As vaccine distribution accelerated in the first half of 2021, the economy began to recover. However, that recovery has been uneven across groups, with racial/ethnic gaps persisting. And latent vaccine skepticism across certain parts of the country remains a potential headwind to a full recovery.

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2021 Q1 & Q2 • Updated July 2021

Black–white and Hispanic–white inequality persists amid labor market recovery

By Kyle K. Moore

EPI analyzes state unemployment rates by race and ethnicity, and racial/ethnic unemployment rate gaps, on a quarterly basis to generate a sample size large enough to create reliable estimates of unemployment rates by race and ethnicity at the state level. We report estimates only for states for which the sample size of these subgroups is large enough to create an accurate estimate. For this reason, the number of states included in our maps and data tables varies based on the analysis performed. The following analysis contains data on the first two quarters of 2021.

Our analysis of first- and second-quarter 2021 data finds a still-uneven recovery picking up its pace due in large part to the widespread availability of the COVID-19 vaccine. Recovery in the labor market has not brought with it racial equity, however; the Hispanic–white unemployment ratio rose from 1.6 in 2020Q4 to nearly 1.7 in 2021Q2, while the Black–white unemployment ratio returned to its historical trend of 2.0. That is, although the overall unemployment rate fell, Hispanic workers were still nearly 70% more likely to face unemployment than white workers, while Black workers were twice as likely to face unemployment as white workers. This suggests that a return toward normalcy alone will not be enough to close racial gaps in the labor market.

First-quarter state unemployment rates, trends, and ratios

In the first quarter of 2021, just prior to the full-scale deployment of the COVID-19 vaccine, unemployment rates fell at a slow and uneven pace across the country.

Over the three-month period from January 2021 to the end of March 2021, the share of Americans who had received at least one dose of a COVID-19 vaccine rose from just 1% of the population to nearly 30%.1 This monumental public health achievement made it possible for the economy to begin a return to normalcy; however, latent vaccine skepticism across certain parts of the country remains a potential headwind to a full recovery.

To the extent that the economy has recovered, that recovery has been unequal across groups and has yet to bring with it greater racial equity in the labor market. As states across the country begin to roll back their enhanced unemployment benefits,2 they should be mindful of the disparate impact that policy decision will have on communities with relatively high unemployment rates, particularly Black and Hispanic communities.

First-quarter trends among Black workers

Among the 17 states (including D.C.) with a large enough sample size for measurement, Black unemployment was highest in the District of Columbia in the first quarter of 2021, with an unemployment rate of 15.4%—an increase over 2020Q4’s rate of 14.7%. Eight states had Black unemployment rates greater than 10%—D.C (15.4%), Illinois (13.3%), Ohio (12.1%), Louisiana (12.0%), New York (11.5%), Texas (11.2%), California (10.6%), and Mississippi (10.4%). In Florida, Mississippi, and Tennessee, the Black unemployment rate was within one percentage point of its pre-pandemic (2020Q1) rate.

Alabama had the lowest Black unemployment rate of the states with a large enough sample size for measurement, at 5.4%. Alabama also had the lowest Black–white unemployment ratio among the 17 states with available data; Black workers are 40% more likely to be unemployed in Alabama than white workers. That the Black–white unemployment ratio was also lowest in the state with the lowest unemployment rate for Black workers lends some credence to the idea that pushing unemployment rates down further can result in a reduction of racial gaps.

The District of Columbia retained the highest Black–white unemployment ratio in the country, with Black workers in the District more than four times as likely to be unemployed as white workers—a troubling statistic for our nation’s capital.

Black workers were nearly twice as likely to be unemployed as white workers across the country in 2021Q1. The Black–white unemployment ratio for the country remained at 1.9, meaning Black workers were 90% more likely to be unemployed than white workers (9.4% for Black workers vs. 4.8% for white workers). This was essentially unchanged from 2020Q4, further suggesting that the pace of recovery was not enough to produce inequality-reducing growth.

First-quarter trends among Hispanic workers

Of the 13 states with available data, Hispanic unemployment was highest in New York, with a Hispanic unemployment rate of 11.8%, down slightly from 12.4% in 2020Q4. Only one other state, California, had a Hispanic unemployment rate above 10%—the rate there was 10.3%. Washington State was the only state where the unemployment rate had fallen below its pre-pandemic rate.

Idaho had the lowest unemployment rate for Hispanic workers among those states with available data, with a Hispanic unemployment rate of just 3.5%. The three states with the lowest Hispanic unemployment rates in 2020Q4 (Georgia, Utah, and Kansas) lacked sufficient sample size to make comparisons across racial/ethnic groups.

Overall in the United States, the Hispanic–white unemployment ratio was 1.7, meaning Hispanic workers were 70% more likely to be unemployed than their white counterparts (8.3% for Hispanic workers vs. 4.8% for white workers). Of the 13 states with available data, the Hispanic–white unemployment ratio was highest in North Carolina, with Hispanic workers there twice as likely to be unemployed as white workers (8.2% vs. 4.0%). Idaho and Washington saw the greatest amount of equity between Hispanic and white Americans, with the Hispanic–white unemployment ratio at 1.1 in both states.

First-quarter trends among white workers

White unemployment in Hawaii remained the highest in the country in 2021Q1, though the rate fell into single-digit territory at 9.4%. Though the state is still suffering from a lack of activity in tourism and hospitality, we should expect a continued recovery of Hawaii’s labor market as vaccination rates increase throughout the United States and across the rest of the world. With Hawaii crossing into single digits, no state in the country had a white unemployment rate above 10% in 2021Q1.

Unemployment rates were lowest for white workers in South Dakota (2.1%), Utah (2.5%), Nebraska (2.6%), and Oklahoma (2.9%), though in 20 states (including D.C.) white unemployment fell below 4%. The overall white unemployment rate for 2021Q1 was just 1.8 percentage points higher than the rate one year ago in 2020Q1. In 20 states, the white unemployment rate fell to within one percentage point of its 2020Q1 rate. While relatively low unemployment rates do not mean that the recovery has run its course for white workers, the fact that unemployment rates are so skewed does highlight the inequality of the American labor market.

First-quarter trends among Asian American/Pacific Islander (AAPI) workers

AAPI unemployment rates continued to fall throughout the first quarter of 2021, though the overall unemployment rate remained above that of white workers. The unemployment rate for AAPI workers was 5.9% in 2021Q1, 2.8 percentage points above their rate for 2020Q1. AAPI workers still faced an unemployment rate greater than 10% in New York, though Hawaii’s AAPI unemployment rate fell into single digits, to 8.7%. In California, Hawaii, New Jersey, and Washington, AAPI unemployment rates were lower than those for white workers. New Jersey was the only state among those with available data where the AAPI unemployment rate came within one percentage point of its pre-pandemic rate.

Second-quarter state unemployment rates, trends, and ratios

The second quarter of 2021 saw increased availability of the coronavirus vaccine, and along with it the relaxation of mask ordinances across much of the country. That said, the spread of the coronavirus’s Delta variant among unvaccinated Americans threatens slow the return to normalcy if new restrictions on reopening become necessary.

In 2021Q2, many states were eager to suspend the provision of expanded unemployment benefits in a misguided effort to induce the unemployed to return to work; however, so far, those states where the expanded benefits were shut off have not seen a subsequent boost in employment beyond existing trends. Further, many of the states where expanded benefits were cut off early were states where the Black unemployment rate was significantly higher than the white unemployment rate, indicating a lack of consideration or concern for the effects of the policy on racial equity.

Second-quarter trends among Black workers

Among the 17 states with available data for analysis (including the District of Columbia), the District once again had the highest Black unemployment rate at 13.8%—a significant decrease from the previous quarter but still extraordinarily high. The Black unemployment rate exceeded 10% in seven states: D.C (13.8%), Illinois (12.4%), California (11.9%), Ohio (11.0%), Louisiana (10.8%), Texas (10.8%), and New York (10.6%). In Florida, Georgia, and Mississippi, the unemployment rate for Black workers was within one percentage point of its pre-pandemic (2020Q1) rate, while in Tennessee it dropped below its pre-pandemic rate.

Alabama once again had the lowest Black unemployment rate (4.5%) and the lowest Black–white unemployment ratio (1.4) among states with available data. Although the Black unemployment rate in D.C. fell from 2021Q1 to 2021Q2, the white unemployment rate fell by proportionately more, leading the Black–white unemployment ratio to increase from 4.1 to 4.5.

Nationwide, Black workers were essentially twice as likely to be unemployed as their white counterparts, with a Black–white unemployment ratio of 1.97 at the national level. While this is consistent with the historical trend, that by no means makes it acceptable nor inevitable. Policymakers should direct their attention toward finding ways to both extend the recovery in the labor market and close racial gaps in employment. Those concerned with racial equity should also be wary of removing support for the unemployed, as this will have a disproportionately negative effect on Black job-seekers across much of the country.

Second-quarter trends among Hispanic workers

Of the 15 states with available data on the Hispanic unemployed population in 2021Q2, New York had the highest Hispanic unemployment rate, at 11.0%, down from 11.8% the previous quarter. New York and Massachusetts (10.4%) were the only two states with a Hispanic unemployment rate that exceeded 10%. Georgia and Idaho both had low Hispanic unemployment rates, at 3.2% and 3.4%, respectively. Of the 15 states for which data were available, only Washington and Georgia had unemployment rates within one percentage point of their 2020Q1 pre-pandemic rates.

Nationwide the Hispanic–white unemployment ratio was 1.66 (7.7% for Hispanic workers vs. 4.7% for white workers), a slight improvement from 1.71 in 2021Q1. Among the 15 states with available data, Massachusetts and North Carolina had the highest Hispanic–white unemployment ratios, at 2.4 and 2.1 respectively. Georgia, Idaho, and Nevada had low Hispanic–white unemployment ratios: In both Idaho and Nevada the ratio rounds to 1.1, while in Georgia Hispanic unemployment fell below white unemployment such that the Hispanic–white unemployment ratio was 0.95.

Second-quarter trends among white workers

White unemployment remained highest in Hawaii but continued its decline into 2021Q2, falling from 9.4% to 8.8%. Once again, no state in the country had a white unemployment rate that exceeded 10% in 2021Q2.

As of 2021Q2 there are 22 states (including D.C.) where the unemployment rate for white workers is below 4%. In 21 states, the unemployment rate was within one percentage point of its rate in 2020Q1, prior to the pandemic. Unemployment rates were below 3% in five states for white workers: South Dakota (2%), Nebraska (2.1%), Utah (2.5%), Vermont (2.9%), and Idaho (2.9%). Nationwide the white unemployment rate was 4.7%, basically unchanged from 2021Q1’s 4.8%. The slow overall improvement in unemployment numbers here suggests that the recovery we have seen thus far may be fragile; a sudden shock, whether from the Delta variant or a sudden interest rate hike, could still disrupt the path toward a strong labor market.

Second-quarter trends among Asian American/Pacific Islander (AAPI) workers

AAPI unemployment was, like white unemployment, largely unchanged from Q1 to Q2, falling just a tenth of a percentage point from 5.9% to 5.8%. With the AAPI unemployment rate in New York falling to 9.6%, however, no states recorded an AAPI unemployment rate of above 10% for the first time since the pandemic began. AAPI unemployment rates were below those of white workers in four of the six states with available data: New Jersey (4.4% vs. 6.6%), Texas (4.5% vs. 4.6%), Washington (4.6% vs. 5.0%), and Hawaii (7.6% vs. 8.8%). New Jersey was also once again the only state among the six where the AAPI unemployment rate came within one percentage point of its pre-pandemic rate.

Methodology

The unemployment rate estimates in this report are based on the Local Area Unemployment Statistics (LAUS) and the Current Population Survey (CPS) from the Bureau of Labor Statistics (BLS). The overall state unemployment rate is taken directly from the LAUS. CPS six-month ratios are applied to LAUS data to calculate the rates by race and ethnicity. For each state subgroup, we calculate the unemployment rate using the past six months of CPS data. We then find the ratio of this subgroup rate to the state unemployment rate using the same period of CPS data. This gives us an estimate of how the subgroup compares with the state overall.

While this methodology allows us to calculate unemployment-rate estimates at the state level by race and ethnicity by quarter, it is less precise at the national level than simply using the CPS. Thus, the national-level estimates may differ from direct CPS estimates.

In many states, the sample sizes of particular subgroups are not large enough to create accurate estimates of their unemployment rates. We report data only for groups that had, on average, a sample size of at least 700 in the labor force for each six-month period. Data collection for the BLS surveys used to produce this report was affected by the pandemic, in some cases limiting sample sizes such that some states that usually meet sample size thresholds no longer did so.3

Notes

1. Oxford Martin Programme on Global Development, “Coronavirus (COVID-19) Vaccinations” [data set], Our World in Data, accessed July 26, 2021.

2. Julia Wolfe, “Expanded Unemployment Insurance Continues to Be a Crucial Lifeline for Millions of Workers: See Updated State Unemployment Data,” Working Economics Blog (Economic Policy Institute), June 26, 2020.

3. See Bureau of Labor Statistics, “Effects of COVID-19 Pandemic on the Employment Situation News Release and Data” (web page), for more details on how the pandemic has impacted data collection.