In 2016, when President Donald Trump was campaigning to black Americans, the appeal he made was a simple one, “What have you got to lose?”
Nothing, and as it turns out, there was a whole lot to gain, including the best labor market conditions for blacks in American history and maybe for all Americans, too, with near-50-year-low 3.7 percent unemployment nationwide. The rising tide in the Trump economy has been helping Americans of every race and background, including blacks.
Since Jan. 2017, 1 million more African-Americans say they have jobs, up to now 19.4 million, the most ever. Only 1.1 million say they are unemployed, down 1.5 million, even as the population increased 1 million and those participating in the labor force increased by 600,000.
Put another way, black unemployment is down almost a third from the last peak in labor markets in Aug. 2007. Then, unemployment for blacks hit a low of 7.6 percent, before reaching 16.8 percent in March 2010. The rate settled to around 8 percent at the end of the Obama administration, and then began dropping in earnest the second half of 2017.
This economic miracle comes as blacks (and non-blacks, too) today are the most educated in the history of America, a significant generational achievement. The percent of blacks 25-years-old and above with some college and above increased from 50 percent in Jan. 2012 to 56 percent in Aug. 2019 at more than 15.4 million. Non-blacks 25-years-old and above also increased college participation, from 58.2 percent to 62.6 percent, up to 121.6 million.
That is no coincidence. Increased levels of educational attainment are undeniably a major part of the favorable conditions we’re seeing today. Generally, the greater the level of educational attainment, the lower the unemployment rate. The unemployment rates for African-Americans with Bachelor’s degrees or higher or those with some college are as good today as past business cycles. It’s just that now there are more ofthem as a share of the population, leading to the lower unemployment rates we are witnessing today.
In other words, younger Americans including blacks are studying harder and longer than prior generations, and it’s paying off with the most educated labor force in American history and the lowest unemployment levels in about 50 years.
The biggest area of improvement in 2019 especially for all races including blacks has been the decrease of the unemployment rate for those with less than high school, which is much lower than prior cycles, today at 5.4 percent nationwide. It’s been in the 5’s since the beginning of 2018. The lowest before that was 5.8 percent in Dec. 1999, but that was just for one month. Throughout the late 1990s, unemployment for those who didn’t finish high school was in the 6s and 7s range.
The significant increase in jobs for the least educated can partially be attributed to the dwindling number of those who don’t finish high school, now down to 21.3 million from 26.2 million in Jan. 2009, but that number has been collapsing for more than a generation. The fact is, the Trump economy is bringing opportunities to places that never had any, including those who didn’t even finish high school, by integrating those who were not previously a part of the labor force. It’s valuable experience.
And it’s to everyone’s benefit. More people working amid higher demand for labor pushes wages up, and contributes to the growing economy.
On balance, the Trump economy has been better on an unemployment rate basis as any other boom economy in modern history, including the 1990s. It has helped every group of Americans from every walk of life. What separates it is the improvement for those Americans who were historically disadvantaged. The gaps of inequality are eroding faster than ever.
In 2020, President Trump can take his campaign to urban centers that have traditionally voted Democratic on one of the best economies — and certainly the most equitable — in American history and attribute it in part to the expanded opportunities that his administration are helping to bring back home with its pro-growth, America first polices of lower taxes, fewer regulations and better trade deals.
Where it matters, on jobs and on wages, the Trump economy has been consistently delivering, for blacks, for whites, for Asians, for Hispanics — for everyone. And it’s about time.
The Bureau of Labor Statistics (BLS) released its monthly Employment Situation Report, showcasing strong wage growth and steady employment growth. Total nonfarm payroll employment in August increased by 130,000 jobs. Including revisions for the months of June and July, the average pace of job growth has been a robust 173,000 jobs per month over the past year and 158,000 jobs per month so far in 2019. The CBO projected only 14,000 new jobs per month at this point in the cycle in its final pre-2016 election forecast, prior to enactment of the Administration’s pro-growth policies, so this month’s job growth is nearly ten times higher than the job growth CBO had anticipated for this quarter. In total, the economy has added over 6.3 million jobs since the President was elected, nearly 4.5 million more jobs than the CBO predicted would be created between the end of 2016 and the end of 2019:Q3 (figure 1).
The August jobs report also revealed that the labor market remains strong. Job gains have surpassed 100,000 jobs in 30 of the 33 months since the President was elected. Considering the unprecedented length of the expansion and the low unemployment rate, continued job growth at this rate is outstanding. In August 2019, just over 6 million people were unemployed, compared with more than 14 million in July 2009 at the beginning of the economic expansion.
The professional and business services sector led job growth in August, adding 37,000 jobs. The education and health services industry saw the second largest job growth, an increase of 32,000 jobs. Manufacturing jobs increased as well, gaining 3,000 jobs in August. Since the President’s election, the manufacturing industry has added 512,000 jobs and added 138,000 jobs in the past 12 months; manufacturing hours also increased over the past month.
In August, wages continued to grow as well. Nominal average hourly earnings rose 3.2 percent over the past 12 months, marking the 13th straight month that year-over-year wage gains were at or above 3 percent. Prior to 2018, nominal average hourly wage gains had not reached 3 percent in over 10 years (since April 2009). Wages for production and nonsupervisory workers increased by 3.5 percent over the past 12 months; production and nonsupervisory workers had the highest absolute increase in their average hourly earnings over the past month since the series began in 1964. When taking inflation into account, there is evidence that real wages are also growing. Based on the most recent Personal Consumption Expenditures (PCE) price index data from July, inflation in the past year was 1.4 percent, and based on the most recent Consumer Price Index (CPI-U) price data from July, the inflation in the past year was 1.8 percent (August inflation data is not yet available for either series). Assuming inflation holds steady this month, this translates into real wage growth of nearly $1,050 over the past 12 months for someone working 40 hours per week all year at the average wage rate, using the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation measure. Since the election, this amounts to real wage growth of nearly $2,000 for someone working 40 hours per week all year at the average wage rate.
A separate household survey released by BLS shows that the unemployment rate remained at 3.7 percent in August, making August the 18th consecutive month at or below 4 percent. All Americans are benefiting from the strong labor market. The African American unemployment rate hit its lowest rate on record since the series began in 1972 at 5.5 percent (figure 2), the African-American adult female unemployment rate dropped to its lowest rate on record at 4.4 percent, and the African-American teen unemployment rate hit a new series low yet again, beating its record low from July. The Hispanic unemployment rate fell to 4.2 percent, matching its series lows from April and May 2019.
The labor force participation rate—which includes people who are working and those looking for work—edged up by 0.2 percentage point to 63.2 percent and is 0.5 percentage point above the rate when the President was elected in November 2016. The labor force participation rate for prime-age adults (ages 25-54), which largely avoids the demographic effects of the aging population, increased by 0.6 percentage point to 82.6 percent—1.2 percentage points above its rate in November 2016. The prime-age labor force participation rate for women increased 1.0 percentage point to 76.3 percent, its highest rate since February 2002. The employment-population ratio increased by 0.2 percentage point to 60.9 percent, the highest level since December 2008.
The Trump Administration’s pro-growth policies continue to move workers off the sidelines and develop an even more prosperous economy. Despite the continued low unemployment rates over the past year, there may still be potential workers who haven’t entered the labor market yet, a situation economists refer to as “labor market slack.” Because labor market slack still exists, employment can continue to rise and the economy can continue to grow as workers reenter the labor force. In August, 74.3 percent of workers entering employment came from out of the labor force rather than from unemployment.
The August employment data demonstrate that the American economy remains strong, with robust wage growth, a low unemployment rate, and strong job gains.