Recovery from job loss: Easier for whites than blacks
Despite some discouraging numbers on new jobs today, the economy, we know, does seem to be slowly getting back on its feet. But when it comes to the ability of individual families to make a comeback, the results can be shockingly inconsistent. A new study out today by the Pew Economic Mobility Project looks at the role race and assets have in people’s ability to weather the economic hardships of sudden unemployment.
When I looked at the study, I realized my own experience with unemployment fits right in to the results.
To explain what I mean, let’s compare my unemployment story to the story of a man named Billy Lowe.
Billy Lowe is a 36-year-old man from Philadelphia who lost his job last summer. I am a 36-year-old woman from L.A. who lost my job a few years before that. There are plenty of similarities and differences between us, but for the purpose of this story, here are the main ones.
We both have college degrees, and consider ourselves middle class. But Lowe is black, and I am white.
After losing his job 10 months ago, Lowe is still unemployed. “I basically lost my house. I lost my car. I mean, everything just basically fell apart,” he says.
After I lost my job? I was freaked out, but I had lots of resources to draw upon. And luckily, I got another job almost immediately.
These differences between Lowe’s situation and mine reflect larger national trends, according to that study by the Pew Economic Mobility Project. It found that between 1999 and 2009, 11 percent of white households surveyed had experienced unemployment for six months or more, compared to 23 percent of black households.
The study also found that a household’s ability to weather the economic shock of unemployment differed dramatically, largely because of the historic obstacles to building assets that black families face, according to Erin Currier, director of the Pew Economic Mobility Project.
“White families were more likely to hold employer-based pensions or retirement savings accounts, they were more likely to inherit money or receive large gifts from relatives, which are often some of the first resources that families draw upon when they face financial hardship,” Currier says.
So back to Lowe and me. In many ways, my situation echoed Currier’s research. I did have a retirement savings account I could draw upon. I knew I could ask my mom to help with rent, and I didn’t have to worry about car payments because she’d given me her old car.
As for Lowe, he had no retirement savings, and though his parents wanted to help, they didn’t have many assets they could draw upon to offer.
“It was basically ‘This is all I got. I can hand you $50 here or $50 there,’” says Lowe. “But it was not enough where they could pay my rent for two months or pay my car note for two months to try to buy some time to get another job.”
The fact that I could lean on my family’s assets while Lowe could not has ripple effects, says Janet Boguslaw, a co-author of the Pew study and Associate Director of the Institute on Assets and Social Policy at Brandeis University. Boguslaw interviewed dozens of black families for the study, and she says in many cases their limited assets going in to unemployment hampered their ability to recover financially from the shock, even once they found a new job.
“They’ve depleted all of their wealth. They may be in debt. They can’t start the recovery in the same way that people who have either a personal safety net or an extended family safety net would have.”
Boguslaw says there should be more policies put in place by government and private lending institutions “so that people don’t have to deplete all of their resources” when they lose their jobs. She also suggests policy makers consider using the tax code to encourage more savings among lower-income families, to create more assets to fall back on in times of need.
All charts and graphics courtesy of the Pew Charitable Trusts.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
