Job shifts may help explain why earnings are declining for black Americans

Seven years into the recovery from the Great Recession, a large segment of the U.S. workforce continues to express frustration about the state of the economy. Despite 70 straight months of job growth at the national level, the Pew Research Center reports that only 44 percent of Americans rate the U.S. economic situation as good, down from 50 percent in 2007, before the crisis.

A lack of earnings growth for typical American workers helps explain this unease. Census Bureau data shows that median earnings for full-time, year-round workers dropped from by nearly 3 percent for men and 1 percent for women between 2009 and 2014. While new data from the Labor Department shows that wage gains have accelerated over the past two years, that trend is only beginning to make up for an extended period of income stagnation for many workers. Economists generally point to an overall lack of hiring demand, and reduced bargaining power among workers, as explanations for these wage trends.

These national-level statistics, however, tend to obscure significant earnings discrepancies by race and by place over the past few years. A closer look at data from Brookings’s Metro Monitor, including analysis of occupational trends by race, offers some clues as to why black workers in particular may have suffered more widespread wage losses than their white and Latino counterparts over the first five years of the economic recovery.

Our analysis shows that among the 100 largest U.S. metro areas, 25 saw earnings for black workers decline significantly from 2009 to 2014, while just four exhibited statistically significant increases. In metro areas including Akron, Las Vegas, New Haven, Sacramento, and Winston-Salem, median wages for blacks declined by a staggering 20 percent or more. By contrast, white earnings declined in 14 metro areas during that period, but increased in 11 others.

One reason for those place- and race-specific declines may be that black workers shifted from higher-paying to lower-paying occupations over the course of the recovery. In Akron, for instance, shares of blacks working in middle-paying sales and office jobs, and higher-paying management/business/financial and computer/science/engineering jobs fell, while the share working in lower-paying food service occupations rose. Indeed, many metro areas in which black wages declined saw a drop in the share of black workers employed in sales and office jobs, and a rise in those employed in food service jobs. Some of these metro areas did, however, see a rise in blacks employed in middle-paying manufacturing jobs as that industry rebounded from the depths of the recession.

Occupational shifts did not seem as significant a factor in explaining metropolitan wage trends for white workers. There were few differences in whites’ occupational trends between the 14 metro areas where their wages increased, and the 11 metro areas where they decreased. For Latinos, metropolitan wage increases (in nine of 100 metros) actually outnumbered decreases (in eight of 100 metros), and were often associated with jumps in Latino employment in management/business/financial occupations, including in metro areas such as Atlanta, Boston, Detroit, New Orleans, and Philadelphia.

Economic policy makers at the national level concerned about helping workers should clearly continue to prioritize policies that can stimulate aggregate demand, such as keeping interest rates low and investing in infrastructure. But this evidence from metro economies suggests that local economic development officials should also consider more carefully the types of occupations and industries they seek to cultivate, in order to preserve and grow better-paying employment opportunities for groups—particularly black Americans—who have yet to experience significant economic benefits from the recovery.