend we can determine? Or, are we still not far enough in to the post-industrial age to make such statements? For example, does this economy generate more jobs that come and go versus the industrial economy? Is it part and parcel of this economy that the job market will churn more and that jobs will have a finite life span resulting in higher unemployment?

Or, is the opposite true? Does the economy generate so many jobs that the unemployment rate will stay low despite any churning in the labor market?