Fed Officials Expect Rate Hikes to Hurt Blacks and Hispanics More

Federal Reserve officials expect that their campaign to bring down inflation will be especially painful for black and Hispanic Americans.

The minutes from the Fed’s meeting in December contain the stark admission that rebalancing the labor market by reducing demand for workers is likely to have a racially disparate impact on employment.

“In the context of achieving the Committee’s broad-based and inclusive maximum-employment goal, a number of participants commented that as the labor market moved into better balance, the unemployment rate for some demographic groups—particularly African Americans and Hispanics—would likely increase by more than the national average,” the minutes report.

Historically, the black unemployment rate has often been twice that of the white unemployment rate. This held in good times and bad. When white unemployment increased due to an economic downturn, black unemployment increased more. Similarly, when white unemployment fell during an economic expansion, black unemployment declined also but not enough to close the gap.

This changed during the Trump administration. The black unemployment rate fell to its lowest level ever and the racial gap in unemployment narrowed dramatically.

The most recent unemployment figures, released Friday by the Department of Labor, show the gap expanding. In December, the white unemployment rate fell to three percent from 3.3 in November. The black unemployment rate, however, held steady at 5.7 percent.