WASHINGTON – The African-American unemployment rate – which is historically twice the rate for whites – is “disturbing,” Federal Reserve Chairwoman Janet Yellen said Wednesday.
According to statistics released by the Economic Policy Institute in February, the national unemployment rate in December 2016 was recorded at 4.7 percent. While whites registered a 3.9 percent rate, African-Americans had the highest unemployment of any other group at 8.2 percent. Hispanics recorded a 5.7 percent rate, and Asians a 3.7 percent rate.
“I find the disparities, which have been there for many years between African-American, white and Hispanic employment rates, to be very disturbing and to reflect broader problems that minorities and less-skilled individuals also are having in the labor market, and they’re very worrisome and damaging trends,” Yellen told members of the Joint Economic Committee.
However, she noted during the hearing that unemployment rates and other measures for labor market functioning have returned to pre-recession levels for all groups.
“Unemployment rates for African-Americans and Hispanics, which tend to be more sensitive to overall economic conditions than those for whites, have moved down, on net, over the past year and are now near levels last seen before the recession,” Yellen said in her opening remarks. “That said, it remains the case that unemployment rates for these minority groups are noticeably higher than for the nation overall.”
Yellen touched on the issue when questioned by Rep. Alma Adams (D-N.C.), who pointed to figures in her home state. While North Carolina’s unemployment rate was recorded at 4.7 percent in the first quarter of 2017, African-Americans saw a 7.5 percent rate and Hispanics a 5.3 percent rate.
“This unemployment disparity is not a recent or one-time occurrence,” Adams said.
She told Yellen that the Federal Reserve cannot consider its employment mandates fulfilled when such racial disparity exists for unemployment. The Federal Reserve is required to fulfill a dual mandate in ensuring maximum employment and price stability.
Yellen also discussed the U.S. debt trajectory, telling lawmakers that the Congressional Budget Office’s predictions should be of “very significant concern.” The total national debt level has surpassed $20.6 trillion.
“Our current debt-to-GDP ratio of about 75 percent is not frightening, but it’s also not low,” Yellen said. “(The CBO’s analysis is) the type of thing that should keep people awake at night, and it shows a picture in which as our population ages, expenditures on Medicare, Medicaid and Social Security grow more rapidly than tax revenues, the debt-to-GDP ratio moves up.”
CBO released debt analysis in January and then offered an update for the information in June. The analysis shows that that the debt held by the public is expected to be about 77 percent of GDP, or $15 trillion, by the end of the year. By 2027, that number is expected to climb to 89 percent of GDP, or $25 trillion. CBO notes that that level of debt would be the highest since 1947 and more than twice the average over the past 50 years.
During her opening remarks, Yellen painted a positive picture for the overall U.S. economic outlook. She noted that 17 million more Americans are employed now, compared to 2009. The unemployment rate is also about 6 percentage points below the height of the crisis in 2010, as it was recorded at 4.1 percent in October.
At the same time, she noted that GDP growth has lagged despite economic expansion. She blamed this largely on a slowdown of retirement for older members of the Baby Boomer generation.
“Another key reason has been the unusually sluggish pace of productivity growth in recent years,” she said. “To generate a sustained boost in economic growth without causing inflation that is too high, we will need to address these underlying causes.”