Coinciding with Black History Month in February, Dun & Bradstreet dug deep into US minority employment statistics from the Bureau of Labor Statistics to determine how African-American employment has historically performed in relation to overall labor and economic cycles. Such trends may help determine the direction of the economy.
Employment Cycles Are Complicated
Beginning in Q2 1964, the time of the official signing of the landmark Civil Rights Act, the US has experienced seven recessions. US economic contractions and their related employment cycles have varied in length and severity.
Before 1982 US economic expansions and contractions were characterized by volatile up-and-down swings, and the employment situation followed suit. Since then, each economic and employment cycle has been longer in duration, lasting on average at least seven years.
Looking at year-over-year change, minority employment after the 1980s — specifically employment among Hispanics and African-Americans — has recorded a double dip in growth on at least two separate occasions.
The most glaring example of significant employment change is among African-Americans. Since 1960 African-American employment has peaked on average two quarters after the peak of other groups, including the men, women, and total categories. In addition, at the lowest point of the cycle, when the economic malaise appears to be at its worst, black employment is quicker to hit bottom compared to other groups. The duration of the peak-to-trough is historically shorter for this group.
Why Does This Matter?
As the data shows, peak African-American employment is typically a lagging indicator when compared to the economic cycle. Despite the lags, immensely powerful signals can be derived from this data, including confirmation of turning points within each economic cycle.
The current US economic expansion that began during the summer of 2009 has lasted nearly seven years. Year-over-year employment growth of all groups has dipped at least once since 2009. Since the initial dip, overall employment growth and growth among all segments has then accelerated. Now, growth has once again begun to decelerate.
This recent deceleration in employment gains could possibly be the second wave or double dip similar to what has been recorded during prior economic cycles. This is why taking note of African-American employment change is imperative in helping determine whether the US is heading into a contraction, or if it will continue its economic expansion.
On a three-quarter smoothed average, African-American employment change began to slow starting in Q2 of 2015. This represents exactly two quarters, following the pace of deceleration of the overall employment numbers and other population segments. While it may be too soon to determine if this is a turning point and peak for the labor cycle, mounting evidence could support this in the coming months.
Adam Morehouse is a Macro Analytic Consultant on D&B’s Global Data, Insight & Analytics team. He covers parts of the Asia Pacific region as a contributor to D&B Macro Market/Country Insight Products. He also contributes to D&B’s monthly economic tracker, adding both commentary and analysis. Adam holds a BBA in finance from James Madison University in Harrisonburg, Virginia, and an MBA in financial management from Pace University in New York City.