This report presents policy considerations and offers a framework for addressing racial disparities in the labor market. Disparities between Black and white workers are evident across a wide range of labor market outcomes: Black workers face higher rates of unemployment and underemployment, lower wages and earnings, lower rates of access to programs designed to support workers (e.g., unemployment insurance, paid leave), and lower rates of earnings growth. We review how historical and contemporary policy choices in the US have contributed to these racial disparities. We also identify a corresponding set of policy changes, suggested and supported by evidence on how these changes are key building blocks toward an economy in which Black workers can attain better labor market outcomes. By prioritizing fairness in policy design and implementation, policymakers can tackle systemic barriers Black workers face and pursue structural reforms and targeted interventions to foster shared prosperity for all.

Why This Matters

Black workers’ labor market outcomes reflect the enduring consequences of centuries of US policies and practices, including those explicitly designed to obstruct Black workers’ opportunities for economic security and upward mobility. Today’s labor market outcomes for Black workers are the product of these policy choices, imperfect enforcement of employment protections in the face of ongoing discrimination in labor markets, and a lack of investment in individuals and communities harmed by discrimination. Ensuring that the future of work does not replicate the disparities of today will require a multipronged policy approach that tackles structural racism across the labor market.

Key Takeaways

• Historical political and policy choices, along with occupational segregation’s enduring effects, and a contemporary suite of policy design choices means that structural racism continues to drive disparities in key worker outcomes. These include persistent and significant disparities in the occupations Black workers have access to, the resulting quality of their jobs and the wages they earn, and their likelihood of finding employment.
• Strong labor demand is crucial for creating opportunities in the labor market, leading to job growth, wage increases, and improved employment prospects for workers. The key policy levers for labor demand are fiscal and monetary policy. Policymakers should prioritize fiscal and monetary policies that support full employment and reduce racial disparities in labor market outcomes. Fiscal policy can also directly pursue reforms to address disparities in programs like unemployment insurance that lead to unequal outcomes for Black workers.
• Labor market policies that guarantee worker right and protections are also essential. Key policy areas include wage and hour policy and collective bargaining. Raising the federal minimum wage would benefit millions of workers, with Black workers being disproportionately affected. Fair Workweek policies, including notice, compensation, and voice rights, have shown promise in enhancing worker well-being. Policies to make it easier for workers to form unions and to bargain collectively, as well as more robust enforcement of existing labor laws protecting workers’ rights to organize would particularly benefit Black workers.
• Worker supports are important to ease the economic shock triggered by job loss or the need to be temporarily away from work to care for a loved one. Key worker support policies include unemployment insurance and paid family and medical leave. Expanded and equalized unemployment insurance benefit levels, durations, and eligibility would close gaps in access and generosity between Black and white workers. Universal access to paid family and medical leave using a social insurance model would significantly expand access to income support during caregiving for Black workers.
• Taken together, these policy considerations offer a framework for addressing racial disparities in the labor market. By prioritizing equity and inclusion in policy design and implementation, policymakers can dismantle systemic barriers Black workers face and pursue structural reforms and targeted interventions to foster shared prosperity for all.