Friday’s jobs report also highlighted an element of America’s racial problems that have brought thousands of legitimately concerned citizens to the streets in the last week, reacting to the tragic and shocking death of George Floyd in police custody in Minneapolis. According to the BLS, the unemployment rate for those classified as white people, already the lowest among reported racial groups, fell markedly in May (to 13.3% from 14.7%) while the one for those classified as black people rose (to 16.8% from 16.7%) — and this after the latter had risen by the largest magnitude in April. In other words, having been a pronounced “unequal opportunity unemployer” in April, the economy turned into an “unequal opportunity employer” in May, serving to worsen both the income and opportunity components of the so-called inequality trifecta that I and many others worry about — that is, the inequality of income, wealth and opportunity.
May’s shock jobs report should do more than humble applied economists and Wall Street analysts. It should be used as a catalyst for politicians to focus more holistically and efficiently on the need not only to win the war against the threat of a global depression but also secure a lasting peace of high, inclusive and sustainable growth.
This requires continuing to refine and to laser focus better emergency relief actions, including but not exclusively in a more pro-work manner; moving more decisively on the repair agenda to ensure that we navigate well the current phase of reopening and living with Covid-19; and designing the policies needed to minimize the risk that we emerge from this crisis into a “New Normal 2.0” characterized by an ultimately unstable mix of frustrating low growth, a worsening inequality trifecta and increasingly hard-to-maintain artificial financial stability.
Mohamed A. El-Erian is a Bloomberg Opinion columnist. He is the chief economic adviser at Allianz SE, the parent company of Pimco, where he served as CEO and co-CIO. He is president-elect of Queens' College, Cambridge, senior adviser at Gramercy and professor of practice at Wharton. His books include "The Only Game in Town" and "When Markets Collide."