The relationship between white and minority unemployment has troubled political, economic and social observers for decades. The crude and cruel rule of thumb is that whatever the white unemployment rate, the minority unemployment rate will be approximately double. Unfortunately, this has been generally true since employment figures were first categorized by race.
The recession that is slowly gripping the economy is expected to increase overall unemployment to 8 or 9 percent. Granting these estimates, the misery of unemployment will be even more severe for minority workers as their unemployment approaches 20 percent.
Since the mid-1960s, a similiar relationship, though not as tight, has developed between white and minority teenage workers. We enter this recession with minority teen-age unemployment near 35 percent (50 percent in some central cities).
There are many reasons given for the spread between white and minority unemployment rates. Discrimination, no doubt, is at the heart of the problem. uMuch has been done not only to lessen the effects of discrimination, but also to improve the American psyche regarding racial matters. However, the problem of discrimination, because it requires a change of attitude as well as behavior, will be present for a long time to come. Consequently, the beneficial effects on minority employment of the elimination of discrimination will be insufficient in the short run to offer much hope of dramatic improvement.
The effect of the minimum wage on young workers, especially minority teen-agers, has been well documented. But, though a youthful differential in the minimum wage laws would be particularly beneficial to minority teen-agers and would help close the gap between white and minority umemployment rates, the simple political fact is that such a change is not foreseeable in the short run.
What hope is there, then, for lessening the differential?
The hope is economic growth.
Supply-side economics has received increasing support from economists and increasing interest from the press and politicians lately. The reasoning behind this approach is simple: if the economy is being hurt by inflation -- that is, too much money chasing too few goods -- then the solution should be an increase in the supply of goods. Furthermore, if production is stimulated, the problem of unemployment is simultaneously attacked. Supply-side economics reasonably request that policy-makers reduce the tax and unnecessary regulatory burdens that impair additional efforts to save, invest and work -- the three lynchpins of economic growth.
Now, there is nothing more obvious than saying that the way to reduce unemployment is to stimulate economic growth. What is not obvious is that economic growth has a more substantial impact on reducing black umemployment than on white unemployment, a fact confirmed by a study just completed, at my request, by the National Commission on Manpower Policy. Thus, if this country entered into a prolonged period of economic growth at a rate substantially higher than its current absymal 2 to 3 percent per year, then the differential between white and minority unemployment rates would be reduced substantially.
In conjunction with this finding, Dr. Idbell Sawhill, director of the commission, testified at a recent Join Economic Committee hearing on minority employment opportunities that, in the latter years of the recovery just ended, minority teen-age employment increased three times as fast as white teen-age employment, that minority teen-agers were getting one out of every five new jobs during this period -- an amazing development considering that this small portion of the minority work force faces the most severe barriers to employment.
This study does not disregard the need for training programs to aid the structurally unemployed. Though we have spent $90 billion on manpower programs over the past 15 years, we have failed to direct money to private-sector employers for on-the-job training and employment of these individuals and have concentrated instead on the public sector. We need a more balanced approach.
The present recovery is, unfortunately, being brought to an end by insufficient, outdated government economic policies that rely on the old shibboleths of trying to stimulate demand by increasing government spending and, consequently, government tax revenues. The result is that marginal tax rates on individuals and businesses have gone through the roof. This means that the rate of return on additional saving, working and investing has been lowered. Output and hopes of full employment are being strangled. Combined with the misguided monetary policy of the Fed under its former chairman, G. William Miller, demand-side economics has left a legacy of the highest inflation rate in 30 years, negative productivity growth, the weakest dollar ever, falling real income for our workers and unemployment rates for minorities at disgraceful levels.
It could have been different if we had done more than pay lip service to economic growth in recent years; if we had realized that inflation, though good for government revenues, is deadly to economic growth; if we had realized that our economic problems were the result of our misdirected economic policies and had not spent the past three years placing the blame on greedy American workers and employers. And it could have been different, in social terms as well as economic, if we had realized that sustained economic growth can do much to lessen the discrepancies between the different racial groups in this country in their employment and income opportunities.