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A Jobs-Centered Approach To African American Community
Development?
The crisis of African American unemployment requires
federal intervention
By Algernon Austin
Economic Policy Institute
December 14, 2011
http://www.epi.org/publication/bp328-african-american-unemployment/

Millions of African Americans live in communities that
lack access to good jobs and good schools and suffer
from high crime rates. African American adults are about
twice as likely to be unemployed as whites, black
students lag their white peers in educational attainment
and achievement, and African American communities tend
to have higher than average crime rates. These issues
have been persistent problems.

Jobs are essential to improving African American
communities. Increased employment would help people in
these communities lift themselves out of poverty. In
addition, because poor economic conditions are an
important causal factor behind poor educational outcomes
and high crime rates are correlated with high
unemployment rates, creating job opportunities would
help improve educational outcomes and reduce crime.

This paper outlines a plan for significantly increasing
the number of jobs available to African Americans. The
plan, which targets communities with persistently high
unemployment, includes three main components: creation
of public sector jobs, job training with job-placement
programs, and wage subsidies for employers. Although the
plan is constructed with African Americans in mind, it
would also provide benefits to Latino, American Indian,
and white communities in which unemployment has remained
high.1

A precondition for implementing this plan is a U.S.
economy with strong job growth and low unemployment.
Unemployment in African American communities cannot be
low while the national unemployment rate is high. Thus
macroeconomic initiatives-such as infrastructure
investments, aid to states, and a stronger safety net-
are needed to restore the national economy, reduce the
national unemployment rate, and create the conditions
for strong job growth in the future.

Even when the national economy is good, however,
conditions for African Americans are typically bad.
Federal intervention to aid African American community
development is necessary for the following reasons:

    African Americans still reside mainly in separate
    and unequal communities. In 2010, in the 100
    metropolitan areas with the largest African American
    populations, 62.5 percent of blacks would have had
    to move to achieve full black-white integration.

    Unemployment rates for African Americans have been
    far higher than those of whites for the past 50
    years, even in good times. In fact, since 1960 the
    black unemployment rate has been about twice the
    white rate. Had blacks had the same unemployment
    rate as whites in 2010, an additional 1.3 million
    blacks would have been employed.

    Parental unemployment, and not simply low income,
    has negative effects on children's educational
    outcomes. Blacks are twice as likely as whites to
    have had 10 or more spells of unemployment over
    their prime working years.

    Joblessness, although by no means the only factor
    producing higher crime rates in African American
    communities, appears to play a significant role.

    Neither educational advances nor suburbanization by
    blacks has translated into reductions in the black-
    white unemployment rate ratio.

    If a bold new approach is not developed to address
    the racial unemployment disparity, it is likely that
    African Americans will be condemned to unemployment
    rates that are twice those of whites into the
    foreseeable future.

This paper begins with brief discussions of residential
segregation and the persistent job crisis facing African
Americans. It then presents evidence that suggests why
improving educational attainment and access to suburban
labor markets are not likely to be enough to raise
employment rates among African Americans. This
discussion is followed by a proposal for reducing the
high rate of joblessness in and rejuvenating African
American communities. Separate and unequal communities

African Americans still reside mainly in separate and
unequal communities. In 2010, in the 100 metropolitan
areas with the largest black populations, 62.5 percent
of blacks would have had to move to achieve full black-
white integration. In some of the largest metropolitan
areas, the degree of segregation is significantly above
the average. In the New York, Chicago, and Detroit
metropolitan areas, for example, more than 75 percent of
African Americans would have had to move to achieve
residential integration.2

These spatially separate communities face very different
economic circumstances. In 2007, before the recession
began, African Americans in many of the largest
metropolitan areas were already in economic distress,
with unemployment rates of 10 percent or higher (Austin
2011). The 2007 unemployment rate for blacks in the
Detroit metropolitan area was 14.9 percent-more than 2.5
times the 5.8 percent rate for whites. In the Chicago
metropolitan area, the 2007 unemployment rate was 10.3
percent for blacks and 3.6 percent for whites.3

The segregation and economic inequality seen in large
metropolitan areas also exist even within the smaller
geographies of cities. In 2009, for example, Ward 3 in
Washington, D.C., which was 78 percent white
(Neighborhood Info DC 2011), had an unemployment rate of
just 3.2 percent (Comey, Narducci, and Tatian 2010). In
contrast, the unemployment rate in Ward 8, which was 94
percent African American, was 28.7 percent.

Because of the high degree of segregation of African
Americans into economically distressed communities,
community-based policies can be effective mechanisms for
helping this population. In Washington, D.C., for
example, the challenge is not how to provide economic
development for the city as a whole but how to provide
economic development for Ward 8 and similar wards. ?The
importance of jobs

The problem of joblessness is a deep and persistent one
for African Americans. Since as early as 1960, the black
unemployment rate has been twice the white rate (Fairlie
and Sundstrom 1999).4 As wide as this unemployment rate
gap is, it actually underestimates the magnitude of the
problem, because, faced with persistent challenges
finding employment, many would-be job seekers give up
hope of finding a job and drop out of the labor force.
Once they do so, they are no longer counted as
unemployed, even though they are jobless. For this
reason, only employment-rate gaps reveal the full
magnitude of the problem of joblessness for African
Americans.

In 2010, for example, had blacks had the same
unemployment rate as whites, an additional 1.3 million
blacks would have been working. Had blacks had the same
employment rate as whites, however, an additional 2.0
million blacks would have been working.5 The
unemployment rate gap is large, but the employment rate
gap is even larger.

Employment that reaches deep into African American
communities is key to community development, for a
variety of reasons. First, economic conditions are
related to educational achievement. Low family income
has significant negative effects on children's
educational achievement (Duncan and Magnuson 2005; Kalil
2010; Lee and Burkam 2002; Stevens and Schaller 2009;
Taylor, Dearing, and McCartney 2004). Unemployment in
and of itself has negative effects on children's
educational outcomes (Stevens and Schaller 2009; Kalil
2010). Blacks are twice as likely as whites to have had
10 or more spells of unemployment over their prime
working years (Bureau of Labor Statistics n.d.). Each
spell of parental unemployment reduces the likelihood of
a child's educational success. If it were possible to
increase the black employment rate to the level of
whites and sustain it, we would expect substantial
increases in the performance of black students. Creating
more jobs for African Americans would thus not only
raise incomes, it would also improve educational
outcomes.

Second, economic conditions seem to be related to crime
rates. Although there is much that criminologists still
do not understand about the dynamics of criminal
offending, a growing body of research suggests that low
wages, high unemployment, high poverty, and high
economic inequality lead to higher crime rates (Kelly
2000; Ludwig, Duncan, and Hirschfield 2001; Gould,
Weinberg, and Mustard 2002; Machin and Meghir 2004; Lin
2008). Strong job creation that targets African-American
communities would improve economic conditions in these
communities and likely reduce crime rates.

It is important to recognize that economic conditions
are not the only factors driving crime rates.
Demographic changes, criminal-organization practices,
criminal-justice policies, and other factors all affect
crime rates. The recent declines in crime likely stem
from these other factors. The insufficiency of education
alone

Improving educational attainment is a worthy end in
itself, but there is little reason to believe that it
will reduce the economic problems facing African
Americans. The more educated a person is, the more
likely he or she will be employed and employed in a good
job. However, the employment gap between African
Americans and whites will not be bridged by increasing
education, as the evidence presented below shows.

The African American population is much better educated
today than it was in the 1960s by several measures
(Austin 2006, 41-49), but the unemployment disparity
between blacks and whites remains essentially unchanged.
Educational advances have not translated into
improvements in the employment situation for most
African Americans (Bernstein 1995).

One reason for the ineffectiveness of education is that
educational advances made by blacks have often been
matched or exceeded by educational advances by whites.
For education to improve blacks' relative position, they
need to make educational advances at a faster rate than
whites.

Even if African Americans were able to catch up with
whites educationally, unemployment disparities would not
disappear, as African Americans are more likely to be
unemployed than whites at every educational level. In
2007, for example, before any significant unemployment
effects of the Great Recession had been felt, blacks 25
years old and older with a high school diploma were
about twice as likely to be unemployed as their white
peers. Blacks with a bachelor's degree or higher were
one and a half times as likely to be unemployed as their
white counterparts. These disparities are so large that
even if blacks had the same educational attainment
profile as whites, most of the unemployment gap would
remain.6

For African Americans to have had the same unemployment
rate as whites in 2007, for example, they would have had
to have been much, much better educated than whites.
According to Current Population Survey data from the
Bureau of Labor Statistics, the proportion of the labor
force with a bachelor's degree was 24 percent for
blacks, 34 percent for whites, and 58 percent for Asian
Americans. For the African American unemployment rate to
have equaled that of whites, 85 percent of African
Americans would have had to have been college educated.
Even if there were a way for African Americans to
quickly leapfrog whites and Asians in college
attainment, over time white educational attainment would
gradually catch up, recreating the African American
unemployment disadvantage.

It is extremely valuable for African Americans to
improve their educational outcomes, both individually
and collectively. Education has economic as well as
important noneconomic benefits. The social problem of
the employment gap between blacks and whites will not be
solved by educational advances alone, however. The
limitations of remedies that target hard and soft skills

A related but somewhat different issue is skills
training. As with education, it is doubtful that skills
training alone is a powerful enough remedy to rectify
the employment disparities between blacks and whites. An
evaluation by Public/Private Ventures, a nonprofit
research organization, reveals the effect of training on
employment of African American workers (Maguire et al.
2010). The study evaluates the sectoral employment
approach, which provides job seekers with training in
the technical ("hard") skills needed for specific
growing sectors of a local economy. The organizations
providing the training work closely with employers to
ensure that training is relevant. In addition to
technical skills, programs also provide some
interpersonal ("soft") skills training.

Public/Private Ventures used a rigorous experimental
design to assess the effectiveness of the sectoral
approach. A year after participants started the program,
employment rates of women, people born abroad, and
Latinos were higher than employment rates in the control
group. In contrast, the program was not successful in
improving the employment rate of African Americans.
Although the skills of the African American participants
improved, their employment rates did not. This study
raises doubts that training is enough to improve black
employment rates.

Many observers believe that employers reject African
Americans, particularly African American men, because
African Americans lack soft skills (see Hamilton,
Austin, and Darity 2011, 6-7). The occupational and
employment data do not support this view, however (see
Allegretto and Pitts 2010, Appendix A; Hamilton, Austin,
and Darity 2011, 6-7). African Americans, including men,
are overrepresented in the service sector, a sector with
relatively high soft-skills demands. They are very much
underrepresented in the construction industry and
slightly underrepresented in the manufacturing industry,
both of which emphasize hard skills. Because these
industries tend to pay higher wages than the service
sector (Allegretto and Pitts 2010, Appendix A; Hamilton,
Austin, and Darity 2011), it would be more beneficial
for African Americans to increase their rates of
employment in these sectors than in the service sector.

As with education, it is valuable for blacks to master
both hard and soft skills. Unemployment disparities
between blacks and white do not, however, appear to be
caused primarily by the lack of these skills. A spatial
mismatch or a racial one?

Another common misconception about unemployment
disparity is that it is driven by the spatial mismatch
between African Americans and jobs. The claim is that
African Americans live in urban areas whereas jobs and
much of job growth is in suburban areas. The solution
therefore is presumed to be moving African Americans to
the suburbs or increasing urban African Americans'
ability to reach suburban jobs through transportation
initiatives (Hellerstein and Neumark 2011). In fact, the
mismatch driving the black-white unemployment disparity
appears to be more racial than spatial (Hellerstein,
Neumark, and McInerney 2007).

William Julius Wilson's work is seen as supporting the
spatial-mismatch hypothesis (see Foster-Bey 2006), but
he also provides evidence of racial mismatch. Wilson
shows that during the late 1980s, before the Internet
became an important source of job information, more than
40 percent of employers in Chicago did not advertise
their entry-level job openings in the newspaper (Wilson
1996, 133). These employers likely relied on word-of-
mouth methods of advertising and recruiting for jobs.
Because whites have higher rates of employment and
interpersonal networks in the United States are not very
integrated racially, informal recruitment methods
disadvantage blacks seeking work. Wilson (1996) also
shows that a large share of the employers who advertised
job openings in newspapers did so only in white or
Latino neighborhood newspapers. Thus, in many cases,
even when jobs were advertised, blacks were unlikely to
learn of the opening.

Wilson's work suggests that African Americans were not
able to learn about a large share of entry-level job
openings in Chicago. Had employers been less
discriminatory, African American employment rates would
have been significantly higher. Chicago employers who
advertised job openings in newspapers where African
Americans might see them were twice as likely to employ
African Americans in their entry-level jobs. African
Americans in Chicago were blocked from obtaining many
jobs because of race, not space.

This finding has been replicated with national data from
the 2000 Census by Hellerstein,  Neumark, and  McInerney
(2007), who find that although less educated blacks live
in areas in which less educated whites hold many jobs,
"the problem is not a lack of jobs, per se, where blacks
live, but a lack of jobs into which blacks are hired."
Thus, if there were equal employment opportunity for all
races in urban spaces, black employment rates would be
higher in those spaces.

Another reason to be skeptical about a spatial approach
for addressing unemployment disparities is the fact that
African Americans have suburbanized to a large degree-
with no effect on employment disparity. In 1960 only 13
percent of the African American population lived in
suburbs. By 2000, 35 percent did so (author's
calculations based on data from Wiese 2004 and Ruggles
et al. 2010). In the 100 largest metropolitan areas,
which are home to about three-quarters of the African
American population, 51 percent of African Americans
lived in suburbs in 2010 (Frey 2011). These increases in
suburbanization have not been accompanied by a reduction
in the gap between African American and white
unemployment.

Even in metropolitan areas where only a small share of
the black population resides in the central city, large
unemployment disparities persist. In Washington, D.C.,
for example, only 21 percent of blacks in the
metropolitan area lived in the central city in 2000, but
unemployment was 3.5 times higher among blacks as
whites. In Atlanta only 18 percent of blacks lived in
the central city in 2000, but the rate of unemployment
among blacks was 2.6 times that of whites.7 These data
suggest that suburbanization alone will not solve the
problem of African American joblessness.

Suburbanization has not reduced the disparities in
unemployment because the suburbs in which African
Americans live tend to be separate from the suburbs in
which whites live. According to Turner (2008, 159), "In
several metropolitan areas, suburban minorities are
clustered in one or two counties. . . . The vast
majority of those who have located in the suburbs live
in the inner suburban communities, while a much larger
share of whites live in the outer suburbs."

Economic growth-and therefore job opportunities-appears
to be most strongly connected to white middle-class
communities. African Americans remain economically
marginalized in the suburbs. As Turner (2008, 165-66)
notes:

    Although many minorities have gained access to
    suburban residential communities, these are often
    not the suburban jurisdictions that offer the most
    promising job opportunities. Correspondingly, black
    workers in particular are underrepresented in jobs
    that are located in predominantly white suburban
    communities. On the other hand, Hispanic workers are
    generally just as likely as non-Hispanic whites to
    find employment in the white suburbs. . . .
    residential segregation continues to put
    considerable distance between minority workers,
    especially blacks, and areas of greatest employment
    opportunity.

Other researchers find similar results. Harris (1999)
finds that African Americans are overrepresented in
suburbs with the lowest socioeconomic profile. Many of
these low- status suburbs have high poverty rates.
Indeed, many are poorer than the central city they
surround. In contrast, whites are overrepresented in
high socioeconomic status suburbs.

Economic growth seems to be correlated with the density
of the white middle-class population rather than to any
specific geography. It is not suburbs per se that show
strong job growth but white middle-class suburbs. It is
not cities per se that exhibit low job growth but cities
or areas in cities with a low white middle-class
density. The majority white and middle-class city of
Seattle, for example, has experienced strong job growth
(Turner 2008). Cities and areas of cities that have seen
white gentrification have experienced economic
revitalization (Hampson 2005; Kiviat 2008). Indeed, now
that most African Americans in major metropolitan areas
live in the suburbs, there are more discussions that the
future of American economic growth is urban
(Shellenbarger 2010; Wieckowski 2010).

There are many reasons why economic growth may be tied
to a large white middle-class population. Relative to
the black middle class, the white middle class has
higher income, much greater wealth, and superior
connections to the politically and economically
powerful, who are disproportionately white. Middle-class
blacks are also more likely to have poor relatives to
support and to live in communities burdened with
relatively high levels of poverty. As a result, white
middle-class communities are more likely to be ripe with
economic potential.

Another reason why suburbanization does not
automatically translate into greatly improved job
opportunities for African Americans is that African
Americans probably still experience labor-market
discrimination in the suburbs. Turner (2008, 166)
reports that "the minority share of applicants for jobs
in the white suburbs is significantly higher than the
minority share of population in these areas, suggesting
that blacks and Hispanics are trying to get jobs in
white suburbs [but  appear to be] disadvantaged in white
central-city areas and white and integrated suburbs."
Employment discrimination, which has been well
documented in urban areas, likely exists in suburban
areas as well.

All of these factors point to a mismatch for African
American workers that is much more about race than
space. Suburbanization has eliminated neither
residential segregation nor anti-black employment
discrimination. A plan for creating jobs in high-
unemployment areas

The depth and the persistence of the African American
jobs crisis can probably be solved only with
intervention by the federal government. In the past 50
years, the normal working of the U.S. economy and the
modest amelioration efforts that have been tried have
failed to provide sufficient jobs for African Americans.
Increases in educational achievement and suburbanization
by blacks have also failed to spur change. If a bold new
approach to the problem is not taken, it is likely that
blacks will be condemned to unemployment rates that are
twice those of whites into the foreseeable future.

On more than one occasion, the United States has
responded to crises of joblessness with government
intervention. The federal government intervened during
the Great Depression, the recessions of the early 1970s,
and the Great Recession. A sustained level of high
unemployment for African Americans decade after decade
should be recognized as a crisis as serious as periodic
deep national recessions. White Americans regularly
experience unemployment rates below 6 percent-a rate
that blacks have never experienced in the past 40 years.
An unemployment rate of more than 10 percent is
considered extremely high for whites-but African
Americans have had to endure unemployment rates of more
than 10 percent for most of the past 40 years, according
to analysis based on Current Population Survey data from
the Bureau of Labor Statistics.

Given the intractability of high joblessness for African
Americans, the federal government should support
targeted job creation for communities experiencing
persistently high unemployment. Job creation should be
targeted to communities of 25,000 people or more in
counties and metropolitan areas that have experienced
unemployment of more than 6 percent every year in the
previous 10 years. Eligible individuals must have
resided in an eligible community for a prolonged period
and have been unemployed or out of the labor market for
at least six months. The program could be phased out in
communities over a five-year period after the annual
unemployment rate fell below 6 percent.

The proposed program is at a scale large enough to
produce a significant reduction in unemployment. It is
likely to improve communities plagued by persistent high
unemployment in other ways, as well. Types of programs

The federal government should support three separate
programs for increasing employment in these high-
unemployment areas: direct public sector employment, job
training with job placement, and wage subsidies for
employers who hire unemployed workers. Together these
policies should significantly increase employment rates
in African American communities with persistently high
unemployment.

*	Direct public sector employment. The federal
	government should provide funds to local
	governments for job creation aimed at improving
	the quality of life in the community. Local
	governments, with community input, should create
	projects to improve the human and physical
	infrastructure, safety, health, and
	attractiveness of the community. Many African
	American communities experiencing persistently
	high unemployment need workers to clean,
	rehabilitate, and beautify the housing stock and
	green spaces; assist in the education of
	children; form auxiliaries to the police to help
	improve the safety of the community; and
	participate in many other community projects.
	These jobs would improve the quality of life of
	existing residents and make the community more
	desirable to middle-class households. Unemployed
	community residents would be hired and trained
	to perform all program jobs with the possible
	exception of supervision and training.

*	Job training and job placement. Black job
	applicants have a lower likelihood of being
	hired than equally qualified whites or Latinos
	(Pager, Western, and Bonikowski 2009; Morris,
	Sumner, and Borja 2008). Improving the skills of
	black workers is useful, but it may not be
	enough to lead to employment. Organizations
	providing training for black workers also need
	to provide services to help place those workers
	in jobs. These organizations need to develop
	strong relationships with employers and
	aggressively market qualified black job
	candidates. They also need to develop other
	strategies to help well-trained black workers
	find employment.

	For-profit and nonprofit organizations should be
	eligible for funds for training residents of
	targeted communities in skills that are in high
	demand in the local economy and placing them in
	jobs. Programs should be assessed by the
	employment rate of their graduates six months
	after completing the training program. Programs
	that underperform should lose significant
	amounts of funding each year, with the freed-up
	funds redistributed among well-performing
	programs.

*	Wage subsidies. Private sector employers who
	hire residents from targeted communities in new
	jobs should receive a wage subsidy of 75 percent
	of the hourly minimum wage for each full-time
	worker receiving benefits hired and 33 percent
	of the hourly minimum wage for each part-time
	worker or full-time worker not receiving
	benefits hired. Employers located within the
	targeted community should receive an additional
	subsidy that is 10 percentage points higher.
	Long-term effects of a jobs program in high-
	unemployment areas

The effects of the proposed program are likely to be
felt for several years after it is phased out.
Researchers find that positive economic effects last for
many years after temporary jobs programs end (Bartik
2001: 141-146). Positive experiences with African
American workers may also reduce employer biases,
possibly leading them to institutionalize the outreach
and hiring of African American workers (Bartik 2001,
141-46). Studies of public sector employment programs
find that employers are surprised to find that workers
from disadvantaged groups can perform as well as the
workers they usually hire (Bartik 2001, 179-80).

This jobs proposal is designed to increase the overall
economic resources in the community. Increasing the
number of working and taxpaying individuals would
increase the tax base for additional economic
development activities while also decreasing local
government social service and social welfare costs. It
would make the community more appealing for locating a
business. The proposal is also designed to increase the
attractiveness of the community to middle-class
households looking for a new place to live as well as to
both new and existing businesses.

Significant growth in employment rates could also lead
to increases in the educational achievement of the
children in the community and reductions in crime. These
improvements would attract more middle-class residents
and further increase the economic resources of the
community. ??Conclusion

The U.S. economy should be one in which everyone who
wants to work can find a job. This goal has been elusive
for African Americans.

Given the persistence of high unemployment despite
improvements in educational attainment and greater
suburbanization by African Americans, a concerted
national effort is needed to reduce racial disparities
that leave blacks twice as likely as whites to be
unemployed. Under the proposed plan, the federal
government would significantly increase the number of
jobs available to African Americans by creating public
sector jobs, training and helping place participants in
jobs, and subsidizing wages. By substantially increasing
employment rates, it would help diminish poverty,
improve educational achievement, and reduce crime rates.
Acknowledgments

This paper benefitted from discussions with Randell
McShepard, board chairman of the Ohio-based think tank
PolicyBridge. Endnotes

1. A few predominantly white communities-such as
Belleville, Illinois, and Niagara Falls, New York-have
experienced unemployment rates of more than 6 percent
for 10 consecutive years (author's analysis of Local
Area Unemployment Statistics data from the Bureau of
Labor Statistics).

2. Author's analysis of data from population and
dissimilarity data from diversitydata.org. The statistic
for the 100 metropolitan areas with the largest African
American populations is weighted by the population size.

3. African American unemployment rates are from Austin
(2011). Rates for whites are derived in the same manner
using Current Population Survey and local unemployment
area statistics from the Bureau of Labor Statistics.

4. Researchers do not understand why this relationship
persists. As Duke professor William Darity notes, "I
don't know if there's anybody out there who can tell you
why that ratio stays at 2-to-1. It's a statistical
regularity that we don't have an explanation for" (Kroll
2011; see also Conrad 2011).

5. Author's calculations based on Current Population
Survey data from the Bureau of Labor Statistics.

6. Ibid.

7. Data on the share of blacks residing in the central
city are from Turner (2008). Unemployment rate ratios
are derived from Economic Policy Institute estimates
based on Current Population Survey and Local Area
Unemployment Survey data from the Bureau of Labor
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