Monthly Latino Employment Report Issued December 7, 2012
Underemployment: The Real Jobs Crisis Looking Beyond Unemployment among Latino and Black Workers Although the national unemployment rate has held steady at 8% in recent months, it has masked the full picture of the nation’s jobs crisis. Today millions of Americans are underemployed, a term used to describe people who are employed but would like more work, are not in the labor force but want and are available to work, or are unemployed, meaning they are actively seeking employment but cannot find a job. While the number of underemployed people has steadily decreased over the past year, data show that underemployment is more concentrated among Latino and Black workers, resulting in less stability for the populations hit hardest by the Great Recession.
Latino Employment Statistics for November 2012 The latest report from the U.S. Department of Labor showed that net job growth was 146,000 and the unemployment rate was 7.7%, a decrease from October when it was 7.9%. The Latino unemployment rate remained unchanged at 10%. The Hispanic labor force participation rate, 66.1%, continues to be the highest of any demographic group. Much of November’s employment growth occurred in retail trade (+53,000 jobs), a sector that largely employs Latino workers.
Factors of Part-Time Employment Latinos and Blacks are more likely to be underemployed. Their underemployment rates are 19% and 23%, respectively. While some underemployed individuals are working, underemployment still threatens a family’s economic security. Specifically, many workers who hold part-time jobs—positions that offer less than 35 hours per week—would prefer full-time employment in order to make enough money to support themselves and their families. These individuals are described as working “involuntary” part-time jobs, in contrast to part-time workers who deliberately seek out part-time work to supplement a breadwinner in the family or because the income from part-time work is sufficient for them. As Table 1 demonstrates, the rate of involuntary part-time employment among Latinos (10.3%) is more twice the rate of Whites (5%) and 2.6 percentage points greater than the rate of Blacks (7.7%).
Table 1. Underemployment by Race and Ethnicity, 2012* Unemployed Involuntary part-time Marginally attached Total underemployed
White 7,488,177 4,829,790 1,392,638 13,710,606
Hispanic 2,628,777.9 2,095,981.4 425,311.1 5,150,070.4
Black 2,714,618.3 1,106,882.6 558,123.2 4,379,624.1
* The pooled data run from November 2011 to October 2012. Source: Economic Policy Institute calculation using U.S. Bureau of Labor Statistics, Current Population Survey microdata.
The disparity in underemployment rates—especially due to involuntary part-time work—results in economic disadvantages felt particularly by Hispanic and Black workers. Many part-time jobs do not offer benefits like health insurance, and workers in part-time jobs are less likely to be in unionized positions. Moreover, irregular schedules prevent workers from securing other part1
Monthly Latino Employment Report Issued December 7, 2012 time jobs and lead to unpredictable paychecks from week to week. This reality makes it difficult for households to budget time and resources and contributes to higher rates of poverty among minority workers. Larger shares of part-time workers are found in industries that disproportionately employ Latino and Black workers. For instance, Hispanics represent 19.6% of workers and Blacks represent 11.2% of workers in the leisure and hospitality industry but only 14.5% and 10.8% of all workers in all industries, respectively. Table 2 shows that the leisure and hospitality industry has the highest share of part-time workers (56.3%), which is significantly higher than the share of all part-time workers (33.8%) in the overall labor market. Many workers in this industry are in occupations that pay wages at or below the poverty level.
Table 2. Share of Part-Time Workers by Industry, 2012* Industry All Leisure and hospitality Agriculture, forestry, fishing, and hunting Other services Wholesale and retail trade Construction Educational and health services Professional and business services Transportation and utilities Information Financial activities Mining Manufacturing Public administration
Percent part-time 33.8% 56.3% 46.3% 44.7% 40.1% 34.6% 33.4% 32.7% 26.7% 26.4% 22.3% 19.5% 18.7% 15.6%
* The pooled data run from November 2011 to October 2012. Source: Economic Policy Institute calculation using U.S. Bureau of Labor Statistics, Current Population Survey microdata.
High rates of underemployment and involuntary part-time work also hurt the economy at large. Workers without disposable income are less likely to spend money on basic needs like groceries and doctors’ visits, which weaken local businesses and economies. Underemployment also represents a fundamental economic inefficiency because it means that not all willing and able workers are employed to their fullest capacity. That untapped potential hurts the competitiveness of American businesses and prevents workers from strengthening their skills and moving into higher-skilled jobs.
Over-the-Year Underemployment Trends Hidden in this past year’s employment news is a trend in underemployed workers—including those who are unemployed, involuntary part-time for economic reasons, and marginally attached—that deserves closer attention. As Figure 1 demonstrates, although underemployment rates decreased among Latinos (–5.3%) and Blacks (–1.5%) over the past year, underemployment remains markedly high for Latinos (19%) and Blacks (23%) compared 2
Monthly Latino Employment Report Issued December 7, 2012 to Whites (12%). When compared to underemployment rates for Latinos and Blacks at the end of the Great Recession in June 2009 (23.9% and 22.5% respectively), current underemployment rates show little to no promise of improved economic stability for these workers.
Figure 1. Underemployment Rate of Workers 16 and Older by Race and Ethnicity, October 2011–October 2012 (seasonally adjusted)
Source: Economic Policy Institute calculation using U.S. Bureau of Labor Statistics, Current Population Survey microdata, 2012.
While the trend is decreasing, we still need to pay attention to the high rates of underemployment because it affects families’ economic security and can impede recovery. Looking beyond the unemployment rate to closely examine underemployment, and involuntary part-time workers in particular, reveals concerning conditions, demonstrating the need for public policies to spur job creation that will put unemployed and underemployed people back to work full time.
Special thanks to the Economic Policy Institute for providing the data for this report.
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