Thursday, February 18, 2021

African Americans in Oregon: A Labor Market Perspective

According to the Oregon Encyclopedia, “Oregon's racial makeup has been shaped by three black exclusion laws that were in place during much of the region's early history. These laws, all later rescinded, largely succeeded in their aim of discouraging free blacks from settling in Oregon early on, ensuring that Oregon would develop as primarily white.” 

Though only a small share of the state’s population, Oregon’s Black population is diverse, young, and has grown quickly over the last 10 years. Black Oregonians have achieved higher levels of educational attainment over the past decade and have experienced better economic outcomes including higher labor force participation, lower unemployment rates, and higher earnings. However, large disparities in labor market outcomes between Black people and all in Oregon persist and may worsen in the short term during the COVID-19 pandemic recession, as research from the Federal Reserve Bank of San Francisco shows that relative labor market outcomes for Black people improve under tight labor market conditions and worsen during recessions. Here, we will take a look at relative employment outcomes for Oregon's Black residents over the past decade from 2010 to 2019. 

Labor Market Outcomes

The Black population’s labor force participation rate has increased to become higher than for the state’s overall population, driven in part by increased levels of educational attainment in the Black community and overall improving labor market conditions. However, Black Oregonians continue to suffer from a significantly higher unemployment rate at 9.0% compared to 5.5% for all in Oregon’s labor force on average from 2015 to 2019.

Achieving higher levels of educational attainment may help Black people improve their individual employment outcomes, but national data show that Black people still face unemployment rates nearly twice as high compared with all in the labor force across all levels of educational attainment.

Along with improving educational attainment, unemployment and labor force participation rates, real average annual wages for Black workers in Oregon have increased by 18.1% over the decade to $47,500 in 2019. The rate of growth has been faster than the 14.6% wage growth that was experienced across all workers during this period. Nevertheless, average annual earnings for Black workers were 15.0% lower (or $8,412) than earnings for all workers as of 2019.

Wage gaps between Black workers and all others are persistent across all levels of educational attainment for full-time, year-round workers over the age of 25. The largest wage gap occurs at the highest end of the educational attainment spectrum, with Black workers in Oregon with advanced or professional degrees earning median wages roughly $12,000 less than their equally educated peers from 2015 to 2019. Black workers with some college or an associate degree statewide earned essentially the same median wage ($37,000) as workers of all others combined with a high school diploma or equivalent ($40,000). Oregon’s broad trends are consistent with national-level data, with the Black workers earning lower median annual wages ranging from $2,700 less for those with less than a high school diploma to $17,000 less for those with an advanced or professional degree compared with all other workers with the same levels of educational attainment nationally.

Wages consistently increase along with educational attainment for both groups of workers nationally and statewide. Black workers in Oregon with some college or an associate degree, a bachelor’s degree, and an advanced or professional degree earned a median wage of $37,000, $56,000, and $68,000 respectively from 2015 to 2019. Median annual wages were $19,000 (51%) higher for Black workers with a bachelor’s degree compared to those with some college or an associate degree.

Factors like age, gender, and occupation are hard to control for in Oregon due to sample size limitations that affect data reliability, but national data show that none of these factors can completely explain why an earnings gap exists. The Federal Reserve Bank of Minneapolis explains in a study of their own labor market that, “Unequal labor market outcomes are not a consequence of the labor market alone but also reflect the institutionalization of systemic racism through less opportunity in education, housing, location, and the criminal justice system.”

Eradicating economic disparities between marginalized groups of people will increase the U.S.’s overall economic output and improve the lives of individuals and familiesTo keep moving forward towards better economic outcomes, a combination of individual and policy-level efforts are necessary. Individuals can increase their earnings and decrease their likelihood of becoming unemployed through education and training efforts. Key federal agencies such as the Federal Reserve Bank of America can act in ways that promote economic recovery and expansion for longer periods of time, and state and local government can ensure their policies are inclusive of everyone in their communities. Businesses also have a role to play by examining and improving their policies related to the hiring, retention, and promotion of workers. 

To learn more, read economist Sarah Cunningham's article here.

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