Race &Recovery

The Booming U.S. Recovery Is Leaving Some Communities Completely Behind

Bloomberg is tracking the economic recovery in minority communities across the country

By Andre Tartar, Olivia Rockeman, Christopher Cannon and Catarina Saraiva

May 4, 2021, 12:01 AM EDT

The U.S. economy is on a multi-speed track as minorities in some cities find themselves left behind by the overall boom in hiring, according to a Bloomberg analysis of about a dozen metro areas.

The recovery is also patchy geographically. For Asian Americans in San Francisco and Los Angeles, low tourism and high housing costs are weighing on their rebound, while Latinos in Phoenix have benefited from a strong construction sector.

The varying speeds matter because the Federal Reserve and the White House vowed to look beyond aggregate figures to more broad-based data before adjusting their monetary and fiscal policies. Fed Chair Jerome Powell says he will base interest rate decisions in part on improvement in metrics that historically take longer to recover from downturns—like national Black unemployment, wage growth for low-income workers and labor force participation for those without college degrees.

Race &Recovery

A City Split Along Race: Washington, D.C.

Late Pandemic Relief: Chicago

Asian Businesses Struggle: NYC

Read more in our series on the economic recovery in minority communities across the U.S.

The Biden administration has stated that a more inclusive economy is key to a recovery. The Department of Labor is looking closely at data like the economic impact of the pandemic on labor force participation of Black women, who experienced the biggest drop between February and December 2020. In a February report, chief economist Janelle Jones wrote “No economic recovery can be complete if some communities are left behind.”

What Local Labor Conditions Can Tell Us

To better understand how the recovery is unfolding beneath the national level, Bloomberg calculated local unemployment rates for racial and ethnic groups across 15 metro areas.

A Growing Divide

By the fall, the Covid-19 pandemic had widened the non-seasonally adjusted White-vs.-Black unemployment gap nationally by 2.9 percentage points and the White-vs.-Hispanic gap by 2.3 points, while unemployment among Asians is back below the national average.

A Significant Difference

On a more local level, average jobless rates from January to March ranged from 15.5% for Black people in the Los Angeles metro area to 3.5% among White people in the Atlanta metro area. Margins of error for local rates can be quite large, but these data still provide important insights and signals in the absence of monthly, granular unemployment figures.

Note: Bloomberg considered margins of error when deciding which local unemployment-rate trends or disparities to highlight in this story.

Where the Recovery Is Stronger

A rare bright spot can be found in the Phoenix metro area, where local Hispanic workers are in a better labor market than their peers nationally, boosted in part by hiring for customer service jobs.

Where the Recovery Is Weaker

However, unemployment remains high in many urban communities, including Houston, where Black, Hispanic and White joblessness is worse than in the country overall, weighed down by the energy sector. Asians there are facing relatively stronger labor conditions.

Compared to the Peak

As bad as the current situation is, it’s dramatically better than at the height of the pandemic crisis last spring and summer. Excluding White unemployment rates and focusing on minorities reveals double-digit unemployment surges for Hispanic people in the Las Vegas-area, Black people around Philadelphia and others.

Not Yet Back to Normal

Still, for more than half of minority groups, local unemployment rates have not fully recovered to March 2020 levels, when stay-at-home orders were first enacted, while some gaps have widened.

Bloomberg calculated the above local unemployment rates using the monthly Current Population Survey of about 60,000 households, which is sponsored jointly by the Bureau of Labor Statistics and the U.S. Census Bureau, and will be following their progress throughout the year.

This analysis—combined with regional data such as housing prices, job listings and small business loans from the Paycheck Protection Program—shows that many minority communities are currently lagging behind. The latest metro-area vaccination rates, which tend to outpace the country as a whole, aren’t showing up in the March unemployment rates as a differentiator, but may play a bigger role in the coming months.

Note: Metro areas are identified by their principal city. Some smaller gaps between groups may not be statistically significant. Race and ethnicity are separate categories in the CPS so there may be overlaps between Hispanic respondents and those in the other groups, which should be taken into account when comparing between groups in a single metro area.

Because the Current Population Survey was not designed for such granular insights, Bloomberg considers margins of error when looking at trends or disparities between communities. The Los Angeles metro area is one of only two (Houston being the other) that had large enough sample sizes to calculate local unemployment rates for the major demographic groups tracked by the Census Bureau, and provides a good illustration of how margins of error are used to identify comparisons that are statistically significant.

Note: Unemployment rates are non-seasonally adjusted and represent the Jan.-March 2021 average.

Explaining the widening gaps between these groups is difficult. But it primarily comes down to local labor conditions and fluctuations in industries that typically hire minorities, which may vary from city to city. Bloomberg will report on these trends and what’s driving them throughout the rest of the year.

Los Angeles

Leisure and hospitality are important industries for Los Angeles. At the start of the pandemic, they lost almost half their workers in the state in just a two-month period, said H.D. Palmer, spokesperson for the California finance department.

“With the various public health-driven stay-at-home orders, cautious consumers and Covid-19 cases, people of color were hit hardest by the pandemic as they represent a larger share of the workforce in the service sectors where there is more in-person interaction as part of doing business,” Palmer said.

Asian Americans in the Los Angeles region are experiencing unemployment at twice the rate seen one year ago, according to estimates calculated by Bloomberg.

Around 350 miles north in the San Francisco area, Asian American communities are also far from pre-pandemic employment.

“A lot of people are living in crowded, multi-generational housing in the Asian immigrant community in the Bay Area, just because the cost of housing is so expensive,” said Sophia Cheng, organizing director for the Chinese Progressive Association, a San Francisco-based advocacy group. “People who are being called back to work are having to make a really hard decision about their health and safety.”

Photographer: Courtney Pedroza/Bloomberg

Phoenix

In Arizona, the recovery of Hispanic neighborhoods in the Phoenix metro region is relatively strong—driven in part by a robust construction industry and an earlier easing of pandemic restrictions that allowed for rehiring in the services sector. The quarterly unemployment rate as of March was 5.9%, according to Bloomberg’s calculations. Even taking into account the margin of error, that’s lower than the non-seasonally adjusted national Hispanic unemployment rate of 8.9% for that period, and statistically indistinguishable from the U.S. jobless rate overall at 6.5%.

Throughout most of the country, the housing market has been one of the biggest bright spots in the pandemic—fueled by the Fed’s near-zero rate policy and the desire for more space to work from home.

As part of that trend, construction was the second-fastest growing industry in Phoenix in March, said Lee McPheters, research professor and director at the Economic Outlook Center at the W.P. Carey School of Business at Arizona State University.

“The construction trades in Phoenix are particularly dependent on Hispanic workers, who account for over 50% of carpet, cement and painting workers, and over 70% of drywall workers,” McPheters said.

Educational infrastructure was also part of the solid bounce back, said Denny Barney, president and chief executive officer of PHX East Valley Partnership.

“You have one of the largest community college districts in the country in Maricopa county,” said Barney. Having a bridge between high school and traditional college allows for more engagement of vulnerable populations and has better prepared the region’s workforce for the post-pandemic economy, he said.

Photographer: Elijah Nouvelage/Bloomberg

Atlanta

Georgia’s partial reopening from a Covid-19 lockdown last April, blasted in many circles at the time, may in hindsight have wound up economically benefiting Atlanta and its large African American population, said Jessica Stewart, a professor in Emory University’s African American Studies department.

“It feels like Atlanta never really closed,” Stewart said.

Black people in the Atlanta metropolitan area had a 7.4% unemployment rate in the first quarter, according to Bloomberg estimates, compared with around 10% for the group nationwide.

There was a concerted effort locally to buy from and support Black-owned businesses in the area during the pandemic, said Stewart, who belongs to a business membership club popular with many of Atlanta’s Black entrepreneurs and high-tech workers.

And the city’s outsize number of large corporations, headed by Delta Air Lines, Coca-Cola Co. and United Parcel Service, also tend to have a progressive attitude toward enlisting minority suppliers, said Stacey Key, chief executive of the Georgia Minority Supplier Development Council.

Still, both women cautioned that the strong Georgia economy and improving jobless rate shadow some of the ills plaguing the community. The real estate boom has exacerbated the region’s affordable housing crunch, encouraging housing speculators to buy up properties and push minorities into the suburbs, Stewart said.

Photographer: Callaghan O’Hare/Bloomberg

Houston

Houston’s economy was hit not only by Covid but also by an energy crisis. The city, known as the oil capital of the world, depends heavily on the industry for all sorts of work, from offshore rigs to white-collar office jobs.

The recovery is particularly weak in the Black and Hispanic communities, with double-digit joblessness. Two in five adults in the Houston metro area say their family has struggled to pay for basic expenses during the pandemic, according to data collected by the Census’ Household Pulse Survey in late March.

The sharp decline in oil prices last year contributed to a spike in unemployment across groups, with 1.7 million jobless claims evenly split among White, Hispanic and Black workers, said Parker Harvey, principal economist at Gulf Coast Workforce Solutions.

Despite oil prices doubling since last November, Houston hasn’t seen any real meaningful hiring. “It performed, in a sense, worse than everything else because it didn’t even start to recover last year,” Harvey said.

Julia Coronado, founder of MacroPolicy Perspectives LLC and a former Fed economist, said that while recent economic data have shown signs of improvement nationally, there are going to be frictions to reaching a full recovery.

“We’re all a little impatient to see the reopening impact, but it’s going to take months for this to play out,” she said. “We’re rebooting the economy.”

Corrects per capita PPP and Yelp data featured in individual metro area graphics.

Editors: Margaret Collins, Silvia Killingsworth, Alex Tribou and Mira Rojanasakul
Assistance from: Alex Tanzi, Romy Varghese, Michael Sasso, Shruti Singh, Katia Dmitrieva, Sarah McGregor and Cécile Daurat
Methodology and code review: David Ingold
Photo editors: Farah Shulman, Marie Monteleone and Maria Wood
Lede photographers: Gabriela Bhaskar, Jessica Pons, Elijah Nouvelage, Eric Lee, Sebastian Hidalgo, Callaghan O'Hare and Courtney Pedroza

Sources: CPS data come from IPUMS-CPS, University of Minnesota, www.ipums.org. Local population and demographic data come from the Census Bureau’s 2015-19 5-year American Community Survey. The BLS non-seasonally adjusted national unemployment rates, including by race and ethnicity, are from the Federal Reserve Bank of St. Louis (FRED). Metro-area unemployment rates are from the BLS. Alternative data sets include: Zillow housing data (through March), Payment Protection Program data from the Small Business Administration, job posting data from Chmura Economics (as of mid-April), credit and debit-card spending data provided by Affinity Solutions (through March) and business re-openings and new business data provided by Yelp (through March). For zipcode-level data, each zipcode’s majority race or ethnicity is based on the relevant lower-bound value from the 2015-2019 5-year ACS (estimate minus margin of error).

Methodology: The Bureau of Labor Statistics no longer publishes annual demographic-level economic data for large metropolitan areas due to sample-size considerations and general concerns about reliability. The Census Bureau has continued to publish similar data via the annual American Community Survey. The latest available figures are for 2019. In order to illustrate how the recovery is playing out for different racial and ethnic groups around the country in 2021, Bloomberg calculated local demographic unemployment rates using raw microdata from the monthly Current Population Survey, which is co-sponsored by BLS and the Census Bureau.

This analysis is based on metro-area unemployment rates for three different racial groups—Asian, Black and White—as well as Hispanic ethnicity, which are categorized separately by the BLS and the Census Bureau. For instance, a CPS respondent who identifies as both Hispanic and Black will be counted in both the relevant unemployment rate calculations. In cases where there's substantial Hispanic-race overlap, the difference between the respective unemployment rates is unlikely to be statistically significant.

Rates were only calculated where the average monthly CPS sample size in 2020 for a given group in each metro area was large enough to be significant given a 90% confidence interval, 0.5 standard deviation and 10% margin of error. Metro-race and metro-ethnicity combinations were then further filtered to areas with a maximum pre-pandemic coefficient of variation—a measure of volatility calculated using 2019 monthly data–of 0.5, in line with what the BLS recommends for publication of subnational CPS data.

Fifteen metro areas had at least one minority group that met this criteria. Only two—Houston and Los Angeles—had qualifying data for all major demographic groups.

When calculating the unemployment rate for qualifying groups and areas—defined as the share of people aged 16 and over who are in the labor force and who are unemployed—only months with a large enough relevant sample were used. All unemployment rates cited in this story, including national reference rates, are non-seasonally adjusted to better capture the impact of the pandemic and limit unnecessary adjustments of the microdata tabulation. Additionally, non-seasonally adjusted data are appropriate for comparing between groups in a given time period or year-over-year for a single group, as is the focus of this story.

Since the CPS isn't meant to be used for such granular tabulations, a 3-month rolling average and margins of error were calculated and used throughout the analysis to focus on statistically significant trends and disparities. Bloomberg received guidance from the BLS on the most appropriate equations, metro-area parameters and national-level factors for calculating these margins of error.

“We stopped publishing annual-average economic and demographic characteristic detail from the CPS for large metropolitan areas effective 2015 because we did not think that we could do so responsibly, given the sample-size limitations and the lack of reliability criteria or independent population controls at the area level,” Thomas Krolik, an economist with the BLS' Local Area Unemployment Statistics division, said. “Data users nonetheless are free to develop custom tabulations of CPS microdata and use and disseminate as they see fit.”

Because the ranges for these local rates can be quite large, only comparisons between groups or over time that fall outside the relevant margins of error were used. To gauge the severity of the variance, the 2019 annual average unemployment rate was calculated from the CPS microdata following the above methodology and compared to the estimates from the 2019 1-year American Community Survey. The ACS estimates were on average 0.8 points higher than the CPS measures, and were higher for 80% of metro area and group combinations. That's roughly in line with the BLS’ own findings when comparing CPS and ACS 2018 data at the national and state levels.

While the unemployment rates we’ve calculated show how various races and ethnicities are continuing to experience higher unemployment than a year ago and lagging the country overall, this analysis does not look at people who are underemployed, those who have dropped out of the labor force or those who are making wages that are lower than they were previously earning, which may reveal other noteworthy trends or relationships.

Race &Recovery

The Booming U.S. Recovery Is Leaving Some Communities Completely Behind

Bloomberg is tracking the economic recovery in minority communities across the country

Double-Digit Divide

Finding Meaning in the Data

Los Angeles

Phoenix

Atlanta

Houston

Race &Recovery The Booming U.S. Recovery Is Leaving Some Communities Completely Behind

Bloomberg is tracking the economic recovery in minority communities across the country

Double-Digit Divide

Finding Meaning in the Data

Los Angeles

Phoenix

Atlanta

Houston

Race &Recovery

The Booming U.S. Recovery Is Leaving Some Communities Completely Behind