Native American unemployment rate hovers near lowest level in 22 years, new report says

The unemployment rate among Native Americans has dropped close to its lowest level in more than two decades, according to a report from Wells Fargo's Economics Group. 

The Native American jobless rate has averaged 6.2% so far this year, close to the 6.1% average in 2019, which was the lowest since the Bureau of Labor Statistics began measuring unemployment within that community 22 years ago, the report said.  

The downward trend likely reflects in part the disproportionate number of Native Americans working in production and construction – industries that did well during much of the pandemic, says Jay Bryson, chief economist for Wells Fargo corporate and investment banking and co-author of the report.

"Over the last two years... Americans have spent a lot more on goods than they did on services,'' he says. And while the housing market has recently weakened as the Fed raises interest rates to curb inflation, during the "first two years of the pandemic ... housing was very, very strong."

Native American employment uptick could reverse in a recession

When the U.S. economy largely shut down at the start of the global health crisis resulting in the loss of millions of jobs, unemployment among Native Americans surged, reaching nearly 29% in April 2020. That was more than twice the national rate of 14.4%.

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"We haven't seen 30% unemployment rates since the 1930s,'' Bryson says. "So those first few months were, in many respects, a depression for the Native American community.''

Still, from 2019 to 2021, the employment rate among Native Americas increased by 15%, the report says. That uptick could reverse, however, if the U.S. slips into a recession, Bryson says.

As the housing market cools, potentially leading to fewer homes being built, "you can expect to see layoffs ... and that will fall disproportionately on Hispanic and Native Americans just because of where they're concentrated'' in jobs, Bryson says.

Additionally, unlike the pandemic-related downturn, a more typical recession will likely lead to consumers spending less on goods. So, not only will the unemployment rate among Native Americans probably increase, Bryson says, "it will go up more than the overall unemployment rate.''

Native American population is younger, growing faster 

While a recession may temporarily slow down the economy, the recent labor shortage that has made it difficult for some businesses to find workers will likely still be a challenge once it's over, Bryson says.

Native Americans, whose numbers are growing at a faster pace than the overall population and who also tend to be younger, could help boost the labor force, particularly in states where they make up a larger share of the residents, he says.

"Once we get through the recession and things start to grow again, I think you'll generally be looking at a relatively tight labor market,'' Bryson says, "because we don’t have the population growth or immigration to support it. And given that Native Americans are younger than the overall population and the population is growing faster ... we think that bodes well for their longer-term employment.''

During the decade between 2010 and 2020, those who said they were solely American Indian or Alaskan native rose 27%, over three times the growth rate of the broader population, according to Wells Fargo.

And the median age of Native Americans is 32 as compared to the wider population, which has a median age of 39. Initial estimates from the 2020 decennial census also found that 32% of Native Americans were younger than twenty years old as compared to a quarter of all Americans. 

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Native Americans have hurdles but can boost labor force 

But there are broader issues that feed an unemployment rate among Native Americans that remains roughly double the rate of the overall population.

Roughly 3 out of 4 American Indians or Native Alaskans finish high school within four years after starting the ninth grade as compared to 86% who do so nationwide, the Wells Fargo report says. And among Native Americans from the age of 3 to 18, 83% are able to connect to the internet, versus 95% of Americans overall.

"To fully participate in coming expansions, we need to be able to address some of those issues,'' he says. If “6% of the Native American population is searching for jobs and they don’t have the right skills for the jobs, then that’s a concern not only for the individuals who are affected ... we're not producing as many goods and services as we otherwise would."