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Black unemployment high in Chicago; wage-sharing could save jobs

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While releasing a new report showing Chicago among the top cities in the nation for African American unemployment, the Center for Tax and Budget Accountability [2] is urging the state to avail itself of new federal funding for “wage-sharing” programs that reduce layoffs.

The Chicago area had the third highest African American unemployment rate in the nation last year, according to a new report [3] by the Economic Policy Institute released here by CTBA.  While unemployment among African Americans fell in most metropolitan areas last year, in Chicago it increased by 1.7 percent to 22.6 percent.

In 2010, five other metropolitan areas had higher black unemployment rates than Chicago; last year only Los Angeles and Las Vegas did.

St. Louis, Atlanta, Memphis, New York, Philadelphia, Baltimore, Houston, Dallas/Fort Worth, Washington and Richmond had black unemployment rates that were below the national average of 15.9 percent, according to the report.

Chicago is also near the top in the ratio of black to white unemployment, with African Americans here 2.5 times more likely to be unemployed.

One significant factor could be heavy cuts in public service jobs, which disproportionately impact the black community, said Ron Baiman of CTBA.

Federal funds for wage-sharing

A new initiative could help keep those numbers from rising further. Baiman said the federal government recently issued regulations for a provision in the jobs bill passed in February, under which the federal government will provide 100 percent funding for wage-sharing programs.  (See CTBA’s fact sheet [4] on the program.)

Under such programs, workers receive partial unemployment benefits to cover lost wages when their employers reduce their hours in order to prevent layoffs.  Currently 21 states have wage-sharing programs.

Under the new legislation, the feds will pick up the cost of such programs for up to three years.  “That’s a big incentive,” Baiman said.  “There are no downsides and many advantages” to enacting wage-sharing, he said.

A wage-sharing program would keep workers employed and paying taxes, help employers recover more quickly when business picks up, inject money into the state’s economy, and reduce the deficit for the state’s unemployment insurance program, saving employers from having to pay higher assessments in the future, he said.