Interest rate hikes will hurt Black Americans the most

The US Federal Reserve is set to hike interest rates this week, a decision partly backed by the strong recovery in the labor market.

Since April 2020, the unemployment rate has dropped nearly 11 percentage points to 3.8%, and is now only slightly higher than before the pandemic. But the overall rate obscures the situation for Black workers: Their unemployment rate is 6.6%, double that of white workers.

Higher interest rates slow down the economy and hiring. When that happens, Black workers are the first to be squeezed out, says William Spriggs, a Howard University economist. “[The Fed] recognizes that the Black unemployment rate is higher, and their conclusion is ‘that’s too bad,’” Spriggs said. “What happens when hiring stops is that the cost of a job search becomes prohibitive for the people who have been marginalized.”

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