Congressional Report shows rising unemployment for Latinos
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Most states with higher percentages of Latino workers were severely impacted by the collapse of the housing market.
The U.S. Congress’ Joint Economic Committee (JEC) published a study with an in-depth look at the unemployment situation in the Hispanic labor force. The report underscores that Hispanic workers have been hit particularly hard.
The report, entitled, “Understanding the Economy: Unemployment in the Hispanic Community,” concludes that the increasing unemployment among Hispanic workers during the recession, and the increased disparity in unemployment rates between Hispanic workers and the overall workforce, appear to be largely caused by the collapse of the housing market.
Hispanic workers were disproportionately employed in the construction sector, which was hit hard during the housing collapse, and in states such as California, Florida and Nevada, which experienced the largest declines in housing prices and the biggest increases in foreclosures.
Workers across the United States have been hard hit during the recession but in many respects, workers of Latino or Hispanic ethnicity are facing even greater employment challenges.
Latinos make up over one-seventh (14.8 percent) of the U.S. labor force, but represented almost one fifth (19.0 percent) of the unemployed in March 2010.
Rising unemployment in the Latino community appears to be caused in large part by the bursting of the housing bubble. Employment in the construction sector reached a peak of 7.7 million workers in August 2006. By February 2010, however, employment had plummeted to 5.6 million workers a 27.8 percent drop.
As the report shows, Latino workers are over-represented in the sectors that contracted the most during the recession, including the construction industry.
In 2007, 14.7 percent of Hispanic workers were employed in the construction sector compared to 8.1 percent of the overall labor force. By 2009, only 11.6 percent of Hispanic workers were employed in the construction sector compared to 6.9 percent of the overall labor force.
Latinos are also over-represented in two other sectors that were hit hard during this recession: the manufacturing sector and the leisure and hospitality sector.
Manufacturing employment fell by 16 percent and employment in the leisure and hospitality sector fell by 4 percent from December 2007 to December 2009.
In 2007, 11.6 percent of the Hispanic workforce was employed in the manufacturing sector compared to 11.2 percent of the overall population, and 11.8 percent of the Hispanic workforce was employed in leisure and hospitality sector compared to 8.5 percent of the overall population.
In 2007, Latinos were under-represented in the only sector that expanded during the recession, the education and health services sector. In 2007, 21 percent of the labor force was employed in the education and health services sector compared to 14.4 percent of the Latino workforce.
Furthermore, large concentrations of Latino workers live in the states that were hardest hit by the collapse of the housing market – Nevada, Arizona, Florida and California. The freefall in house prices placed further strains on the construction sector in those states.
Most states with higher percentages of Latino workers were severely impacted by the collapse of the housing market. While home prices nationwide fell 30.8 percent from the peak in March 2006 to April 2009, home prices in Nevada, Arizona, Florida, and California fell by much more than the national average.
Only two states with large Latino populations, Texas and New Mexico, saw smaller home price declines and lower foreclosure rates than the national average.
At the same time, Nevada, Arizona, Florida, and California saw large increases in foreclosure rates. In the first quarter of 2007, foreclosure rates in these states were under 1.2 percent of mortgages, but foreclosure rates increased rapidly. For example, by the end of 2009, the foreclosure rate was 9.8 percent in Nevada and 13.4 percent in Florida, while the national foreclosure rate was 4.6 percent.
Until the collapse of the housing market, Hispanic workers were facing unemployment rates similar to the overall population. The gains made in reducing the unemployment rate for Hispanic workers quickly evaporated with the Great Recession, with the unemployment rate for Hispanic workers rising to 13.1 percent in October 2009, 3 percentage points higher than the 10.1 percent overall unemployment rate.
Policies to create jobs during the recovery must ensure that the unemployment rate drops for all workers, regardless of race or ethnicity. Because Hispanic workers are over-represented in certain industries that either may not be expanding or may grow slowly during the recovery, targeted policies to make sure that these workers have the skills to move into expanding sectors may be necessary.
Additional policies to encourage mobility of the labor force from states still experiencing a housing slump may also be warranted.
The Americano / Agencies
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