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Young ethnic minorities bear brunt of recessions, and it’s happening again – here’s how to stop it

The government has a legal duty not to exacerbate inequalities in its policies, but this is getting forgotten during the pandemic.

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3 years ago

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The official unemployment figures that have just been published for the last quarter of 2020 reveal the continued economic impact of COVID-19 on Britain’s ethnic minority groups. Among all groups, Black African/Caribbean people fared worst, with unemployment rates reaching 13.8% in the period from October to December 2020. The White unemployment rate has not reached that level since the early 1990s, and was 4.5% in the same period.

As you can see in the charts below, unemployment initially held steady for men and women from White and ethnic minority groups in the first full quarter after the March 2020 lockdowns. But there were sizeable increases during summer 2020, with the labour market particularly unwelcoming to ethnic minority workers.

Unemployment rate by ethnicity and gender

ONS

The government’s much-vaunted furlough scheme appears to have muted the unemployment figures in what is the worst economic downturn in modern history, but this policy response has not been race neutral. Ethnic minority people experienced a similar loss of working hours to White people, and yet 15% fewer workers from this group were furloughed and 13% more became unemployed.

Much of the increase in joblessness has been driven by the fact that younger workers have poorer prospects – this is in keeping with previous recessions. And from analysing the two post-COVID quarters of data available from the Office for National Statistics’ Labour Force Survey, there exists a large ethnic disparity among 16-24 year olds. The youth unemployment rate among ethnic minority groups is estimated to be in the region of 20%, much larger than the 12% faced by White youths. Why is this?

Ethnic minorities and recessions

It is well known to researchers that recessions affect ethnic groups differently. Previous studies have noted that ethnic minority unemployment rates rise faster at such times. In the literature these rates are said to exhibit “hypercyclicality”, or a supercharged response to the economic cycle.

In both the early 1980s and 1990s, people from Black and Pakistani/Bangladeshi backgrounds faced a greater risk of unemployment than White people. And following the 2007-09 financial crisis, workers from Black African and Caribbean groups faced higher unemployment levels compared to White people.

The chart below, using data from the Labour Force Survey, shows that the after-effects of the 2007-09 financial crisis lasted longer for young people from ethnic minorities. Their unemployment rates did not experience a sustained fall until 2014, three years after White people. Given the long-term consequences of periods of unemployment for future employment and wages, such patterns are deeply worrying.

Unemployment rate among 16-24s

Graph showing unemployment rates among young whites and ethnic minorities
ONS

Since we know that downturns disproportionately affect young people from ethnic minority backgrounds, policymakers should be ready to act. Yet despite the mounting evidence that the same thing is happening again, there is little evidence that they are doing anything about it.

The Kickstart scheme launched in 2020, funds employers to create job placements for young people on universal credit. It shows that the government is alive to the risks of youth unemployment caused by the pandemic, but the scheme does nothing to acknowledge the ethnic dimension to the problem. We see the same failing in the recent government white paper on post-16 education and training, and the House of Lords report on the impact of COVID-19 on employment.

What can be done

The fundamental problem is that as an economy worsens, racial discrimination is likely to increase. As a result, the wage expectations and job prospects of ethnic minority workers suffer.

Tackling ethnic inequality has been a mainstream political goal since the Race Relations Act of 1976, and legislation already exists that explicitly monitors the effects of discrimination. The Equality Act 2010 brought in the Equality Duty, which requires all public bodies, including government departments, to consider “how the decisions that they make, and the services they deliver, affect people who share different protected characteristics”.

The concern is that in the current uncertain landscape the need for policies to be developed quickly is making these duties less of a priority. There is a need for everyone across the political spectrum and civil society to hold the government’s feet to the fire here – as new policies are proposed, ministers need to make explicit how, at the very least, they will not exacerbate existing labour market inequalities.

Man perched on concrete railing
The downward slope: young ethnic minorities need government support quickly. Mike Von/Unsplash, CC BY-SA

Indeed, they should go further. The 2017 McGregor-Smith review of race in the workplace noted that those from ethnic minority communities face “discrimination and bias at every stage of an individual’s career, and even before it begins”. The review highlighted the need to shine a light on racial differences and make the creation of an inclusive labour market part of business as usual: policy therefore needs an explicit focus on reducing ethnic inequality.

There is no shortage of research on the problem or guidance on how the government can help. A recent review identified 78 separate recommendations made by three different government-sponsored enquiries over nearly two decades. These include: mandatory unconscious bias and race awareness training; improved support for jobseekers; additional training and educational opportunities; setting recruitment and retention targets; diversifying decision-making bodies; publicising ethnic pay and employment gaps; and making leaders – in both government and non-government institutions – accountable for reducing ethnic gaps.

Action on the implementation of these recommendations has been patchy at best. Governments have not provided the consistent leadership required to keep the ethnicity agenda at the forefront of people’s minds. A clear focus both on the moral case for action and the practicalities of how to do it are needed to drive this agenda forward.

This is a crisis we have been able to see coming. Failing to anticipate the problem and react accordingly risks making increased ethnic inequality for young people one more damaging legacy of the pandemic.

Steve Nolan's research is supported by funding from the Economic and Social Research Council through the Centre on the Dynamics of Ethnicity (CoDE).

Ken Clark's research is supported by funding from the Economic and Social Research Council through the Centre on the Dynamics of Ethnicity (CoDE).

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Shipping company files surprise Chapter 7 bankruptcy, liquidation

While demand for trucking has increased, so have costs and competition, which have forced a number of players to close.

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2 hours ago

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March 8, 2024

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The U.S. economy is built on trucks.

As a nation we have relatively limited train assets, and while in recent years planes have played an expanded role in moving goods, trucks still represent the backbone of how everything — food, gasoline, commodities, and pretty much anything else — moves around the country.

Related: Fast-food chain closes more stores after Chapter 11 bankruptcy

"Trucks moved 61.1% of the tonnage and 64.9% of the value of these shipments. The average shipment by truck was 63 miles compared to an average of 640 miles by rail," according to the U.S. Bureau of Transportation Statistics 2023 numbers.

But running a trucking company has been tricky because the largest players have economies of scale that smaller operators don't. That puts any trucking company that's not a massive player very sensitive to increases in gas prices or drops in freight rates.

And that in turn has led a number of trucking companies, including Yellow Freight, the third-largest less-than-truckload operator; J.J. & Sons Logistics, Meadow Lark, and Boateng Logistics, to close while freight brokerage Convoy shut down in October.

Aside from Convoy, none of these brands are household names. but with the demand for trucking increasing, every company that goes out of business puts more pressure on those that remain, which contributes to increased prices.

Demand for trucking has continued to increase.

Image source: Shutterstock

Another freight company closes and plans to liquidate

Not every bankruptcy filing explains why a company has gone out of business. In the trucking industry, multiple recent Chapter 7 bankruptcies have been tied to lawsuits that pushed otherwise successful companies into insolvency.

In the case of TBL Logistics, a Virginia-based national freight company, its Feb. 29 bankruptcy filing in U.S. Bankruptcy Court for the Western District of Virginia appears to be death by too much debt.

"In its filing, TBL Logistics listed its assets and liabilities as between $1 million and $10 million. The company stated that it has up to 49 creditors and maintains that no funds will be available for unsecured creditors once it pays administrative fees," Freightwaves reported.

The company's owners, Christopher and Melinda Bradner, did not respond to the website's request for comment.

Before it closed, TBL Logistics specialized in refrigerated and oversized loads. The company described its business on its website.

"TBL Logistics is a non-asset-based third-party logistics freight broker company providing reliable and efficient transportation solutions, management, and storage for businesses of all sizes. With our extensive network of carriers and industry expertise, we streamline the shipping process, ensuring your goods reach their destination safely and on time."

The world has a truck-driver shortage

The covid pandemic forced companies to consider their supply chain in ways they never had to before. Increased demand showed the weakness in the trucking industry and drew attention to how difficult life for truck drivers can be.

That was an issue HBO's John Oliver highlighted on his "Last Week Tonight" show in October 2022. In the episode, the host suggested that the U.S. would basically start to starve if the trucking industry shut down for three days.

"Sorry, three days, every produce department in America would go from a fully stocked market to an all-you-can-eat raccoon buffet," he said. "So it’s no wonder trucking’s a huge industry, with more than 3.5 million people in America working as drivers, from port truckers who bring goods off ships to railyards and warehouses, to long-haul truckers who move them across the country, to 'last-mile' drivers, who take care of local delivery." 

The show highlighted how many truck drivers face low pay, difficult working conditions and, in many cases, crushing debt.

"Hundreds of thousands of people become truck drivers every year. But hundreds of thousands also quit. Job turnover for truckers averages over 100%, and at some companies it’s as high as 300%, meaning they’re hiring three people for a single job over the course of a year. And when a field this important has a level of job satisfaction that low, it sure seems like there’s a huge problem," Oliver shared.

The truck-driver shortage is not just a U.S. problem; it's a global issue, according to IRU.org.

"IRU’s 2023 driver shortage report has found that over three million truck driver jobs are unfilled, or 7% of total positions, in 36 countries studied," the global transportation trade association reported. 

"With the huge gap between young and old drivers growing, it will get much worse over the next five years without significant action."

Related: Veteran fund manager picks favorite stocks for 2024

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Wendy’s has a new deal for daylight savings time haters

The Daylight Savings Time promotion slashes prices on breakfast.

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2 hours ago

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March 8, 2024

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Daylight Savings Time, or the practice of advancing clocks an hour in the spring to maximize natural daylight, is a controversial practice because of the way it leaves many feeling off-sync and tired on the second Sunday in March when the change is made and one has one less hour to sleep in.

Despite annual "Abolish Daylight Savings Time" think pieces and online arguments that crop up with unwavering regularity, Daylight Savings in North America begins on March 10 this year.

Related: Coca-Cola has a new soda for Diet Coke fans

Tapping into some people's very vocal dislike of Daylight Savings Time, fast-food chain Wendy's  (WEN)  is launching a daylight savings promotion that is jokingly designed to make losing an hour of sleep less painful and encourage fans to order breakfast anyway.

Wendy's has recently made a big push to expand its breakfast menu.

Image source: Wendy's.

Promotion wants you to compensate for lost sleep with cheaper breakfast

As it is also meant to drive traffic to the Wendy's app, the promotion allows anyone who makes a purchase of $3 or more through the platform to get a free hot coffee, cold coffee or Frosty Cream Cold Brew.

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Available during the Wendy's breakfast hours of 6 a.m. and 10:30 a.m. (which, naturally, will feel even earlier due to Daylight Savings), the deal also allows customers to buy any of its breakfast sandwiches for $3. Items like the Sausage, Egg and Cheese Biscuit, Breakfast Baconator and Maple Bacon Chicken Croissant normally range in price between $4.50 and $7.

The choice of the latter is quite wide since, in the years following the pandemic, Wendy's has made a concerted effort to expand its breakfast menu with a range of new sandwiches with egg in them and sweet items such as the French Toast Sticks. The goal was both to stand out from competitors with a wider breakfast menu and increase traffic to its stores during early-morning hours.

Wendy's deal comes after controversy over 'dynamic pricing'

But last month, the chain known for the square shape of its burger patties ignited controversy after saying that it wanted to introduce "dynamic pricing" in which the cost of many of the items on its menu will vary depending on the time of day. In an earnings call, chief executive Kirk Tanner said that electronic billboards would allow restaurants to display various deals and promotions during slower times in the early morning and late at night.

Outcry was swift and Wendy's ended up walking back its plans with words that they were "misconstrued" as an intent to surge prices during its most popular periods.

While the company issued a statement saying that any changes were meant as "discounts and value offers" during quiet periods rather than raised prices during busy ones, the reputational damage was already done since many saw the clarification as another way to obfuscate its pricing model.

"We said these menuboards would give us more flexibility to change the display of featured items," Wendy's said in its statement. "This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants."

The Daylight Savings Time promotion, in turn, is also a way to demonstrate the kinds of deals Wendy's wants to promote in its stores without putting up full-sized advertising or posters for what is only relevant for a few days.

Related: Veteran fund manager picks favorite stocks for 2024

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United Airlines adds new flights to faraway destinations

The airline said that it has been working hard to "find hidden gem destinations."

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3 hours ago

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March 8, 2024

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Since countries started opening up after the pandemic in 2021 and 2022, airlines have been seeing demand soar not just for major global cities and popular routes but also for farther-away destinations.

Numerous reports, including a recent TripAdvisor survey of trending destinations, showed that there has been a rise in U.S. traveler interest in Asian countries such as Japan, South Korea and Vietnam as well as growing tourism traction in off-the-beaten-path European countries such as Slovenia, Estonia and Montenegro.

Related: 'No more flying for you': Travel agency sounds alarm over risk of 'carbon passports'

As a result, airlines have been looking at their networks to include more faraway destinations as well as smaller cities that are growing increasingly popular with tourists and may not be served by their competitors.

The Philippines has been popular among tourists in recent years.

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United brings back more routes, says it is committed to 'finding hidden gems'

This week, United Airlines  (UAL)  announced that it will be launching a new route from Newark Liberty International Airport (EWR) to Morocco's Marrakesh. While it is only the country's fourth-largest city, Marrakesh is a particularly popular place for tourists to seek out the sights and experiences that many associate with the country — colorful souks, gardens with ornate architecture and mosques from the Moorish period.

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"We have consistently been ahead of the curve in finding hidden gem destinations for our customers to explore and remain committed to providing the most unique slate of travel options for their adventures abroad," United's SVP of Global Network Planning Patrick Quayle, said in a press statement.

The new route will launch on Oct. 24 and take place three times a week on a Boeing 767-300ER  (BA)  plane that is equipped with 46 Polaris business class and 22 Premium Plus seats. The plane choice was a way to reach a luxury customer customer looking to start their holiday in Marrakesh in the plane.

Along with the new Morocco route, United is also launching a flight between Houston (IAH) and Colombia's Medellín on Oct. 27 as well as a route between Tokyo and Cebu in the Philippines on July 31 — the latter is known as a "fifth freedom" flight in which the airline flies to the larger hub from the mainland U.S. and then goes on to smaller Asian city popular with tourists after some travelers get off (and others get on) in Tokyo.

United's network expansion includes new 'fifth freedom' flight

In the fall of 2023, United became the first U.S. airline to fly to the Philippines with a new Manila-San Francisco flight. It has expanded its service to Asia from different U.S. cities earlier last year. Cebu has been on its radar amid growing tourist interest in the region known for marine parks, rainforests and Spanish-style architecture.

With the summer coming up, United also announced that it plans to run its current flights to Hong Kong, Seoul, and Portugal's Porto more frequently at different points of the week and reach four weekly flights between Los Angeles and Shanghai by August 29.

"This is your normal, exciting network planning team back in action," Quayle told travel website The Points Guy of the airline's plans for the new routes.

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