Business /

Is the jobs market racist?

Ben Chu investigates what the data can tell us about racism and discrimination in the UK when it comes to employment

The unemployment rate of black people aged 16 to 24 has almost doubled over the past year to 42 per cent – for white people the rise has been much smaller

In its analysis of the UK labour market, the recent Commission on Racial and Ethnic Disparities (CRED), chaired by Tony Sewell, talked up a positive story of a closing gap between the outcomes of various ethnic groups in the UK. The government-commissioned report spoke of an “overall convergence story on employment and pay” and added: “There have been more signs of social progress than social regress over the past 50 years”.

Yet new research this week from the Resolution Foundation seems to show a remarkably different picture. The think tank presented data showing that black youngsters have suffered a considerably larger surge in unemployment than their white peers during the pandemic. And other new work by Alan Manning and Rebecca Rose of the London School of Economics has also cast doubt on the assertions of the CRED report on the supposedly closing gap on remuneration. So what does the evidence actually show when it comes to the outcomes of black people in the British labour market – and what can that evidence tell us about discrimination and racism in the UK?

The CRED report pointed to evidence that the gap in employment rates between the white ethnic group and ethnic minorities has decreased over the past 20 years. Yet it, rather oddly given the data is so stark, failed to note official data showing that the unemployment rate of black/African/Caribbean people has been consistently more than double the rate of white people over the same period. At the end of 2019 the jobless rate was 8 per cent for black/African/Caribbean people and just 3.5 per cent for white people.

And the most recent figures show a spike to 14 per cent rate for black/African/Caribbean people versus 4.5 per cent for white people. And Office for National Statistics data also suggests that the unemployment rate of black/African/Caribbean/black British people aged 16-24 has almost doubled from 24 per cent in 2019 to 42 per cent at the end of last year. For white people in the same age bracket the rate has increased from 10 per cent to only 12.5 per cent in that time.

There’s really no room for doubt that black people suffered from higher unemployment rates than white people in the years before the crisis and that they were also hit much harder during the pandemic, especially the young. The same picture of a high and sustained disparity between ethnic groups in outcomes is found on pay by Manning and Rose, looking at official data. They show that the average pay of black women was 4 per cent lower than that of white women in the most recent data, up from 1 per cent in 2000. For black men, average pay is 18 per cent lower than that of white men, up from a 15 per cent gap at the turn of the millennium.

“It is clear there is no evidence for pay gaps being smaller for ethnic minorities now than they were 25 years ago, contrary to the impression given by the Sewell Report”, they write. The new work from the Resolution Foundation adds to this picture of disparity by showing that black university leavers were also much more likely to be unemployed during the pandemic than their white counterparts. The jobless rate of black graduates rose from 22 in 2019 to 34 per cent at the end of last year, whereas for white graduates it increased from 9 to only 13 per cent.

This seems to undermine one of the central arguments of the CRED report, namely that education is the “single most emphatic success story of the British ethnic minority experience”. For if black graduates are suffering considerably worse outcomes than white graduates where, one might ask, is the financial value of those educational improvements in recent decades?

The CRED report does seek to address this graduate pay and opportunity disparity by suggesting that black youngsters are more likely to attend lower quality universities and to choose courses which are less likely to enhance their future employment and earnings potential. To some extent this might be true. Yet recent research by the Institute for Fiscal Studies (IFS) which looked at earnings for graduates from different ethnic groups at the age of 30 adjusted for the type of university attended and subject choice and still found an earnings premium for white people over black people.

“Large unexplained earnings gaps between socio-economic and ethnic groups remain,” the IFS authors concluded. The data on outcomes is unambiguous. But that does not, of course, tell us what is driving the clear divergence. The CRED report in general – and controversially – sought to downplay the idea that structural or institutional racism are driving divergent outcomes. And in its section on labour markets, this manifested itself in an apparent dismissal of various field studies showing that similarly qualified people who submitted job applications with ethnic or black sounding surnames were considerably less likely to be called to interview than those with white-sounding names.

“These experiments cannot be relied upon to provide clarity on the extent that it happens in everyday life,” wrote the CRED report. Yet labour market experts say that this is a bizarre claim because this is precisely what these studies are designed to determine. And in the absence of countervailing evidence, it seems entirely justified to conclude that racial stereotyping is playing at least some negative role in hiring decisions.

It also seems safe to conclude that, at least when it comes to its analysis of the UK labour market, the unsubstantiated claims and apparent data cherry-picking of the CRED report have fatally undermined the credibility of its conclusions.