Even though the U.S. economy is projected to regain its pre-pandemic strength as early as 2024, the negative impact to Black workers' previous labor market gains could linger after the country recovers from the pandemic-related recession, according to new policy research from a Georgia State University faculty member.
Julie L. Hotchkiss, a research economist and senior policy adviser at the Federal Reserve Bank of Atlanta, who is also an adjunct professor at Georgia State's Andrew Young School of Policy studies, explained the issue in a new policy paper from the FRB of Atlanta's Policy Hub.
Black workers experience what is known as a "high-beta" effect across the business cycle -- being hit harder durign recessions, but benefitting more from the momentum of a recovery, especially during strong economic periods.
For the three years preceeding the COVID-19 recession, the "hot" economy allowed for Black workers to regain some of the ground lost in the labor market crash of the late 2000s Great Recession, relative to white workers. The COVID-19 recession brought this to a halt.
Policies that can reduce the volatility of the economy can benefit disadvantaged workers, Hotchkiss writes in the paper.
"Disparate labor market outcomes between various groups of workers across the business cycle appear persistent and inevitable," she concludes. "However, creative economic policy during weak economic environments—and employers’ incentives to meaningfully upgrade workforce skills in their need to have skilled workers during hot economic environments—just might be able to begin to alter this dynamic."
The paper, "Will COVID-19 Erase Black Workers’ Labor Market Gains?" is at the Federal Reserve Bank of Atlanta's Policy Hub, Center for Human Capital Studies, Feb. 2021, No. 2021-2, https://doi.org/10.29338/ph2021-02.
You can also download the paper through the link below at the Georgia State DEI website.
— Jeremy Craig, Communications Manager for the Office of the Provost