Study: Job Displacement Affects Blacks, Women, And Non-degreed Individuals Most

A new study focusing on job displacements between 1989 and 2019 found that, on average, Black workers are 67 percent more likely to be displaced than their white peers.

Research by the nonprofit Brookings Institution further revealed that workers without a bachelor’s degree are also 67 percent more likely to be displaced than those with a bachelor’s degree.

Additionally, workers whose parents are in the bottom half of the income distribution are 27 percent more likely to be displaced than those with parents in the top half.

Titled Job displacement in the United States by race, education, and parental income, the study noted that using an event study fixed effects model, researchers measured the impact of a given displacement on annual earnings by worker group.

They discovered similarly large and persistent adverse effects on earnings across all demographic and socioeconomic groups.

The study authors estimated a 57 percent decline in earnings following a displacement. They also estimated a 25 percent decline in the 10th year after a displacement.

During the first months of the COVID-19 recession, an estimated 22 million Americans lost their jobs – roughly 13 percent of the U.S. workforce.

The initial impact on employment was largest for women, Black workers, Latino workers, and less-educated workers.

“This negative employment shock occurred against a backdrop of long-term trends of declining intergenerational economic mobility and high-income inequality across race and education levels,” the researchers explained.

The study examined how job displacements affect workers by race, education level, and parental income in the United States.

“An extensive literature in economics shows that workers experience large and persistent earnings losses following a job displacement,” Brookings researchers determined.

“Given the millions of workers displaced during the COVID-19 recession and the high-income inequality in the United States, it is important to understand the role that job displacement may play in driving inequalities across demographic and socioeconomic groups.”

Meanwhile, the authors found that workers whose parents are in the bottom quintile of the income distribution are 27 percent more likely to be displaced than those with parents in the top income quintile.

The study concluded that Black workers, less-educated workers, and those with low-income parents are more likely to be displaced yearly.

The negative effect of job displacement on earnings is relatively consistent across socioeconomic groups. “While displaced workers with bachelor’s degrees seem to experience less severe earnings losses in the year immediately following a displacement, they also experience larger lingering effects than their peers without degrees.”