An equitable recovery: Moving beyond a return to status quo

By Aaron Hirsh for the Fund for Our Economic Future, with Phoebe Lee, Civic Board Member of the Fund and CEO of Acumen Industries

The conversation about the economy and the labor force over the last few months has been all about recovery. How do we get back to where we were? But that’s the wrong question to be asking. A strong economic rebound creates an economy that is better than it was before; more prosperous, more innovative and, critically, more equitable.

The picture of economic inequity is particularly stark in the case of Black women. In this post, we will consider how this group has fared both prior to and during the pandemic and how their experience can push us to think about a recovery that goes beyond just a return to baseline. 

Black women have historically faced enormous disadvantages in the labor market. Nationally, Black women earn 63% of what white men make and have also consistently made less than white women. Compounding these challenges are a disproportionate concentration of Black women in low paying service sector jobs that lack benefits and opportunities for advancement and are susceptible to volatility in the labor market. In addition, Black women face barriers that are not captured in statistics. Phoebe Lee, CEO of Cleveland-based uniform company Acumen Industries, put it this way: “From entry-level up to executives, we’re never comfortable. We can’t show up as who we are. We are told we can’t wear braids or hoop earrings. I’m an owner and a boss and I still feel like I have to code-switch and show up to make other people comfortable.”

Northeast Ohio is no exception to these inequities. In fact, research from the Bloomberg City Lab suggests that on dimensions of income, health, and education, Cleveland is the hardest place in the country to be a Black woman. 

If we are concerned about an equitable economic recovery, we need to ask how this group in particular is faring in our current labor market.

Let’s start with some data. The chart below shows the national labor force participation rate for Black and white women since January 2019. The Labor Force Participation rate measures the percentage of a given population that is either working or is actively looking for work. 

Prior to the pandemic—and indeed, since this data was first collected in 1972—Black women have participated in the labor force at higher rates than their white counterparts. When the pandemic hit, Black women’s LFP declined 4.5% from February to April, compared to 3% for white women. Since that time, LFP for Black women has begun to tick back up. This is true for white women as well, but given that Black women fell further, their recovery represents a more significant rebound. 

Black women are returning to the labor force. But is this a good thing? Well, it depends on why they are returning. 

For some Black women, it may be that a hot labor market is creating access to secure, fulfilling, well-paying job opportunities. Others may be choosing to start their own businesses instead of returning to their old employers. According to the Harvard Business Review, Black women are more likely to start businesses than either white women or white men (although notably, those businesses are less likely to succeed). “Given the barriers we face in traditional workplaces I would rather create my own environment where I can hire other people like me and make them feel good about coming to work.” Ms. Lee told us “When employees feel good about coming to work, their productivity affects the bottom line.”  

If entrepreneurship and good job opportunities are pulling Black women into the workforce, then we should be excited about this group going back to work. 

While many Black women may have benefited from the improved financial position we explored previously, more recent data suggests that savings rates have returned to pre-pandemic levels. This reality, paired with rising consumer prices, may be pushing them back into the same subpar jobs they worked prior to the pandemic. For these women, a return to work is not a choice, but a necessity. Given that Black women work or look for work at higher rates than their white counterparts, yet earn less (not to mention finding jobs at lower rates, even when they are looking for them), we might rightly view this rebound as a troubling return to an unacceptable status quo. 

What does this mean for policymakers and other stakeholders? Rather than asking, “What do Black women need to continue reentering the labor force?” we should be asking instead, “How can we use this moment to put in place the policies and structures that give Black women the same degree of economic freedom as white women, or indeed, white men? How can we ensure that those who want to work have access to good jobs, and that those who don’t have the security not to?”

Economic recovery is no good if it isn’t equitable. When we think about 2023 and beyond, we should not hope to see a world where the labor force participation rates for women of different races are back to where they were in 2019. Instead, we should focus on bringing those rates closer together, ensuring that women (and people) of all races have access to the same level of economic opportunity, choice, and freedom.

“How can we use this moment to put in place the policies and structures that give Black women the same degree of economic freedom as white women, or indeed, white men?”

 

Aaron Hirsh conducted a national scan of existing research addressing the national labor shortage for the Fund for Our Economic Future.