Nationwide—The unemployment rate dipped to 4.2% in August and 142,000 jobs were added, according to new data from the Bureau of Labor Statistics. 7.1 million workers were unemployed. The Bureau of Labor Statistics also issued revised data finding that employment in June and July was 86,000 lower than previously reported. Overall, the labor market has weakened significantly since a year ago, when the unemployment rate was 3.8% and 6.3 million U.S. workers were unemployed.
The unemployment rate for Black workers in August was 6.1% compared to 3.8% for white workers. The unemployment rate was 5.5% for Latinx workers. Asian workers’ unemployment rate was 4.1%. Continuing disparities in unemployment rates are a result of structural racism in the U.S. labor market, including persistent occupational segregation.
“The dip in the unemployment rate is a positive sign,” said Rebecca Dixon, president and CEO of the National Employment Law Project (NELP), “But the evidence of a weakening job market is unmistakable. It is time for the Federal Reserve to substantially lower interest rates to prevent a disastrous economic downturn. Meanwhile Congress and state governments must strengthen the unemployment insurance system, which isn’t ready to support a surge in jobless workers.”
Even if more workers lose their jobs, most will not receive unemployment insurance benefits. A significant problem with the unemployment insurance system is that it only supports about 1 in 3 unemployed workers. This dismal trend persisted in August: Although 7.1 million workers were unemployed, fewer than 1.9 million of them claimed unemployment insurance benefits.
Workers of color are disproportionately excluded from the system: Even though, as a result of structural racism, Black workers are more likely to be unemployed, they are even less likely to receive unemployment benefits than their white counterparts. The low rate of benefit recipiency for all workers is the result of a variety of factors, including eligibility restrictions, cuts to benefit weeks, and procedural hurdles that prevent unemployed workers from becoming—or remaining—eligible for unemployment benefits. In addition, many workers never apply for benefits.
Congress must act to expand access to and eligibility for unemployment insurance by passing the Unemployment Insurance Modernization and Recession Readiness Act, introduced by Senators Ron Wyden (D-OR) and Michael Bennet (D-CO) and Representative Don Beyer (D-VA). The bill sets nationwide standards for UI, mandating that states offer at least 26 weeks of unemployment benefits, raising benefit amounts to replace a greater share of workers’ prior earnings, and increasing coverage for part-time workers, temp workers, and workers whose earnings fluctuate over time. The bill also establishes a new, federally funded Jobseekers Allowance to support jobless workers who would not otherwise be covered by unemployment insurance and modernizes the Extended Benefits program that makes additional weeks of unemployment benefits available in times of high unemployment. State policymakers across the country should also act to improve their state unemployment insurance systems to better support workers and the economy.
