Is one group preventing a recession?
A response to a Washington Post essay
I have three issues with the opinion piece in the Washington Post If we avoid a recession, we can thank Black and Hispanic workers (7/9/2023)
Their own data doesn’t match the title.
Even if it were partially true, it makes little sense and is divisive.
It probably isn’t true.
The hypothesis of the piece is
If the U.S. economy ends up having a soft landing, it will largely be because immigrants and people of color have kept entering the labor force — helping to keep production going, consumption solid and wage growth (and inflation) cooling to a more sustainable level.
Here is the graph from the article.
First Point
How come Asian workers aren't in the title when they have added more workers than Black people? Why are Blacks listed before Hispanics, which makes it seem like they did more, when Hispanics added more than twice as many workers as Blacks? Either of these names is more truthful: If we avoid a recession, we can thank Hispanic workers; if we avoid a recession, we can thank Hispanic, Asian, and Black workers. Titles matter, and when they don't accurately describe the article, it's not surprising that people don't trust mainstream media.
Second Point
Now let us suppose the statement is actually true (we’ll get to this next). Putting one race or ethnic group against another is divisive and not helpful to society. Should these stories be written? We should thank White people for a robust economy as the majority. Most farmers are white men, so if you're eating tonight, thank them for dinner. Blacks and Hispanics are finally helping the economy. The clear and obvious answer is no.
Third Point
Is the statement actually true? In other words, is it the case that the groups adding workers are keeping production and consumption going and saving us from a recession? In my piece, “U.S. Demographics by Age,” I talk about how the White population is getting older and how the drop in White workers might just be because people are retiring. The increase in non-white workers could be because younger people are getting jobs. In other words, the numbers in the Washington Post graph might just show how the population as a whole is changing.
In his post, “Nonwhite workers are putting the economy back to work,” Kevin Drum talks about another way to measure this. I'm not sure I agree with him, but it's worth noticing that he uses two different measures. First, he looks at how the number of people working in their prime years has changed from 2018 to now. This is the share of people ages 25 to 54 who have jobs. He says
White workers have only barely recovered their pre-pandemic employment levels while nonwhite workers are all 10-13% higher.
Fair enough, but this assumes everyone started at the same employment level. He also looks at prime-age labor participation rate and notes that
White workers have a lower participation rate than they had before the pandemic. Nonwhite workers have 1-4% higher rates. On an absolute level, whites now have the lowest participation rate of any demographic group.
If we care about keeping the economy going, then why should we limit ourselves to the ages 25–54? The Washington Post piece makes the case that if you are consuming, you are helping the economy. Here is a chart from the BLS that shows how many are working as a share of the civilian noninstitutional population.
What we see here is that in the last two years, White employment has been flat and that Black employment was only briefly higher. In fact, Black employment rates have been falling since March. Maybe we should blame them for not helping fend off a recession? (I’m not serious; I say it again that I think this discussion started by the Washington Post is divisive.) Actually, the Hispanic population is still growing in employment and has been generally higher for a decade, so give them extra credit.
The Washington Post essay uses counts instead of percentages. Should they? On the one hand, numbers are what matter. On the other hand, someone could say that a group can only do its part based on the percentage of its members. For example, the rate of White jobs is about 5 points lower than that of Asians, but there are still more White workers. Based on the numbers, are Whites doing their part, or are they being slackers because their employment ratio is lower? There are many ways to analyze this. I have one last point.
Just because one is working or just started working doesn’t mean they are contributing much to consumption. For example, an 18-year-old who takes a year off before college might work and save almost all of their money. That does little for consumption. So, maybe we should look at how much money is added to the economy and not simply employment, but I think I'll stop here.
Does the article's main idea hold up? It hasn't been proven, and it depends on the start and end dates chosen. It is clearly divisive, and the title is misleading. The guy who hit a homerun in the bottom of the ninth in a game tied at 7 to 7 didn’t win the game themselves, as they needed the first 7 runs to be scored. When asked about winning the game by reporters at the conclusion of it, the wise teammate remarks on how fortunate they were that the other players put them in a position to score one more run and win the ballgame. Maybe that's the way we should look at things as a country.
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