Federal Reserve Bank of St. Louis Bill Rodgers joins Yahoo Finance Live to discuss the January jobs report, vulnerable groups, structural barriers in the labor market, and the outlook for labor equity.

Video Transcript

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- Let's look between the lines of today's shockingly strong jobs report, a whopping 517,000 rise in jobs for January. It doesn't necessarily mean strong gains across every single group. Some vulnerable workers are finding the recovery uneven.

Here with more, Bill Rodgers, director of the Institute for Economic Quality at-- or Equity at the St. Louis Fed. Bill, always nice to get some time with you here. Where are you seeing the most unevenness? Because today, at least from the vantage point of investors in the markets, this was a good jobs report. But your research may suggest maybe that's not the case.

BILL RODGERS: Yes, good morning. And thanks for having me. And I think it's still OK to say happy new year. I haven't seen you since--

- It is.

BILL RODGERS: --since last year. Yeah, what we're seeing in the data is, number one, as you said, and I'm very happy that we're continuing to see robust job creation because there is a longstanding relationship that as the economy improves, you end up seeing improved opportunity for Black individuals, for people with a disability, for young people, particularly those who are out of school and they don't have a college degree. And our research at the Institute had shown early into the summer, into the fall, that many of these groups, their employment population ratios-- that is, the share of their populations that had a job-- have begun to-- have begun to fall.

We've extended that work and have found that into November and December and probably this month when we get the new data at the micro, at the individual level, we'll end up seeing that there hasn't been a vast improvement. But the slowdown has thus far been averted. So the bottom line here is that for those vulnerable groups who typically have lower participation rates, people with disability, young minorities who are out of school, Latinos, young Latinos, that there was an erosion into the third quarter, into the fourth quarter. But that seems to have been abated. And today's numbers will help to continue averting a slowdown amongst these more vulnerable groups.

- Over the past two years, we've seen a wave of pledges by every kind of corporation and across sectors, whether that be in the banking sector or whether that be in the athleisure and apparel sector, about how we can start to narrow this gap in terms of the equity and really make sure that there are people who are not left behind, given the fact that there had been so much disparity between-- and within the racial wealth gap, there had been so much disparity for years and also almost baked in. So with that, have you seen anything that's been successful within that regard thus far in those pledges and commitments?

BILL RODGERS: Well, that's a great question and one of the things that we're actively trying to think about in terms of where do you start the calendar of looking and seeing to see if we're getting improvements. And so but what we're doing before we're really diving into that area what I've been doing and my staff have been doing is really developing what we're calling cases for equity, just to help people understand. For example, from a business case that we have estimated for St. Louis, our St. Louis economy, that that would be an additional $6 billion in disposable income to the community if we were to pursue equity, economic equity in terms of, in this case, moving Black incomes more towards those of white income-- white incomes.

We've also seen, like in Memphis, that that would be again several billion dollars of additional disposable income that would come into the economy. And the punch line here or the point here is that, as you saw when you talked about these various businesses, we're helping to provide a rationale or offering a rationale that if you help to act affirmatively-- and that could be your own employment hiring and promotion approaches, but it also could be being that good corporate partner in the community-- that there's a win-win here, that we'll improve equity, but also prosperity will be broadly spread and experienced.

- Hey, Bill. It's Julie here. This seems like a compelling argument. It's not an entirely new argument, even if we have some new numbers around it, right? So what's the hold up? Is it just that we still have institutionalized racism that is that entrenched that is holding back? Or are there more specific things that you can pinpoint? What is not working in this direction?

BILL RODGERS: Yeah, yeah, that's a great question. And great to see you. And one of the challenges is that, as you said, you have these institutional structures that have existed for generations. And it's very, very hard to unwind them. And so that's why I'm spending a lot of time traveling my Eighth District. I'll be in the Delta, Mississippi Delta next week talking to leaders there and sharing these cases for equity.

Another case that we've developed is borrowing some of the-- building on that work that Dr. King did. I was reading one of his recent speeches or his interviews where he was at the Southern Seminary and talking with students there. And he actually said, like you said, he was building that economic case. And he was perplexed at that time of why is it that certain businesses really don't want to pursue equity, even though it would help to improve their bottom line?

And so my role that I focus on is just providing education, providing those narratives to people in their various communities so that they can then use them at a cocktail party. They could then use them in their workplace to help themselves create change.

- So, Bill, bringing this conversation full circle back to the news of the day as well, within the employment data that we've been continuing to track, of course, there is the elevated unemployment rate for Black Americans and that in comparison to the broader kind of average among the labor force participants. But then you also think about the wave of layoffs that have also taken place and how that has disproportionately impacted some of the more-- the more marginalized groups within the workforce as well. How can we ensure that there isn't a larger-ranging implication or impact to ethnic groups that are underrepresented or had been underrepresented coming into this hiring wave that had taken place, especially across some of the tech companies that said that they overhired?

BILL RODGERS: Yeah, I mean, it's a great question. And I think some of the evidence that's been compiled has said that the one importance is transparency, right, is that people have a clear understanding of what the rules of the game are. And I think also we've seen this, the important role of institutions. And I think in this report particularly there's another example of how institutions matter, that we saw that leisure and hospitality, that was one of the leading industries or sectors that had this job creation.

Well, at the beginning of January, over 20 states were required to-- required that their minimum wages be raised. So what you may have gotten going on here is people were being attracted to-- pulled into leisure, hospitality, particularly because wages, and, again, because of the institutional framework of the government, of the minimum wage, that those legislative pieces led to higher wages. And then that went above what is called people's reservation wage, that indifference between working and not working. And they were drawn in.

Now, I have to caution that this is one data point. It doesn't make a trend. So we'll be following this over the next few months.

- And we'll check in with you as you do that. Bill, it's always good to catch up with you. Bill Rodgers, director of the Institute for Economic Equity at the Federal Reserve Bank of St. Louis, thank you. And have a great weekend.

BILL RODGERS: You too. Thanks.