Both economies are recovering from the last recession very slowly. However, the benefits of the recovery are not trickling down in a noticeable way to blacks in either country.
In South Africa, during the 1st half of 2012, black unemployment averaged 29.1% and white unemployment was 6.1%. In January 2013, black unemployment in the US was 13.8% while white unemployment was 7.0%.
During the 1st half of 2012, the South African economy grew by 3.7%; but black unemployment increased from 27.7% to 29.1%.
In the US, GDP grew by 3.1% in the 3rd quarter, but black unemployment stayed above 14%.
These figures, and the history of both countries, point to one indisputable fact. The problem of black unemployment in South Africa and the US will not be solved simply by growing the economy faster. If the current rate of growth in both countries doubled, the effect on black unemployment would be marginal.
Consider the following example. In the US, December 2007 was the peak of the business cycle, or the last month of growth before the onset of the recession. During that month White unemployment was 4.4%, but black unemployment was 9.0%.
Also, the best quarter of U.S. growth in the last decade occurred in the 4th quarter of 2003. During that quarter, the GDP grew by 6.7%. Nevertheless, the unemployment rate for blacks was still 10.6%. Clearly, economic growth is not enough.
In fact, neither the South African government nor the US government would allow their economies to grow above 6% or 7% for any extended period of time because the central banks would be frightened to death of inflation. Therefore, they would put the monetary brakes on and slowdown economic growth, which would cause an increase in unemployment.
It is time to be realistic and face the fact that growth policies are important, but by themselves they will do little to reduce the high rates of unemployment among blacks in the US or South Africa.
Nature of the Problem
In both societies, the racial disparities in unemployment reflect the legacy of discrimination and disenfranchisement. Racial practices are part of the historical legacy of both countries. Those practices ultimately placed blacks at the bottom of the socioeconomic ladder.
It is rather easy to document the historical mechanisms that manufactured today’s racial inequality. But it is much more difficult to solve the problem; and simply recounting the ugly history of racial discrimination is not enough. We must come up with more creative solutions to address this issue; especially since we cannot rely on economic growth to solve the problem, even if it returns robustly.
Common factors contributing to high black unemployment in the US and South Africa, other than racial discrimination, includes the following:
- Disadvantages in the occupational distribution of jobs that blacks hold (they tend to be heavily concentrated in low-paying occupations that are sensitive to changes in business cycle activity)
- The residential pattern of blacks puts them at a disadvantage. That is, the place where they are most heavily concentrated is different from where most jobs are located. In South Africa, blacks are in the shantytowns while in the US, they are concentrated in urban ghettos.
- In both countries, blacks have lower levels of educational attainment, higher rates of dropout and they attend schools that are poorly funded and underperform.
- A high rate of black incarceration in both countries creates a special problem for prisoners when they are released because they have great difficulty finding productive employment.
- Studies have shown poor housing, located in communities with high concentrations of poverty leads to social disorganization within families and a lower probability that adults will be engaged in the labor market.
- Poor health conditions and infectious diseases are a particular problem in South Africa. However, poor health conditions also plagued blacks in the US a disproportionate extent. Poor health conditions make employment less likely. Furthermore, unemployed workers are less likely to have health insurance.
- Finally, if more blacks owned businesses, fewer black workers would be unemployed. However, there are not enough black owned businesses in the US or South Africa.
Clearly, both countries have common problems when it comes to the issue of black unemployment. The complex and multifaceted nature of the problems suggest that piecemeal solutions are not enough. It is great to have job training programs, but such programs do little to improve the poor educational infrastructure of schools that most blacks attend.
More vigorous enforcement of anti-discrimination laws and implementation of affirmative action programs would certainly help. However, that still would not be enough. Just as a problem is multifaceted, the solution must be also.
The governments in both countries must recognize the deep-seated crisis of black unemployment and be willing to commit the necessary resources, both human and financial, that are required to solve the problem.
After all, they used a multifaceted strategy to rescue financial institutions and other industries that were threatened with bankruptcy during the great recession. So, these kinds of strategies are not uncommon, they simply have not been applied to address the employment
Last modified: February 6, 2013