Sample Economic Paper on Race and Unemployment

Race and Unemployment

Natural unemployment is the minimum rate of unemployment existing within stable economic conditions. Economists note that, high rates of unemployment in the greater participation of the labor force, comprising the working age population, is the main cause of the rise in levels of ‘Natural’ unemployment (Hershey 24).  Unemployment is considered one of the major contributors in the high poverty rates and economic retardation. Race, gender and class constitute some of the main key players in the escalating levels of natural unemployment rates. Organizational developments and departmental changes as well as institution of economic monitoring policies, also contribute largely to creation of more jobs as well as loss of some other jobs in the same economy. The result is what is termed as ‘natural’ unemployment. The determining factors comprise the number of individuals seeking employment, those losing jobs as well as those gaining new jobs. Naturally a notable number of individuals are able, available and actively looking for opportunities but there is generally limited slots of employment. As this number grows, unemployment rate computed as a percentage of the growing labor force also grows rapidly (Hershey 24).

Race and gender differentials in the labor market have over the years remained stubbornly persistent, although the nature and magnitude of the differences have changed with various developments in the global economic setup (Donohue & Heckman 1617). In this context, with just a few exceptions, race is delimitated to black and white differences in the labor market. Blacks in the United States are at a greater disadvantage in securing employment than whites, especially during episodes of higher unemployment. Experts believe that, the prevailing natural unemployment rate is approximately 5.5%, largely attributed to the economic recession and creeping inflation rates. However, in spite of the uniform effects of the economic catastrophes on every race and ethnic group, there is substantial racial disparity in almost all the economies around the globe (Donohue & Heckman 1617). Different groups experience distinctly different rates of unemployment. This is exhibited In the American economy for example, where the apparent fact is, there is much higher unemployment rates among blacks than whites. For instance in the year 2011, majority of the American labor force constituted Whites, 81%, Blacks and Asians made up an additional 12% and 5%  respectively. American Indians and Alaska Natives composed about 1% of the labor force while indigenous Hawaiians together with Pacific Island groups made up less than 1%. The position generally taken by economists is that some part of  the racial gap in  earnings  or employment  is due  to  average group  differences  in  productivity- linked  features, commonly defined as a human  capital gap and some  other part is due  to average  group differences  in  treatment defined as discrimination  gap (Donohue & Heckman 1617).

In delineating the causes of these labor market differences, economists take into consideration the priority settings in terms of the substantial differences in the contributions of different workers in the work place. These differences include variation in Education levels, occupational and potential experience, geographic locations and the degree of discrimination encountered in the various work places. In essence, the considerable differences, majorly Educational, amongst these groupings are large. The differential investment on education may reflect preferences and choices of various races and/or pre market discrimination (Heckman 406). For example, evidence-based research reveals that blacks in the United States of America have consistently been denied access to suburban residences and are in turn crowded into the inner city residential with substandard schools. Under such circumstances, they receive poor public education and even drop out. With insufficient Educational attainments individuals tend to have low occupational and potential experience. Economists Samuel Meyers & Spriggs state that, “Most individuals from major race and ethnic groups with higher levels of education are generally allied with a greater probability of employment in higher paying jobs such as those in management, specialized, and related occupations than individuals with less education” (36).

As per the United States Bureau of Statistics 2014, in the current situation, most American citizens both black and white at the age of 25 and above have attained reasonable academic qualifications, over 90% having at least a high school diploma  and 59% in the labor force having a bachelor’s degree. However regardless of the improved academic attainments, racial discrimination plays a key role in determining the models and employment inequalities among these individuals. Meyers (1993) finds that white males of equal academic qualifications are twice as much able to acquire jobs than their black counterparts. This is due to high discrimination levels in various working places (27). In his research Meyers paired young black and white males with equal academic qualifications and other standard factors, and designed an application for similar jobs in Chicago and Washington DC (28). Their resumes were doctored to put their credentials at par, and they were trained on the contents of the interviews in order to minimize dissimilarity in their self presentations. A finding of discrimination was established when the white males were offered the jobs and their black counterparts were not (28). On the other hand research establishes that black males are about three times likely to acquire the jobs than white Hispanic males. This is a fairly stringent test for discrimination since it portrays that most employers are not open in their prospects for hiring black male or Hispanic whites (Fix et al. 23). In 2009, employed Black graduates from a similar college had clambered a lot in relation to the whites in this recession recovery period. Unemployment rate for the Black scholars above the age of 25years was virtually twice their white counterparts, recorded at 8.4% in comparison to 4.4% of the black job seekers.

Unemployment due to Academic and racial discrimination is a leading cause of low occupational and potential experience. In the normal sense, most employers in the job industry seek individuals with both academic capabilities and professional experience (Fix, Michael et al. 32). Due to the high unemployment rate among specific races, most individual end up not attaining any reasonable experiences for competitive advantage in the job market. The empirical evidence is that this constitutes numerous advantage to the favored races, creating lesser crowding in the job market hence higher employment opportunities to a smaller group. According to the United States Bureau of Labor and Statistics, about 50% of the employed Asians were attached to management and other specialized highest paying occupations, in comparison to 39% of employed Whites, 29% of employed blacks and 20% of employed Hispanics. Low percentages in the occupational distribution are ascribed to the low academic and occupational experiences among the smaller racial and ethnic groups (Fix, Michael et al. 32). The same is also aggravated by the fact that most undereducated individual prefer to reside in rural locations in which employment opportunities are largely limited to farms and other low skill, low income jobs. This in turn enhances exploitation by ranch owners culminating into much lower income.

Most labor force from the smaller racial and ethnic groups is considerable stimulus to firm profits, investment and export produce. Unemployment as a result of racial discrimination and income inequity can be a potential cause of a pressure on economic growth rates causing slow development processes. These disparities have in a long time created rifts and social discontent among communities, political conflicts, compounding into pressure on investment due to heightened risks and uncertainties. Essentially, racial employment inequalities suffice as a model for the dominant groups to maintain control over major portions of resources intensifying the rates of underinvestment in human capital among the inferior races. Another good deal of evidence shows that, low wages and low life standards contribute to most parents’ reluctance in investing on their children’s education. Low levels of experience and low esteem affects worker bargaining power and thereby wage derivatives.  Successively, racial exception is a way of making certain workers less militant for the more lucrative job positions, creating room for high indulgence in crime and other social malpractices. Government interventions on policy formulations such as financial policies have grand short run effects, creating short term regulations on the modes of financial distributions, job creation levels as well as other strategic economic regulatory approaches in attempt of recession recovery. Broadcasting of job information and training opportunities is a model that would increase chances of individuals finding jobs and in turn reduce the rates of natural unemployment.  Nonetheless, discrimination in work places hinders the possibilities of equal employment.




Works Cited

Donohue, John & Heckman, James. “Continuous Vs. Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks.” Journal of Economic Literature, 294 (1991): 1603-1643. Print.

Fix, Michael et al. “Clear and Convincing Evidence: Measurement of Discrimination in America. Washington: The Urban Institute Press, 1993. Print

Heckman, James. “The  Value  of  Quantitative  Evidence  on  the  Effect  of  the  Past on  the Present.”  American  Economic  Review, 87. 2 (1997): 404-408. Print

Hershey Jr. Robert, “When is Unemployment ‘Natural’?” New York Times. 25 October 1982: a.16. Print.

Meyers, Samuel & Spriggs, William. “Black Employment, Criminal Activity and Entrepreneurship.” Boston: Kluwer Academic  Publishers, 1997. Print