On Friday, we were greeted with the shock, awe, and, dare I say, confusion of hitting the lowest overall unemployment rate since 1969. Unemployment fell to 3.4% in January from 3.5% the month prior. But click one level deeper, and you’ll find another number that should turn HR leaders’ heads: Black labor force participation is up. 

While the unemployment rate among Black workers remained almost two percentage points higher than the overall rate, labor force participation among Black workers buoyed back to 2019 levels (62.9%), hovering above the overall share of workers who’ve returned to the workplace in 2023 (62.4%). 

But hold the applause.

Talent experts say now is the time to audit where underrepresented employees reside within an organization and consider how to move them up the ladder and retain them.

For context, the uptick in Black labor participation is partially attributable to the surge in demand for workers in leisure and hospitality and transportation and warehousing, according to a recent report by Wells Fargo. Both industries employ large percentages of Black workers, and the bank’s analysis finds about 23% of transportation and warehousing workers identify as Black.

“If you had said to me in 2020 that the Black unemployment rate would be back down to more or less where it was before the pandemic, I would have said no way I’m selling that. [But] part of it is a rising tide lifts all boats,” says Jay Bryson, chief economist at Wells Fargo, who nodded to the effects of the overall labor market improvement over the past few years. 

But he acknowledges that those gains can quickly fall in the face of economic uncertainty, especially when most marginalized employees work within a given sector. Black and underrepresented employees are concentrated in entry-level and nonessential roles, frequently among the first jobs cut during economic duress. Recent tech layoffs show some evidence of this phenomenon.

“That’s one of the reasons you see the Black unemployment rate rise during recessions relative to everybody else because sometimes the entry-level people are the first to go,” says Bryson.

Meisha-Ann Martin, senior director of people analytics and research at Workhuman, echoed this sentiment in a conversation with Fortune last month. 

“We know based on our Workhuman research that people who are hired during the pandemic have a particularly tough time…And then you add on top of that last in, first out. When all of those things converge together, the pattern is distressing. But it’s not surprising.”

To hold on to the increased number of Black employees in the labor force, employers will have to make a concerted effort to create a culture of inclusion, provide the support and training for employees to grow and move up through an organization, and approach layoffs through an equitable lens, so marginalized groups aren’t disproportionately affected. 

That said, the story here is one of “tempered optimism,” says Bryson. “There has been an improvement over the last few years, although there’s still a long way to go.”

Amber Burton
amber.burton@fortune.com
@amberbburton

Reporter's Notebook

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Cultural intelligence and diverse leadership will become increasingly important thanks to demographic shifts.

Women of color will make up the majority of all women in the U.S. by 2060, according to new research by Catalyst, a nonprofit firm focused on advancing women in the workplace. And by 2031, the percentage of Latina women in the workplace is expected to increase by 26%, while the percentage of Black women is expected to increase by over 9%.

Around the Table

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- Activision Blizzard agreed to pay a $35 million fine for violating sexual harassment and gender discrimination regulations. Financial Times

- Since the pandemic, 2 million hospitality jobs have gone unfilled because workers found more stable jobs with better pay. Washington Post

- The growing number of return-to-office mandates may push working moms out of the workforce—possibly for good. Time

- Amazon will only hire recent college graduates for its entry-level software roles, according to company documents. Insider

- Job listings for chief diversity officers fell last year after hiring sprees in 2020 and 2021. Bloomberg

Watercooler

Everything you need to know from Fortune.

Jobs report. The strong jobs report, which saw the U.S. add 519,000 jobs and unemployment fall to a 53-year low, could spell trouble for the Fed’s efforts to stop inflation. —Will Daniel

Tough guy. Men consider being managed by a woman a threat to their masculinity, making them more likely to engage in toxic behavior at work. —Eleanor Pringle

Make DEI hybrid. Hybrid work models can breed new workplace inequalities, making DEI initiatives more important in these work environments. —Kenneth Imo

Killer meetings. Companies that force employees to come in for excessive meetings “are not only killers of freedom, but killers of time,” says leadership author Koen Blanquart. —Jane Thier