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Tom Barkin

Understanding Disparities in Hispanic Employment

Tom Barkin

June 30, 2021

Tom Barkin

President, Federal Reserve Bank of Richmond

Virtual Presentation to Regional Hispanic Chambers of Commerce

Spanish version/versión en español

Thanks for inviting me to be with you today, and a special thank you to the Maryland Hispanic Chamber for hosting us. This is the first time these five chambers have gotten together, and I hope it’s the start of a new tradition. We have a lot to learn from one another, and I am confident the discussions today will inspire new ideas for all of us.

Before I dive in, I have to note that the views I express are my own and not necessarily those of my colleagues on the Federal Open Market Committee or in the Federal Reserve System.1 That said, I thought I might spend some time today talking about how the COVID-19 pandemic has affected the Hispanic workforce. This is an important topic for us to study at the Fed because the Hispanic community is essential to the growth of our workforce, and workforce growth is a key ingredient of economic growth. I hope that my remarks today will provide helpful, high-level context for the upcoming roundtable. The important issues that will be discussed, such as education, health care and access to capital, contributed to how Hispanic workers fared during COVID-19 and will be key tools during the recovery and beyond.

While the unemployment rate gets most of the attention, today I want to look at the Hispanic workforce through the lens of the employment-to-population ratio. As the name implies, this measure tells us the share of a given population that is working. Because it accounts for both people who are unemployed and looking for work and people who have dropped out of the labor force entirely, it gives us a more complete picture of the labor market’s recovery.

Let’s start with some background. During the past two decades, the employment-to-population ratio has been higher for the Hispanic population than the non-Hispanic population.2 This might seem surprising since Hispanic workers have consistently experienced higher unemployment rates than non-Hispanic workers during the same time period. But it’s driven by the high employment-to-population ratio of Hispanic men, which since 2000, has ranged from 4 to 9 percentage points higher than that of non-Hispanic men. In large part, this reflects the fact that Hispanic men on average are younger than non-Hispanic men and thus are more likely to be what economists call “prime age” for the workforce. But even when we compare apples to apples — prime-age Hispanic men to prime-age non-Hispanic men — we see higher employment ratios among the former.

In contrast, Hispanic women have historically trailed their non-Hispanic counterparts with respect to employment. But by February 2020, the lengthy economic expansion, increased educational attainment and a decline in fertility rates had brought the employment-to-population ratio for Hispanic women in line with that of their non-Hispanic peers.

The historically strong labor market prior to the pandemic had benefited male Hispanic workers as well, and overall, the unemployment rate for Hispanic workers was near its lowest point ever.  The upshot is that in February 2020, the gap between the Hispanic and non-Hispanic employment-to-population ratios was at its widest point on record.

But then the pandemic hit, and the economic fallout was larger for Hispanic workers than non-Hispanic workers. Between February and April 2020, more than 20 percent of Hispanic employees lost their jobs, compared with just under 15 percent of non-Hispanic employees. And that record-wide gap between employment-to-population ratios that we’d seen in February 2020? It shrank to about zero in just two months.

Why was this? Hispanic workers' concentration in the services sector played a key role. For example, as of 2019, they accounted for 27 percent of employees in accommodation and food services, compared to 17.6 percent of the workforce overall.3 We’re all familiar with the drastic employment declines this industry experienced at the onset of the pandemic: It lost nearly half of its jobs — a decline of 6.9 million — between February and April 2020. And looking more broadly at all service occupations, we see they employ one-quarter of Hispanic workers. The share is even larger for Hispanic women; almost one-third work in service occupations. This is striking, considering that the share of all workers employed in service occupations is less than one-fifth.4

This concentration in service occupations, which operate largely in person, also meant that Hispanic workers were less likely to have jobs that allowed them to work from home. The Economic Policy Institute has estimated that only 15 percent of Hispanic employees were able to telework in response to the pandemic, compared with 26 percent of white non-Hispanic employees.5 This may have exacerbated employment challenges for Hispanic workers, especially women, given school, child care and elder care closures.

Concentration in service occupations also meant that those workers who didn’t lose their jobs faced a greater risk of exposure to COVID-19 — a risk that extended to their children and parents, as Hispanic adults are more likely to live in multigenerational households.6 And indeed, Hispanic communities have borne a disproportionate burden from COVID-19. Although Hispanics are about 18 percent of the U.S. population, they accounted for nearly 29 percent of COVID-19 cases as of June 28, according to Centers for Disease Control and Prevention data.7 The hospitalization rate is 2.8 times higher for Hispanics than for white non-Hispanics, and the death rate is 2.3 times higher.8

We have experienced tragic losses, but the economic recovery is underway. Vaccines are widely and increasingly available, and, as COVID-19 cases drop, economic activity is picking up. The demand for labor looks strong, and we are seeing historically high job openings.

Hispanic employment has recovered quickly. As of May, Hispanic employment is 4.8 percent lower than it was in February 2020, compared with 4.4 percent lower for non-Hispanic employment. Considering the steeper initial drop for Hispanic employment, this is notable. And looking at the employment-to-population ratio, a gap has once again emerged, with the ratio for Hispanic workers 3 percentage points higher than for non-Hispanic workers.

It’s important to note, however, that the aggregate data hide the slower recovery of Hispanic women. Once again, Hispanic men are driving the gap in employment-to-population ratios, while Hispanic women lag behind non-Hispanic women. In fact, Hispanic men are closer to full employment recovery than non-Hispanic men: The number of Hispanic men working is just 1 percent lower than it was in February 2020, compared with 3.3 lower for non-Hispanic men. In contrast, 5.3 percent fewer Hispanic women are working than in February 2020, compared with 2.8 percent fewer non-Hispanic women. Again, industry plays a big role in these differences. Although service industries, such as leisure and hospitality, continue to add jobs, there’s still a large deficit compared to before the pandemic. And while the continued reopening of the services sector might allow Hispanic women to regain the ground they’ve lost, it’s possible we’ll see long-lasting damage. For example, service jobs might seem less attractive than they did a year and a half ago, and not everyone is willing or able to make an investment in retraining for a new career.

What do we need to contribute to a fuller recovery? There are a few levers worth exploring.

The first lever is to make more progress on vaccinations. The vaccine rollout has fueled the economic recovery. But there’s still room for growth among the Hispanic community. As of late June, data from 40 states showed that 38 percent of Hispanics had received at least one COVID-19 vaccine dose, compared with 46 percent of whites.9 If we can get beyond access barriers and information gaps, we can make progress and bolster our recovery.

The second lever is to deliver fiscal aid. Congress passed historic stimulus over the past year. Much like vaccines, the stimulus is only effective when it reaches individuals. Rental relief programs are starting to get going, and child tax credit payments begin in July. We know Hispanic communities face unique obstacles to accessing aid, ranging from language barriers to immigration-induced hesitation, but if we can ensure available support is reaching individuals, then we will see an even stronger recovery.

Third, we need to bolster small businesses. The Paycheck Protection Program is no longer accepting new applications, but our need to foster growth among small businesses remains. By one measure, the number of small businesses open today is down more than 44 percent from January 2020.10 The loss has been especially acute for businesses owned by Hispanic women. Hispanic-owned businesses are vital to our small business ecosystem: After the Great Recession, the number of small businesses in the United States would have declined were it not for the growth in Hispanic-owned firms.11

I’m hopeful that with our economy’s current momentum and persistent efforts in these three areas, we will see continued growth in the overall economy and in the Hispanic workforce. With that, let me turn it over to our roundtable panelists. I look forward to hearing their perspectives.

 
1

Thank you to Maia Cotelo and Abigail Crockett for assistance preparing these remarks.

2

Unless otherwise specified, employment data come from the Bureau of Labor Statistics (BLS) and are seasonally adjusted by either BLS or Haver Analytics.

5

Gould, Elise, and Jori Kandra. “Only One in Five Workers Are Working From Home Due to COVID.” Economic Policy Institute’s “Working Economics Blog,” June 2, 2021.

6

Cohn, D’Vera, and Jeffrey S. Passel. “Record 64 Million Americans Live in Multigenerational Households.” Pew Research Center, April 5, 2018.

7

Note that this only includes about two-thirds of all reported cases since not everywhere reports race/ethnicity data.

8

Risk for COVID-19 Infection, Hospitalization, and Death by Race/Ethnicity.” Centers for Disease Control and Prevention, June 17, 2021.

9

Ndugga, Nambi, Olivia Pham, Latoya Hill, Samantha Artiga, and Noah Parker. “Latest Data on COVID-19 Vaccinations by Race/Ethnicity.” Kaiser Family Foundation, June 23, 2021.

10

Percent Change in Number of Small Businesses Open.” Opportunity Insights, Economic Tracker. Chetty, Raj, John N. Friedman, Nathaniel Hendren, Michael Stepner, and the Opportunity Insights Team. Accessed June 29, 2021.

11

Orozco, Marlene, Inara Sunan Tareque, Paul Oyer, and Jerry I. Porras. “2020 State of Latino Entrepreneurship,” Stanford Latino Entrepreneurship Initiative, January 2021.

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