Did you miss HBCU Money™ Dozen via Twitter? No worry. We are now putting them on the site for you to visit at your leisure. We have made some changes here at HBCU Money™ Dozen. We are now solely focused on research and central bank articles from the previous week.
17% Of Household Energy Comes From Rooftop Solar In Queensland l Clean Technica http://dlvr.it/7pDtJh
Fungus has an amazing arsenal, from body invasion Alien-style to hallucinogenic poisons l New Scientist http://ow.ly/FNBhe
What is one way to pursue a career in land use law? A former FSG student shares her story. l FL Sea Grant http://ow.ly/FNBEp
Cisco sees a data analytics fortune at the edge of the network l Network World http://ow.ly/FNCwp
The State Leading The US In EV Adoption Is… l Clean Technica http://dlvr.it/7pDF1W
Get your thinking caps on! Monday, + launch the Climate Data App Challenge l EPA Research http://ow.ly/FNDaQ
Federal Reserve, Central Banks, & Financial Departments
Is mass come to an end? l World Economic Forum http://wef.ch/12CkRie
Are wages and the unemployment rate correlated? l St. Louis Fed http://bit.ly/1yaVB0c
What will our jobs look like in 15 years? l World Economic Forum http://wef.ch/1DmFQq0
Three trends that signal hard times for renters in 2015 l Philadelphia Fed http://ow.ly/FNFiC
Serious mortgage delinquencies fell during third quarter in the U.S. l St. Louis Fed http://bit.ly/1B2w1J7
Why invest in resilience? Here’s what 0.5m sea level rise would mean l World Bank http://wrld.bg/FLHsE
Thank you as always for joining us on Saturday for HBCU Money™ Dozen. The 12 most important research and finance articles of the week.
By William A. Foster, IV
You can be young without money but you can’t be old without it. – Aristotle
There is an unemployment epidemic in African American teenage unemployment. Its ramifications will indict an entire generation of our youth if it is not confronted. Yet, it continues to get brushed under the rug assuming anyone acknowledges it at all. A recent report by the International Labor Organization addressing high youth unemployment in the European Union is quoted as saying “There is a price to be paid for entering the labor market during hard economic times. Much has been learned about “scarring” in terms of future earning power and labor market transition paths. Perhaps the most important scarring is in terms of the current youth generation’s distrust in the socio‐economic and political systems.” However, there seems to be little attention being given to the plight of African American teenagers. Below is a look at a graph of European youth unemployment followed by the US Department of Labor’s view of African American teenage unemployment.
Scarring is the term that economist use in describing long-term unemployment for youth. This is because the compounding impact of it for the individual, household, and community ends up being much like a wound that is almost impossible to heal. Individually, African American teenagers are missing out on the basics of developing work ethic, work skills, networking through employment, early professional success which builds long-term confidence, and a host of other qualitative factors that tend to impact an individuals career trajectory. Because there is high teenage unemployment in African American households and communities it goes without saying that idle time is the devil’s playground. The increased idle time increases the probability of counterproductive behavior especially when there is such an acute quantity of unemployed teenagers.
The economic implications are profound. If we assume a teenager starts working at sixteen and is making minimum wage while working 20 hours a week average, they would earn $6 786 annually after taxes. It does not seem like much on face value but let us dig a little deeper. Let us assume the teenager gives $2 400 a year to the household income, puts aside $1 500 a year for college or vocational training, and lastly puts the remaining $2 886 in a Roth IRA account. First, 38.2 percent of African Americans are in poverty (see chart below) according to the National Poverty Center so an extra $200 a month can often mean the difference between a refrigerator full of groceries and malnutrition for a family. Malnutrition which has been shown to have not only health implications but long-term correlations to academic consequences for children in a household as well. The savings for college would allow the teenager to start college at eighteen with $4 500 in savings. This small amount should not have severe implications on a students’ financial aid but it could be the difference between a student purchasing books at the beginning of the semester as opposed to waiting on their refund which puts students behind during a semester and impacts their chances of academic success and ultimately their ability to graduate in a timely manner. Anyone who has attended an HBCU can readily attest to this reality either for themselves or classmates in experience. Lastly, the $11 544 invested in a Roth IRA after four years with average returns would be approximately $15 000 towards retirement saved at the age of 20. However, they can not touch this retirement account until they are 65. If they did not add another dollar to it and just continued with average returns over the next 45 years that account would be worth $2.5 million by retirement.
The International Labor Organization calls for the following actions to address youth unemployment:
- Fostering pro-employment growth and decent job creation through macroeconomic policies, employability, labour market policies, youth entrepreneurship and rights to tackle the social consequences of the crisis, while ensuring financial and fiscal sustainability.
- Comprehensive measures targeting disadvantaged young people in advanced economies with high numbers of unemployed youth. These include education, training, work experience support and recruitment incentives for potential employers.
- Integrated employment and livelihoods strategies and programmes in developing countries, including training in literacy, occupational and entrepreneurial skills and business support.
These solutions could be applied here in the United States and certainly could be implemented on a more micro level by community organizations operating within African American communities and give a good base for starting to stem the tide. There are 1.9 million African American owned businesses, but 1.8 million of them have no employees. These young people offer an affordable labor option for African American small businesses that in exchange could provide them priceless experience and professional building. Unfortunately, most African American teenagers are ill-equipped for very basic work beyond physical labor so training programs are vital. A difficult task to meet as local city and state budgets are cutting job training programs not expanding them. Therefore, community centered solutions must be examined. Any belief that there will be government assistance or grants should be viewed as no more than a bonus if an organization can get it.
African American teenagers are a silent group suffering and their current condition do not bode well as the stated above reasons show for African America’s future economic condition. They have the least voice among any group it appears in America but given the percentage of African American single parent households are arguably the second most important wage earner in the family. If the children are our (economic) future as Whitney Houston once said, then the future economic condition is looking bleaker and bleaker for African Americans.
Overall Unemployment: 7.6% (7.6%)
African America Unemployment: 13.7% (13.5%)
Latino America Unemployment: 9.1% (9.1%)
European America Unemployment: 6.7% (6.7%)
Asian America Unemployment: 5.0% (4.3%)
Analysis: The unemployment rates overall remains unchanged. Two of the four diaspora groups remain unchanged while the other two saw upticks. Asian America saw a significant uptick but remains the group with the lowest unemployment. African America remains the only group with a double digit unemployment rate.
African American Male Unemployment: 13.0% (13.5%)
African American Female Unemployment: 12.0% (11.2%)
African American Teenage Unemployment: 43.6% (42.6%)
African American Male Participation: 67.1% (67.9%)
African American Female Participation: 62.3% (62.5%)
African American Teenage Participation: 28.1% (28.0%)
*Previous month in parentheses.
Analysis: African American women and teenagers saw significant upticks in their unemployment rate while the unemployment rate for men saw a moderate decrease. Participation rate for teenagers remain virtually unchanged while men and women both saw decreases. The men saw a substantial drop in their participation rate.
Conclusion: The overall economy added 195 000 jobs in the month of June. African America shows a loss of 112 000 jobs for the month of June. A significant loss after four straight months of positive job growth. The African American labor force shrunk by almost 100 000 and most disturbing is the participation rate as it dropped to its second lowest rate in the past five months. A sign that fatigue is setting in and the desire to find employment is waning. African American women’s participation rate has held steady over the past five months while the men have shown an alarming drop. The continued crisis of African American teenagers proves to be worsening as the group hit a new high again for its unemployment rate which still stands at the third highest in the developed world. It appears the sequester is setting in and unemployment fatigue is starting to take a turn for the negative in the African American community.
Source: Department of Labor
Overall Unemployment: 7.6% (7.5%)
African America Unemployment: 13.5% (13.2%)
Latino America Unemployment: 9.1% (9.0%)
European America Unemployment: 6.7% (6.7%)
Asian America Unemployment: 4.3% (5.1%)
Analysis: Overall unemployment saw a rise primarily due to a rise in the number of people entering the labor force. African America saw the largest rise in unemployment rate among all groups. Latino and European America experienced virtually no change. Asian America was the only group with a significant drop in its unemployment rate. African America remains the only group with double digit unemployment.
African American Male Unemployment: 13.5% (12.6%)
African American Female Unemployment: 11.2% (11.6%)
African American Teenage Unemployment: 42.6% (40.5%)
African American Male Participation: 67.9% (67.4%)
African American Female Participation: 62.5% (62.3%)
African American Teenage Participation: 28.0% (27.5%)
*Previous month in parentheses.
Analysis: African American male unemployment saw a sharp uptick. African American women saw another healthy decline in their unemployment rate. The teenage group continues to see significant rises in unemployment. All three groups saw a rise in their participation rates suggesting more African Americans looking for work in the month of May.
Conclusion: The overall economy added 175 000 in the month of May. African America after adding 100 000 jobs last month in April only added an estimated 35 000 jobs in May. There just does not seem to be much to enjoy right now if you are African America still trying to recover from over 5 years ago now. Job growth in the private sector for African America is moving at a snail pace if it is moving at all. The continued crisis that is African American teenage unemployment continues unabated. Civilian labor force (those looking for work) has picked up for a second straight month but it is fairly apparent there are not many places for them to go. African American men have lost 70 000 jobs over the past two months. Thankfully, African American women have netted 260 000 jobs over that same two month stretch. Given the latter group is more vital to African American households economically speaking they are once again carrying the majority of the household burden. African American teenagers have lost 60 000 jobs over the past two months as well. It appears while more African Americans are looking for jobs it might be more a result of the continuing job loss for African America not job gains that is spurring them to do so.
Overall Unemployment: 7.6% (7.7%)
African America Unemployment: 13.3% (13.8%)
Latino America Unemployment: 9.2% (9.6%)
European America Unemployment: 6.7% (6.8%)
Asian America Unemployment: 5.0% (6.1%)
Analysis: Overall unemployment rate is down. Every group saw a decline in their unemployment rate led by Asian America who saw the largest decline. African America continues to be the only group with double digit unemployment. The American participation rate is the lowest since 1979.
African American Male Unemployment: 12.7% (12.9%)
African American Female Unemployment: 12.2% (12.5%)
African American Teenage Unemployment: 33.8% (43.1%)
African American Male Participation: 68.1% (68.2%)
African American Female Participation: 61.3% (62.2%)
African American Teenage Participation: 27.6% (27.4%)
*Previous month in parentheses.
Analysis: All groups saw declines in their unemployment rates. The African American teenage group led the way with one of the most significant drops in recent memory in its unemployment rate. Participation rates saw drops for both men and women while the teenagers saw a slight uptick. African American women saw a significant drop in their participation rate.
Conclusion: America overall added only 88 000 jobs in the month of March, the lowest job creation since June of 2012. African America netted 9 000 new jobs or 10.2 percent of new jobs. African American men and teenagers netted 18 000 and 68 000 new jobs, respectively. Unfortunately, African American women experienced a loss of 76 000 jobs. The women’s loss is by far the most problematic for African American household financial stability since they head the majority of African American households. The increase in teenage unemployment while serving as a hedge in households also means African American households are bringing in dramatically less as teenagers are almost always working low wage jobs. As the federal sequester continues to take hold we should continue to expect abysmal employment numbers. African America’s continued public employment dependence will continue to be highlighted as long as the federal log jam in Washington D.C. continues and agencies have to make cuts and furloughs. The most damaging number reported is the decrease in the African American labor force which dropped by 115 000 and served as the primary driver in the decreased unemployment rate. After four months of increased African American labor force this could be an early sign that employment search fatigue could be setting in.