Since the beginning of the Recession in 2007, the brunt of the economic downturn has been felt differently by various groups. Hispanics, in particular, faced a serious spike in unemployment that has been slower to recover than other demographics. In this animated graphic from The LIBRE Institute, the gap between the annual Hispanic unemployment rate and the non-Hispanic unemployment rate in each of the fifty states was examined over a ten year period, using data from the U.S. Census Bureau. Unemployment rates vary greatly by demographic, and in order to understand the obstacles affecting the Hispanic community more clearly, it is important to take this variation into account.
States colored red are those where the Hispanic unemployment rate is higher than the non-Hispanic unemployment rate, and states that are colored green are those where it is lower.
The sensitivity of unemployment rates to changing economic conditions varies by demographic, and the Hispanic population has been particularly hard hit. According to a report by the Minority Business Development Agency, the sector with the largest share of Hispanic businesses is construction, accounting for 15.1% of all Hispanic-owned firms. The Recession, which was largely initiated by the financial crash and the collapse of the housing bubble, disproportionately affected industries employing large numbers of Hispanics. Building materials and supply, home furnishing sales, lumber and construction material supply, and concrete product manufacturing were all among the top five industries hardest hit by the Recession.
Government distortions of the free market, even if well-intentioned, are of particular importance to the Hispanic population. According to Todd Zywicki at the Mercatus Center, Federal Reserve policies that artificially lowered short-term interest rates played a significant role in triggering the housing bubble and subsequent financial crisis. To protect U.S. Hispanics from falling victim to such a disproportionate economic downturn in the future, it is important that policymakers take these factors into account and pursue sound-money policies that minimize such distortions of the free market.
For the most part, the states with positive gaps, meaning Hispanics there experienced a higher unemployment rate than non-Hispanics, markedly outnumber those with negative gaps, which can be readily observed from the relative scarcity of green states in the graphic. Fewer than half of the states show a negative gap at any point over the period examined – signaling how rare it is for Hispanics to have experienced the same or better levels of unemployment compared to others. On the other hand, positive gap states have unemployment rates which are higher for Hispanics than non-Hispanics, some by margins as large as 13 percentage points.
Moreover, all but 10 states have worse Hispanic unemployment gaps at the end of the period than they did in 2006, a year before the recession. The gaps begin to worsen in 2007, soar upward in 2008, and reach a peak in 2009. A cumulative comparison of the gaps shows that while a gradual reduction of the gap has occurred since its peak in 2009, it has not returned to pre-Recession levels. States with lower economic freedom, such as Wisconsin, Illinois, Michigan, Ohio, Rhode Island, and Maine, tended to suffer from wider Hispanic unemployment gaps than economically freer states such as Texas, North Carolina, and Virginia.
While the states listed above fit this theory, the correlation is not perfect, signaling that there are mitigating factors at play. A handful of states show a strong green pattern. These appear to contradict the idea that the Hispanic population fared worse across the board, but the demographic makeup of these states suggests another possible explanation. The green regions of the map, with the exception of occasional appearances in Nevada, Alaska, and Michigan, are largely concentrated in the Southern U.S. and the District of Columbia. These regions are known for their large populations of African-Americans, who generally faced even higher unemployment rates than the Hispanic community. For this reason, the non-Hispanic unemployment rate is skewed upward in these regions, and therefore the gaps in these states should be taken with a grain of salt.
While the Obama administration has touted current conditions as signs of an economic recovery, not all recoveries are created equal. Studies such as this one go to show the importance of asking the question, “an economic recovery for whom?” As this animated graphic shows, the gap between U.S. Hispanics and the rest of the nation widened under the recession, and has not rebounded. States with higher economic freedom appear to be better environments for job-seekers than those with less, and this has made a difference for the Hispanic community. Some states have narrowed the gap more than others, and this disparate impact highlights ever more clearly the need for policymakers to avoid distorting the free market. Government intervention into the economy got us, at least in part, into this mess, and for the Hispanic community, the mess has been far greater. The Recession may be over and the Obama administration is coming to a close, but for U.S. Hispanics, the recovery is less apparent.
Methodology: This choice of populations to compare in the graphic is important on a methodological level. The Census does not provide data directly relating to the non-Hispanic population, so the non-Hispanic unemployment rate was calculated by subtracting the Hispanic unemployment level from the total unemployment level. While this calculation widens the margin of error to a certain extent, it is necessary in order to prevent large portions of the Hispanic population from being counted twice. If Hispanic unemployment rates were compared to total unemployment rates, it could be objected that the rate of Hispanic unemployment is also contained within the total, and that any gap between them does not correspond to a gap between two actual groups. Because ‘white’ and ‘Hispanic or Latino ethnicity’ are not mutually exclusive categories on Census forms, the same limitation would also affect comparisons of Hispanic and white unemployment rates. By measuring the gap between Hispanic and non-Hispanic unemployment rates, this graphic focuses uniquely on the Hispanic population, and visualizes the gap in unemployment rates between them and the rest of the U.S. population.
