A new report from the Illinois Economic Policy Institute and the University of Illinois at Urbana-Champaign seeks to understand causes of high African-American unemployment and provide solutions that have proven track records.
The State of Illinois and the City of Chicago are experiencing extremely high African-American unemployment rates. In the beginning months of 2016, African Americans across the United States experienced an unemployment rate of about 9 percent. However, black unemployment rate was 14 percent in Illinois, the highest of all 50 states. African-American unemployment remains above pre-recession levels in Illinois. Moreover, the Chicago-Naperville-Elgin area is among the lowest-performing metropolitan areas by racial employment and income equality. The Chicago area ranks 65th out of 70 urban areas for black-white unemployment equality.
There are structural barriers to full employment for African-Americans in the United States. African-Americans have been severely impacted by job losses in both manufacturing and the public sector. Race-based discrimination in the labor market excludes many African-American men from high-wage jobs and has accounted for part of the rise in black-white inequality. African Americans with higher levels of educational attainment also have higher unemployment rates than lesser-educated white workers.
A new study by the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign seeks solutions to this problem based on policies that have been proven to make a significant impact on reducing black unemployment. Based on the analysis, the City of Chicago and local government across the United States should implement at least seven policies and programs.
1. Boost public sector employment: The public sector often offers a path to middle-class incomes for African-American workers. A one percentage-point increase in state and local government employment decreases the African-American unemployment rate by 0.5 percentage points. In addition, every $1 million spent in Cook County on state and local government workers creates 6 net jobs. Efforts to cut state and local government employment have a disproportionately negative impact on African-American workers.
2. Increase public transportation ridership: A one-percentage point increase in the public transit commuters decreases the African-American unemployment rate by 0.1 percentage point. In addition, every $1 million spent in Cook County on local government passenger transit creates 24 net jobs. Increasing investment in public transportation systems improves connectivity, economic efficiency, and lowers the costs of going to work.
3. Raise the number of African-Americans with bachelor’s degrees: A well-educated workforce raises wages and builds a foundation for shared economic prosperity. A one-percentage point increase in the share of African Americans with at least a bachelor’s degree decreases the African-American unemployment rate by 0.5 percentage points. In addition, every $1 million spent in Cook County on public universities creates 3 net jobs. Increasing investment in higher education and reducing tuition costs for all residents benefits African-American communities.
4. Lower the costs of homeownership: A one-percent decrease in homeownership costs decreases the African-American unemployment rate by about 0.1 percentage point. In most Chicago neighborhoods, it is illegal to build anything other than single-family homes. By relaxing zoning laws, especially in high-demand neighborhoods, developers can build new high-rises and units. This increase in supply lowers the price of homes, making monthly mortgages more affordable for all families. Every $1 million spent in Cook County on multifamily residential structures creates 10 net jobs. A $15 minimum wage would also lower the relative cost of homeownership for the lowest-earning African Americans because the average wage needed to afford a modest one-bedroom apartment at the fair market rent in the Chicago area is $16.36 per hour for a full-time worker.
5. Reduce the reliance on local property taxes to fund an adequate and equitable public education: Unequal education funding contributes to an inequitable education for people of color, leading to lower rates of high school completion, lower rates of college attendance and completion, and higher unemployment. Replacing the state’s current Foundation Level scheme for funding schools with an Evidence-Based Education Funding model would improve the chances of African-American students earning the minimum requirements to enter the labor market or to enter college.
6. Enforce prohibitions against racial discrimination in employment and apply a racial justice lens to employment practices: In addition to enforcing anti-discrimination laws, states and local governments should help employers develop tools to understand the equity effects of employment decisions. Illinois’ Human Relations Commission should assist employers in developing a Racial Equity Impact Assessment to determine how different racial and ethnic groups will likely be affected by a proposed employment decision.
7. Enhance local market conditions: A low overall unemployment rate and high rents are generally byproducts of a strong local economy. The best way to improve local market conditions is to invest in both physical infrastructure and human capital. Corporate executives list the availability of skilled labor and highway accessibility as the two most important factors in moving to a community or state. Investing in transportation infrastructure and investing in higher education are appropriate policies to boost the employment of all workers, including African Americans.
Other policies and phenomena have no discernible impact on African-American unemployment in urban counties. As an example, “right-to-work” laws have no statistical effect on African-American unemployment. There is also no evidence that foreign-born workers “take” jobs away from African Americans.
Voters and elected officials must consider the merits of local proposals to reduce African-American unemployment. The Chicago and other urban areas area should implement policies and programs related to the factors that actually make a difference. Effective policies that invest in workers, invest in public transit, bolster public sector employment, and lower the relative cost of homeownership can facilitate good, middle-class jobs for African Americans who face considerable structural barriers.
The City of Chicago, Cook County, and the State of Illinois should all take steps to achieve these goals.