The puzzle of black male unemployment

THE last decade was a good one for low-income women, especially minorities and single mothers. Welfare reform pushed many of them into the labor force, and the strong economy helped others to find jobs. Initiatives to "make work pay," such as child-care subsidies and an expanded Earned Income Tax Credit (EITC), also raised the incentive to work. In all, policies stressing reciprocal obligations as well as incentives and work supports such as child-care assistance dramatically increased employment and reduced welfare dependency for this population.

Low-income men, however, did not fare so well. After declining throughout the 1980s, employment rates of young, less-educated white and Latino men remained flat during the 1990s. Among black men aged 16 through 24, employment rates actually dropped. In fact, this group's employment declined more during the 1990s (when it fell from 59 percent to 52 percent) than during the preceding decade (when it fell from 62 percent to 59 percent). By 2000, young black men worked only about two-thirds as much as comparable white and Latino men.

The downward trend is even more striking when one considers labor-force participation rates, which measure the desire to work rather than actual employment. Many young black men have given up on working in the regular labor market. Employment rates of young black women now exceed those of young black men, even though many of these women must also care for children. This is true even when one excludes incarcerated black men: If these were included in our estimates, the decline in employment in the 1990s would seem even more dramatic.

Why did work activity among young black men fall in the 1990s? Are the contributing factors similar to those of earlier decades, or is something new going on? And can policy makers do anything for this group to improve work incentives and obligations, as they did with considerable success for low-income mothers under welfare reform?

Factors at play

According to a large body of research, several factors contributed to the decline of employment among young black men in the 1970s and 1980s, including declining real wages, the skills gap between whites and minorities, other gaps or "mismatches" between employers and minority applicants, and the growing involvement of minority youth in crime.

Real wages for unskilled young men either declined in the 1970s and 1980s or stagnated, depending on which adjustments are made for inflation. Even under the most favorable assumptions, the wages of these men declined relative to those of women and more-educated workers. Part of the reason was the disappearance of manufacturing jobs, particularly in the industrial Midwest. Other blue-collar jobs also disappeared or offered lower wages. Thus the incentives for young, unskilled men to enter the workforce diminished.

To be sure, not all the news was bad. For instance, both educational attainment and test scores increased more rapidly among young blacks than among whites during this period. But that progress did not generate improved employment outcomes among blacks, since the labor-market costs associated with lower education and skills simultaneously rose dramatically. Since young blacks still fall well below whites in both areas, during this time their relative standing in the labor market actually worsened in spite of educational advances.

Fortunately, not all less-educated workers' employment rates fell as much as blacks' did. Indeed, Latinos today work at rates comparable to those of whites despite their lower skills. Thus other factors must have affected the ability or willingness of young black men to work. Among these were a growing "spatial mismatch," or geographical distance, between employers and low-income blacks and a growing employer preference for immigrants and black women over less-educated young black men.

As blacks remain heavily segregated in urban neighborhoods, and as jobs have left these areas, young men living there have found it increasingly difficult to find employment. In part, this is a transportation problem, especially for those who do not own cars and must rely on public transit which often fails to reach suburban job locations conveniently. But lack of information about job openings in the suburbs also contributes to the problem. Informal networks whereby employees refer friends and relatives to employers operate less successfully in black neighborhoods.

One reason for the weakness of these networks among blacks, and their strength among Latinos and Asians, is that employers prefer to draw workers from the latter groups. Employers perceive a stronger work ethic among immigrants of all racial groups, and a greater willingness to accept and retain low-wage jobs. As a result, they frequently seek out referrals from their immigrant employees, especially for jobs that do not require English or strong cognitive skills. Employers are also less reluctant to hire black women than black men, and are more wary of potential conflicts with the latter. Discrimination thus persists against black men at the hiring stage, especially at small establishments and those serving a largely white clientele.

Part of employers' growing uneasiness with young black men owes to their rising involvement in crime. The booming market for crack cocaine in the late 1980s, aided by the continuing decline in good-paying blue-collar jobs, strengthened the appeal of that sector, albeit temporarily and for short-term gains only. The resulting huge increase in incarceration has had important consequences for their long-term employability.

Explaining underachievement

Even if nothing else had changed, one would have expected the employment of young black men to improve sharply in the late 1990s as the labor market tightened. The test-score gap between young whites and blacks closed by nearly a third in the 1980s, improving the employment prospects of blacks in the 1990s. Real wages rose in the late 1990s, especially among young blacks and other low-wage groups that had experienced wage losses over the previous two decades. Residential segregation between whites and blacks continued its slow but steady decline, implying a mild weakening of the "spatial mismatch." And perhaps most importantly, the crime rate dropped substantially.

Why, then, did the employment and labor-force rates of less-educated young men--and especially young blacks--fail to bounce back more sharply? It is true that school enrollment rates were rising for most groups, including young black men during this period. Were the more highly skilled young men now entering school, leaving behind a less-qualified group in the job market? Were young men being crowded out of the job market by low-income women who found employment in large numbers in the 1990s or displaced by a rising tide of immigrants? And did the steady disappearance of blue-collar and manufacturing jobs continue to hurt young black men?

Our analysis suggests that there is some truth to each of these claims. But even after accounting for all of them, most of the employment decline of young black men in the 1990s remains unexplained. We believe that two other factors bear primary responsibility for the drop in working black males: the rising number of young black men who are ex-offenders and the stricter enforcement of child-support laws by the states.

The scope of incarceration

There are about two million individuals incarcerated today in the United States. Nearly 700,000 of them leave prison each year, which means that the proportion of Americans who are felons and have served time is growing rapidly. Richard Freeman, an economist at Harvard University, estimates that about 7 percent of all non-institutionalized men in the United States have been in prison, as have 22 percent of all black men. Among black men under 40, the number is about 30 percent. During the time these young men are incarcerated, they are not counted among the unemployed--since employment and labor-force calculations are based on those in the non-institutional population. When they are released, measured employment rates drop since few of these men become and remain employed.

Much of the problem for ex-offenders centers on the young men themselves and the neighborhoods in which they live. About 80 percent of these men are high school dropouts, and a majority are functionally illiterate. Their previous work experience is generally spotty, and their attachment to the regular world of work is weak owing to the low wages and benefits the jobs typically offer. They tend to live in poor communities that are far from job locations and where few members of the community are working. Weak ties to family and community are often matched by strong ties to peers on the street, which often lead to recidivism.

Compounding these problems is the reaction of potential employers. According to one survey, only 40 percent of employers who are hiring for entry-level jobs would even consider someone with a criminal record, a far lower percentage than is found for welfare recipients or the long-term unemployed. In some cases, especially those involving health care, child and elder care, or financial services, employers are legally barred from hiring those with criminal records. In other cases, employers worry about the legal liabilities they might incur if customers or coworkers were harmed by such individuals, as well as the possible theft of property.

Two other points should be emphasized. First, employers seem much more willing to hire white ex-offenders than black ones, as Devah Pager of Northwestern University found in a study of employers considering black and white job applicants in Milwaukee. Second, prison-rights advocates try to suppress the flow of information about criminal backgrounds to employers, but such a policy may actually serve to reduce young black men's chances of being hired. This is because employers who do not check criminal backgrounds tend to avoid hiring young black men altogether. By contrast, when criminal background information is available, employers can more easily identify those who do not have criminal records, and overall hiring of blacks increases.

Survey data also show that employers tend to be receptive to information concerning the offender--such as whether the offense was violent, and whether the individual has successful work experience since being released--especially when labor markets are tight and employers are scrambling to find competent employees. An important role might therefore exist for labor-market intermediaries to present this information to employers and help bridge any gaps between employer needs and worker abilities.

Taxing work and fatherhood

An estimated one-fourth of black men aged 16 to 24 are noncustodial fathers, according to Elaine Sorenson of the Urban Institute, as are half of those aged 25 to 34. These men will be greatly affected by the more aggressive state laws concerning child-support enforcement. Over the past two decades, states have increasingly adopted a range of policies designed to establish paternity and extract child-support payments from these men by withholding wages. Failure to pay child support is increasingly treated as a felony offense, resulting in potential jail time and loss of personal rights, including the right to a driver's license.

Why might these activities discourage low-income men from seeking employment? If anything, one would think the pressure to pay child-support orders would make men more liable to work, not less. The problem is that for many of these men, child-support orders can be quite steep. Orders of $300 a month are not uncommon, especially for fathers who have several children. In fact, these orders are often set by judges with little knowledge of the father's earning capacity and work experience. Orders remain in effect even when the father is incarcerated, and child-support debts (known as "arrears") continue to accumulate. Under these circumstances, states can garnish up to 65 percent of the father's already low wages to pay off these debts.

As a result, child-support orders can represent a steep tax on the earnings of low-income men. While economists have found that income taxes generally do not discourage the efforts of working-age men who will work about 40 hours per week regardless of their take-home pay, the willingness to work among low-income individuals is more sensitive to the net wage. If they can disappear into the underground economy and evade detection from law-enforcement officials, they have a strong incentive to do so. This is particularly the case if little of the money gets passed on to their children, as is true in almost all states if the family is receiving public assistance. And if states respond by more aggressively punishing noncustodial fathers for lack of support--by incarcerating them, for example--their future earning capacity is further diminished.

This points to a discrepancy in government policies toward low-wage workers: while we strongly subsidize the earnings of low-income mothers, we heavily tax the earnings of noncustodial fathers, thus reducing their incentive to work, and often their involvement with their families. And yet the children of these fathers sorely need them to provide both financial support and meaningful mentoring. Noncustodial fathers can provide important benefits to their sons and daughters if they are emotionally involved with their families, and this is much more likely to occur when they are employed.

Thus "fatherhood" programs like Parents' Fair Share and the Fragile Families Project, providers of counseling and peer support to low-income absent fathers, are badly needed. So are employment services and training programs. And these measures have broad support--in both 1999 and 2000 "fatherhood bills" passed the House of Representatives by overwhelming margins, only to be halted in the Senate by a handful of critics. The irony is that among the few groups opposing these bills were a number of organizations claiming to represent low-income mothers.

Why would these organizations oppose efforts to increase the earnings of low-income men when the primary purpose of these efforts is to raise child-support payments? To begin with, groups like the National Organization of Women consider raising fathers' incomes to be part of an effort to promote marriage, which they strongly oppose. Moreover, they fear that giving assistance to fathers will inevitably result in money going to groups like the Children's Rights Council and others that fight women over custody issues.

But the bigger problem is that these groups are ambivalent about child support itself. They want noncustodial fathers to provide more support, but they also want to reduce women's dependence on men. Anyone seeking to increase male earnings is relying on "stereotypical gender roles," NOW Legal Defense spokesperson Jacqueline Payne told a Senate Finance Committee hearing in 2000. "Women are expected to be the primary caregiver for children and to be economically dependent on men. Men, on the other hand, are expected to shoulder the entire financial burden of the family .... Making fathers more self-sufficient is not the answer to women's and children's poverty."

This argument makes no sense. No one--least of all the Bush administration, or the Clinton administration before it--believes that men should shoulder the family's entire financial burden. But surely it makes sense to have fathers contribute toward the support of their children, which at the current time many of them are unable to do.

Reciprocal obligations

Reversing the fortunes of low-income men is a daunting challenge. Their problems run deep, and as a group they generate little sympathy among the public. However, certain steps might be taken to ease their way into the workforce and reintegrate them into their communities and families.

First, we need a better system of amending child-support orders so that men who are unemployed or in prison don't build up large arrearages during times when they are unable to make payments. A few states are beginning to grapple with these problems, but to date progress has been slow. Furthermore, the National Organization of Women notwithstanding, we need to help low-income non-custodial fathers find jobs so that they can meet their child-support obligations. Surveys show that many of these men want to support their children but are unable to do so. We need to provide work experience as well as job training for them, as has been done so successfully for welfare mothers.

Second, more needs to be done for those leaving prison. This may not win politicians a lot of votes, but it is a matter of simple common sense. Currently, former prisoners receive little or no help upon re-entering society, so chances are high that they will reengage in criminal behavior and end up back behind bars. Given that it costs about $30,000 a year to keep someone incarcerated, the current arrangement makes little sense. These men need help finding jobs so they can support themselves. Opportunities for schooling and especially work for inmates need to be expanded. Regulatory barriers that limit private-sector employers from hiring inmates while they are still behind bars should be revisited, as suggested by former Attorney General Edwin Meese. The activities of labor-market intermediaries that seek to bridge the gap between employers and these individuals upon release need greater support. And laws barring the employment of former prisoners in certain positions should be reviewed. Some of these laws are clearly needed to protect the public, such as those that exclude ex-cons from child or elder care. But other measures whose only purpose seems to be punitive, like the denial of drivers' licenses, are less reasonable.

Third, we need to increase the incentive to work among low-income men. One possibility is to make them eligible for the Earned Income Tax Credit (currently, the maximum credit for a childless person is about $350). The work effort of single mothers has increased enormously, at least partly as a result of the EITC, and something similar may work for men. This could take the form of an expanded EITC for noncustodial fathers who are up-to-date on their child-support payments, or an expansion of the current childless credit for people working full-time. One problem with this suggestion involves marriage penalties: currently, working individuals who get married lose some of the EITC for which they qualify as individuals, and the proposals described above could exacerbate this problem. But these difficulties could be handled with some changes in the current law, such as separate payment schedules for one- and two-parent families.

Finally, we need to revisit the old problem of skill acquisition and the school-to-work transition. In order to motivate these young men while they are still in school, we should link their classroom instruction with the development of skills they will need in the job market. The Manpower Demonstration Research Corporation's recent evaluation of Career Academies, where high school students combine general academic studies with a focus on a particular economic sector, shows that such an approach can be effective in increasing the post-school earnings of young men. Moreover, employers should be encouraged to play an active role in this effort, especially by creating many more internships and apprenticeships. Since finding competent workers is likely to become a growing challenge when the baby boomers start to retire in a few years, they have a strong incentive to do this.

For young men who have already dropped out of school, we need to expand access to proven models like Job Corps and Youth Service Corps that provide work experience and training. Alternative schools that link classroom education to work for those who have failed in traditional classrooms deserve greater study. Finally, incentives that school districts have to wash their hands of these youngsters must be eliminated (especially under the "No Child Left Behind" legislation, where higher dropout rates may improve average test scores).

These proposals will not be cheap, and critics will point out that many past efforts to help this population have fared poorly. Over the past decade, though, similar policies have exceeded expectations in improving the circumstances of low-income women because significant investments have been made to support and reward work for this population. Furthermore, the costs of doing nothing--in terms of crime, incarceration, and child poverty--are huge. Large-scale initiatives involving untested proposals should be avoided, but it is necessary to begin careful experimentation to determine what works best for this population. The bottom line is that serious efforts must be undertaken to help low-income men. This means creating a system of reciprocal obligations that offers rewards for those who work, support their children, and stay out of trouble. It is time to do for young men what we have done so successfully for young women.

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