The ratio ticked up 0.1 percentage point to 16.8 percent, according to data released Friday by the Labor Department, while total U.S. unemployment tumbled from a record high of 14.7 percent in April to 13.3 percent.
“Historically, African-Americans have been in state and local government jobs,” Gbenga Ajilore, senior economist at the Center for American Progress, a Washington D.C.-based independent nonpartisan policy institute, told FOX Business. “That would include public transit workers, postal service workers and also the education and social services sectors,” he added. “Those are the jobs that are being lost that are disproportionally African-American.”
State and local governments saw the largest losses of any sector in May, shedding 585,000 jobs. And that was an improvement from the 963,000 jobs lost in the sector in April.
The gap between white and black unemployment closed in April as essential workers, a large share of whom are African-Americans, didn't lose their jobs at the same rates as other employees.
Ajilore isn’t so sure the reopening of New York City, Chicago, Philadelphia and Detroit, four of the U.S. cities with the largest African-American populations, from their COVID-19 shutdowns will have much of an impact on the black unemployment rate because of that trend.
Instead, he believes the ability for state and local governments to rehire employees will be based on whether Washington provides funding to help counteract both higher costs to fight COVID-19 and lower revenue caused by the shutdowns.
“If they get relief, then they're going to be able to hire back,” Ajilore said. “If they don't get that relief, then they're going to be trying to do more with less.”
Further government aid looks likely as Congressional leaders on both sides of the aisle want more stimulus, according to Greg Valliere, chief U.S. policy strategist at Ontario, Canada-based AGF Investments. Democrats want money for state and local governments that need more assistance while Republicans want to protect businesses from lawsuits stemming from COVID-19.
Both Federal Reserve Chairman Jerome Powell and President Trump have called for more to be done.
Powell has “been quite clear that we can't start tapping on the brakes, we’ve got to keep our foot on the accelerator,” he said. “Trump would like to get more stimulus because if more stimulus means a better economy, that helps his reelection prospects.”
Valliere predicts Congress will pass a stimulus bill of about $1 trillion just before the August recess to ensure the economy will “keep gaining momentum.” He thinks about $500 billion to $600 billion worth of aid will be extended to state and local governments
Ajilore warned that without more stimulus, the U.S. risks making the same mistake as in the aftermath of the Great Recession – implementing austerity too soon.
“This is a pandemic that's causing a lot of these problems throughout the country,” Ajilore said.
“Everyone's getting hit hard, especially the state and local government sector,” he added. “This is going to have long-run impacts if we don't tackle the problems right now.”