“We’re all in this together” has become a rallying cry during the coronavirus pandemic. While it is true that COVID-19 has affected everyone in some way, the magnitude and nature of the impact has been anything but universal. Evidence to date suggests that black and Hispanic workers face much more economic and health insecurity from COVID-19 than white workers.
Although the current strain of the coronavirus is one that humans have never experienced before, the disparate racial impact of the virus is deeply rooted in historic and ongoing social and economic injustices. Persistent racial disparities in health status, access to health care, wealth, employment, wages, housing, income, and poverty all contribute to greater susceptibility to the virus—both economically and physically.
Though black and brown communities share many of the experiences that make them more susceptible, there are also important differences between these communities that need to be understood in order to effectively combat the adverse economic and health effects of the virus. This report, focused specifically on black workers, is the first in a series that will explore how racial and economic inequality leave workers of color with few good options for protecting both their health and economic well-being. A companion report highlights conditions for Hispanic workers.
Effects of the pandemic on black workers
Economic effects: Devastating job losses are hitting black workers and their families especially hard
There are three main groups of workers in the COVID-19 economy: those who have lost their jobs and face economic insecurity, those who are classified as essential workers and face health insecurity as a result, and those who are able to continue working from the safety of their homes. Unfortunately, black workers are less likely to be found in the last group. They have suffered record numbers of job losses over the last two months (March 2020–May 2020), along with the ensuing related economic devastation. They also are disproportionately found among the essential workers in the economy today—continuing to go to their workplaces, risking their health and that of their families because they are unable to sustain adequate social distance from their co-workers and customers.
Spiking unemployment rates
The labor market has continued to deteriorate, as evidenced by massive numbers of unemployment insurance claims through the middle of May (Shierholz 2020). As of May 16, nearly one in four workers have applied for unemployment insurance benefits, either in the regular program or through the new Pandemic Unemployment Assistance program, since stay-at-home orders first went into effect. Furthermore, in the first month of job losses, for every 100 workers who were able to file for UI, 37 additional workers tried to apply but could not get through the system to make a claim (Zipperer and Gould 2020). While many of those who initially couldn’t get through have likely been able to in subsequent weeks, it is also likely that would-be applicants face ongoing challenges and that the reported number of applicants understates the magnitude of the problem.
The latest national data available to assess the impact of job losses for black and white workers separately is the Current Population Survey for April 2020. The labor market started deteriorating in March but fell off a cliff in April. While the losses have certainly continued, the April data gives us a first look at how black and white workers are faring.
Figure A shows the unemployment rates for white and black workers in February, March, and April of this year. February provides a benchmark for the pre-pandemic economy. As will be described in greater detail later, the black unemployment rate has, even in the tightest of labor markets, been persistently and significantly higher than the white unemployment rate. Both began rising in March and then skyrocketed in April. As of the latest data, the black unemployment rate is 16.7%, compared with a white unemployment rate of 14.2%.
And while these differences are notable, they mask even greater disparities that are apparent when we look at unemployment rates by race and gender. White men experienced a large, but relatively smaller, rise in unemployment. Still, the white male unemployment rate is now higher than the highest point the overall unemployment rate reached in the depths of the Great Recession (10.0%, in October 2009; see EPI 2020). White women experienced the largest increase in unemployment, while black women now have the highest unemployment rate of the four groups analyzed. (It should be noted that across race, gender, and ethnicity, Hispanic women actually have the highest unemployment rate as of April 2020—about one in five Latina workers are unemployed. Further data on Hispanic workers will be provided in a forthcoming report.)
While unemployment skyrocketed for Black and white workers in the COVID-19 labor market, the unemployment rate is higher for Black workers: Unemployment rates by race, and by race and gender, February–April 2020
|All white workers||3.1%||4.0%||14.2%|
|All Black workers||5.8%||6.7%||16.7%|
Note: White refers to non-Hispanic whites, Black refers to Blacks alone.
Source: EPI analysis of Bureau of Labor Statistics Current Population Survey public data.
Falling employment-to-population ratios
The unemployment rate is a commonly used measure of labor market slack. One limitation, however, is that it relies on would-be workers to either be on temporary layoff or have looked for work in the last four weeks to be counted as unemployed. In this economy, with the health requirements to stay home and with sectors being completely decimated, it is likely that many would-be workers are not actively looking for work and therefore would not be counted in the official unemployment rate. For this reason, policymakers should look to other measures to determine when to turn on and off policy triggers to support workers and the economy (Gould 2020b). One such measure is the employment-to-population ratio (EPOP), or the share of the population with a job. Figure B displays the EPOP for the same groups shown in Figure A.
Employment losses were stark across racial lines between February and April. Black workers saw slightly greater losses in employment than white workers (10.6 vs. 9.5 percentage-point losses). This translates into an employment loss of 17.8% among black workers and 15.5% among white workers. More than one in six black workers lost their jobs between February and April. As of April, less than half of the adult black population was employed. While the economic devastation is widespread, as we show in this report, black workers are less able to weather such a storm because they have fewer earners in their families, lower incomes, and lower liquid wealth than white workers.
As with the unemployment rates, women suffered greater job losses than men. Black women experienced a drop in their EPOP of 11.0 percentage points. Put another way, 18.8% of black women workers lost their jobs between February and April. At 45.5%, white women haven’t seen such a low share of the population with a job since the late 1970s, when white women were still increasing their participation in the labor market in general.
Employment has dropped sharply in the COVID-19 labor market---Black women face the largest losses: Employment-to-population ratio by race and gender, February–April 2020
|All white workers||61.3%||60.2||51.8|
|All Black workers||59.4||57.8||48.8|
Note: White refers to non-Hispanic whites, Black refers to Blacks alone. The employment-to-population ratio is the share of the population who are working.
Source: EPI analysis of Bureau of Labor Statistics Current Population Survey public data.
Health effects: Black workers and their families are facing greater health risks
Black workers are more likely to be in front-line jobs that are categorized as ‘essential’—forcing them to risk their own and their families’ health to earn a living
Not only are black workers losing their jobs at an incredible pace, those who aren’t losing their jobs are more likely to be found on the front lines of the economy in essential jobs. Rho, Brown, and Fremstad (2020) conducted an important and useful study of six sectors of the economy that are considered essential and in which most workers are on the front lines of the COVID-19 labor market. Their results, displayed in Figure C, show that black workers make up a disproportionate share of these essential workers who are forced to put themselves and their family members at additional risk of contracting and spreading COVID-19 in order to put food on the table.
Black workers make up about one in nine workers overall; they represent 11.9% of the workforce. However, black workers make up about one in six of all front-line-industry workers. They are disproportionately represented in employment in grocery, convenience, and drug stores (14.2%); public transit (26.0%); trucking, warehouse, and postal service (18.2%); health care (17.5%); and child care and social services (19.3%). While, in the near term, this protects them from job loss, it exposes them to greater likelihood of contracting COVID-19 while performing their jobs.
Black workers are more likely than other workers to be in front-line jobs: Black workers as a share of all workers in a given industry
|Black workers’ share of workers in the industry|
|Grocery, convenience & drugstore workers||14.2%|
|Public transit workers||26.0%|
|Trucking, warehouse & postal service workers||18.2%|
|Building cleaning services workers||12.6%|
|Health care workers||17.5%|
|Child care & social services workers||19.3%|
Notes: The front-line industry categories used here are the categories used in the CEPR report (see Source below for more information). Sample is a 2014–2018 five-year estimate.
Source: EPI analysis of data from the Center for Economic Policy Research (CEPR) report A Basic Demographic Profile of Workers in Frontline Industries (April 2020).
African Americans have disproportionately high COVID-19 death rates and are more likely to live in areas experiencing outbreaks
Given the disproportionate representation of black workers in front-line occupations where they face greater risk of exposure to COVID-19, it is not surprising that illness and deaths are disproportionately found among black workers and their families. As shown in Figure D, African Americans’ share of those who have died from COVID-19 nationally is nearly double (1.8 times higher than) their share of the U.S. population. The ratios are even higher in some states: in Wisconsin and Kansas, the rate of African American deaths is more than four times as high as their share of the population in those states (Meepagala and Romer 2020). By comparison, whites account for a smaller share of deaths than their share of the population.
The Centers for Disease Control (CDC) also reports weighted population distributions in an effort to reflect racial/ethnic distributions of the geographic locations where COVID outbreaks are occurring. These weighted population distributions indicate that African Americans represent a larger share of the population in areas where outbreaks are occurring than their representation in the population overall (18.2% compared with 12.5%). Therefore, one of the reasons for disproportionately higher rates of COVID deaths among African Americans is the fact that they are more likely to live in areas that have experienced COVID outbreaks. Even accounting for this fact, African Americans still have higher death rates than their weighted population shares would indicate.
Black Americans make up 12.5% of the U.S. population but account for 22.4% of COVID-19 deaths: Shares of population vs. shares of COVID-19 deaths, by race
|Share of population (unweighted)||12.5%||60.4%|
|Share of population (weighted)||18.2%||41.4%|
|Share of COVID-19 deaths||22.4%||52.3%|
Notes: White refers to non-Hispanic whites, black refers to blacks alone. All shares are as of May 13, 2020. Shares of COVID-19 deaths are based on provisional death counts. Weighted population shares reflect the racial distribution of the geographic locations where COVID-19 outbreaks are occurring, and help to ascertain whether disproportionate deaths are occurring within certain racial groups.
Source: Centers for Disease Control and Prevention (CDC), Provisional Death Counts for Coronavirus Disease (COVID-19): Weekly State-Specific Data Updates.
The devastating effects of COVID-19 on the economic and physical well-being of black Americans were entirely predictable given persistent economic and health disparities. In this section, we describe some of the underlying economic and health factors behind the unequal outcomes observed thus far. These same factors will ultimately prolong the effects of the pandemic on black workers and their families long after the immediate threat has passed.
Underlying economic factors exacerbate the effect of the COVID-19 recession on black workers and their families
Black workers and their families were economically insecure before the pandemic tore through the United States. The pandemic and related job losses have been especially devastating for black households because they have historically suffered from higher unemployment rates, lower wages, lower incomes, and much less savings to fall back on, as well as significantly higher poverty rates than their white counterparts. This prior insecurity has magnified the current economic damage to these workers and their families. The next seven figures illustrate the differences in socioeconomic status between white and black workers, households, and families.
Higher unemployment rates
Let’s start with the labor market. Historically, black workers have faced unemployment rates twice as high as those of their white counterparts. When the overall unemployment rate averaged 3.7% in 2019, the white non-Hispanic unemployment rate was 3.0% and the black unemployment rate was twice as high, coming in at an average of 6.1% over the year. This difference cannot be explained away by differences in educational attainment. Figure E shows that at every level of education, the black unemployment rate is significantly higher than the white unemployment rate, even for those workers with college or advanced degrees.
Black workers are far more likely to be unemployed than white workers at every level of education: Unemployment rates by race and education, 2019
|Less than high school||14.7%||8.3%|
Notes: White refers to non-Hispanic whites, Black refers to Blacks alone. Educational categories are mutually exclusive and represent the highest education level attained for all individuals ages 16 and older.
Source: Economic Policy Institute, State of Working America Data Library, [Unemployment by race and education], 2019.
Significant wage gaps
Among the employed, black workers face significant pay penalties. No matter how you cut the data, black workers face significant pay gaps in the labor market, and research has shown that these pay gaps have grown since 2000 and in the decades before (Gould 2020a; Wilson and Rodgers 2016). On average, black workers are paid 73 cents on the white dollar. We know from a host of economic research that a person’s wages are not a simple function of individual ability. Instead, workers’ ability to claim higher wages rests on a host of social, political, and institutional factors outside their control (Manning 2003; Card, Devicienti, and Maida 2011). Because of historic and current privilege in the labor market (National Advisory Commission on Civil Disorders 2016), white men enjoy exceptionally high wages. Therefore, the gap between white men and black men is particularly stark. Black men are paid only 71 cents on the white male dollar. Black women, who face both gender and race discrimination, are paid even less—64 cents on the white male dollar.
As Figure F shows, black–white wage gaps persist across the wage distribution as well as at different levels of education in the pre-pandemic economy. The black–white wage gap is smallest at the bottom of the wage distribution, where a wage floor—otherwise known as the minimum wage—keeps the lowest-wage black workers from being paid even lower wages. The largest black–white wage gaps are found at the top of the wage distribution and are explained in part by occupational segregation—the underrepresentation of black workers in the highest-wage professions and overrepresentation in lower-wage professions—and the pulling away of the top more generally.
Similarly, across various levels of education, a significant black–white wage gap remains. Black workers can’t simply educate their way out of the gap. Even black workers with an advanced degree experience a significant wage gap compared with their white counterparts.
Black--white wage gaps are wide no matter how you slice the data: Average wages of black and white workers, by gender, wage percentile, and education, 2019
Note: White refers to non-Hispanic whites, black refers to blacks alone.
Not only is black worker pay significantly less than that of their white counterparts, but their benefits are as well. Along with health insurance, discussed in more detail below, two benefits are acutely important at this particular time: paid sick days and the ability to work from home. These two workplace benefits help shield workers from economic losses by allowing them to take paid time off to care for themselves or family members and allowing them to stay out of harm’s way and still earn a paycheck by working from home. Figure G illustrates how black workers are less likely than white workers to enjoy these benefits.
The Family First Coronavirus Response Act was an important first step in providing vital paid sick days, but somewhere between 6.8 million and 19.6 million private-sector workers were left without paid sick days as a result of the firm-size exemptions in the law (Gould and Shierholz 2020). Obviously, those loopholes need to be closed, and workers—regardless of race or ethnicity—also need a permanent fix to this basic labor standard.
Given what we know about job losses and essential workers, it’s not surprising that significantly fewer black workers can telework than white workers. Fewer than one in five black workers in the pre-pandemic economy were able to work from home. This inability to keep their jobs and stay safe makes it even harder for black workers to maintain economic and health security during this difficult time.
Black workers are less likely to have paid sick days and less likely to be able to work from home than white workers: Shares of workers with paid sick days and the ability to work from home, by race
|Paid sick days||58.7%||66.6%|
|Could work from home||19.7%||29.9%|
Sources: U.S. Bureau of Labor Statistics, Job Flexibilities and Work Schedules, 2017 and 2018; U.S. Bureau of Labor Statistics, American Time Use Survey microdata.
Lower household incomes and higher poverty rates
Significant gaps in both employment opportunities and wage levels translate into lower incomes and higher poverty rates in the pre-pandemic economy, as shown in Figure H.
In 2018, median household income for white households was 70% higher than for black households ($70,642 vs. $41,692). On top of decades of preferential wealth accumulation for white families versus black families (Rothstein 2017; Darity et al. 2018), lower incomes are one of the reasons that black families haven’t been able to build up savings to weather storms such as the one our country finds itself in today.
At the bottom of the income distribution, the black poverty rate is two-and-a-half times the white poverty rate. One in five black people in this country live below the poverty line—that’s below about $26,000 annual income for a family of four. Job loss for those living at such low incomes is absolutely shattering.
Black households have lower incomes and higher rates of poverty than white households: Real median household income and overall poverty rate, by race, 2018
|Median household income||Overall poverty rate|
Notes: White refers to non-Hispanic whites, black refers to blacks alone. Black households are households in which the head of household is black. White households are households in which the head of household is white. The poverty rate is the share of people whose family income is below the official family-size-adjusted poverty threshold.
Source: EPI analysis of Current Population Survey Annual Social and Economic Supplement Historical Poverty Tables (Tables 3, H-5, and H-9). Adapted from Racial and Ethnic Income Gaps Persist Amid Uneven Growth in Household Incomes (EPI 2019).
Lower shares of households with multiple earners
In the pre-pandemic economy, black workers were less likely to have multiple earners in their household (shown in Figure I). Half of all black households had only one earner, while nearly half of all white households had at least two earners. This racial disparity in the number of household earners is not just a function of how many working-age adults live in the household, or family structure, but is another measurable consequence of the persistent 2-to-1 ratio between the black and white unemployment rates. The inequities black workers experience in the labor market have larger consequences for the economic vulnerability of black households because it is far more likely that when one household member loses their job, it translates into a complete loss of income for that household. Black households are less likely to have a second earner to fall back on to make ends meet.
Black households are less likely to include multiple earners than white households: Shares of nonelderly households with one earner vs. two or more earners, by race, 2018
|Earners in household||Black||White|
|Two or more earners||32.2%||48.4%|
Notes: White refers to non-Hispanic whites, black refers to blacks alone. Black households are households in which the head of household is black. White households are households in which the head of household is white. Nonelderly households are those in which the heads of household are ages 18–64.
Source: Authors’ analysis of Current Population Survey Annual Social and Economic Supplement microdata, 2018.
Higher shares of households headed by single parents
Single working parents, a subset of one-earner households, face the added burden of needing to balance the competing demands of work, online distance learning, and child care responsibilities. Black women, in particular, as shown in Figure J, find themselves at the nexus of these overlapping responsibilities since they are 3.6 times as likely as white women to be single heads of households with children under age 18 (14.4% of black households compared with 4.0% of white households).
Black women are more likely to be single heads of households and single parents than white women: Shares of Black and white households by selected family type, 2018
|Married couple family||27.1%||51.2%|
|Married couple family with minor children||10.6%||17.4%|
|Single female householder family||26.4%||8.6%|
|Single female householder family with minor children||14.4%||4.0%|
Note: White refers to non-Hispanic whites, Black refers to Blacks alone. Black households are households in which the head of household is Black. White households are households in which the head of household is white.
Source: U.S. Census Bureau, 2018 American Community Survey 1-Year Estimates, Table S0201.
Less cash reserves
On top of lower wages and incomes and higher poverty rates, black families have significantly less access to liquid assets than white families. It’s been long established that black families face a large and persistent wealth gap. Darity and others have shown that no matter how it’s measured, the racial wealth gap is large and persistent (Darity et al. 2018). To weather a financial loss, families often must dip into their liquid assets to pay for their living expenses. If they lose their job or experience a serious health shock, their only hope of making ends meet and continuing to pay their rent or mortgage and put food on the table is to rely on their savings. Wealth is often tied up in housing assets, particularly for black families, and therefore is inaccessible when dealing with sudden and large losses in income.
Figure K displays one component of wealth, the total value of all transaction accounts for black and white families. Transaction accounts include checking or savings accounts, cash, prepaid cards, and directly held stocks, bonds, and mutual funds. These are assets that can quickly be used to purchase goods and services, unlike less liquid sources of wealth like homeownership or assets in 401(k)s. Overall, white families hold, on average, more than five times as much liquid assets as black families do, $49,529 versus $8,762. This makes white families far more capable of weathering the storm of COVID-19, whether it be job loss or another financial hit.
The attainment of higher education does not bridge this divide. This gap remains large when we compare white and black families whose heads of household have the same level of education. In fact, the absolute gap in liquid assets between black and white families is far larger among those with a college degree or more versus those with less than a college degree. White families headed by a college-degree holder have nearly five times the access to money in transaction accounts as similarly degreed black families. The gap persists whether the black family owns a home or not. The gaps in liquid assets differ by what sector the family head works in, but no matter how the data are cut, white families have far more access to liquid wealth.
Black families have significantly less cash reserves to draw upon than white families: Total value of all transaction accounts, for black and white families, by education, homeownership, and employment sector (mean values, 2016 dollars)
|Less than college||$5,289||$20,289|
|College or more||$20,893||$96,930|
|Industry classifications 1||$17,558||$37,768|
|Industry classifications 2||$9,344||$54,633|
|Industry classifications 3||$5,830||$47,529|
Notes: White refers to non-Hispanic whites, black refers to blacks alone. Transaction accounts include checking or savings accounts, cash, prepaid cards, and directly held stocks, bonds, and mutual funds. Industry classifications 1 include mining, construction, and manufacturing. Industry classifications 2 include transportation, communications, utilities and sanitary services, wholesale trade, finance, insurance, and real estate. Industry classifications 3 include agriculture, retail trade, services, and public administration. Race is the race of the survey respondent; industry classifications are for head of household. Education is the education level of the head of household.
Source: EPI analysis of Federal Reserve 2016 Survey of Consumer Finances combined extract data accessed from the UC Berkeley Survey Documentation and Analysis website. The 2016 survey is the most recent survey available.
It is not surprising then that research by Ganong et al. (2020) finds that income volatility has a much greater impact on the spending of black households than white households. They report that these differences in ability to smooth consumption leads to a 50% reduction in black families’ ability to spend on essential goods and services as compared with white families when they are faced with similar income losses.
Underlying health factors put black workers and their families at greater risk for contracting COVID-19
Black workers also face greater underlying pre-pandemic health insecurities that make them more susceptible to the coronavirus. According to one demographic assessment of vulnerability, an estimated 30% of the country’s overall population live in the counties at greatest risk of health and economic disruption from COVID-19, while a much higher share—43%—of black Americans (17.6 million) live in those same counties (Fitzhugh et al. 2020). Below we explore some of the factors contributing to the greater risk of adverse health outcomes related to COVID, including preexisting health conditions, lack of health insurance, housing conditions, and population density.
Preexisting health conditions compound the risks faced by black workers
Preexisting health conditions—such as diabetes, hypertension, asthma, and diabetes—are associated with greater risk of death from the coronavirus. As shown in Figure L, African Americans experience all of these illnesses at higher rates than whites. The greatest racial disparities exist in the prevalence of diabetes (1.7 times as likely among African Americans as among whites) and hypertension (1.4 times as likely).
Air pollution has long been known to increase risk of heart and respiratory disease, heart attacks, asthma attacks, bronchitis, and lung cancer (Sass 2013). Therefore, environmental racism—the disproportionate impact of environmental hazards on health outcomes among people of color—is a contributing factor to these racial health disparities. According to a 2018 report by a group of scientists at the EPA National Center for Environmental Assessment, published in the American Journal of Public Health, people of color are disproportionately affected by air pollution due to their proximity to particulate-matter-emitting facilities (Mikati et al. 2018). African Americans suffer the most, with exposure 54% above average.
African Americans have higher rates of chronic illnesses associated with greater vulnerability to COVID-19: Age-adjusted prevalence of asthma, diabetes, hypertension, and obesity among black and white adults
Notes: White refers to non-Hispanic whites, black refers to blacks alone. Age-adjusted prevalence of asthma, diabetes, and hypertension among adults ages 18 and over. Age-adjusted prevalence of obesity among adults ages 20 and over.
Sources: National Center for Health Statistics, National Health Interview Survey 2018; National Center for Health Statistics, National Health and Nutrition Examination Survey, 2013–2016, 2015–2016, and 2017–2018.
Lack of health insurance also negatively affects health outcomes among black families
Early diagnosis and treatment are essential to minimizing the severity of chronic illnesses, and regular health care is important for promoting better overall health. The lack of health insurance often results in a choice to delay receiving health care until one’s condition is critical. Figure M shows that black workers are 60% more likely to be uninsured than white workers. This is likely an additional contributing factor to the disparity in chronic illnesses described above, but it also might result in uninsured workers waiting longer to seek care for suspected coronavirus symptoms.
Black workers are 60% more likely to be uninsured than white workers: Shares of workers without health insurance, by race, 2018
|Employed and without health insurance||12.3%||7.5%|
Note: White refers to non-Hispanic whites, black refers to blacks alone.
Source: Authors’ analysis of 2018 American Community Survey microdata.
Black workers and their families face greater risk of exposure to the coronavirus because they are more likely to live in densely populated housing
The health and economic risks associated with COVID-19 are not limited to individual workers, but also affect their families and communities. The high rate of contagion associated with the coronavirus has made social distancing critical to slowing the spread of infection. However, in smaller or more densely populated home environments, it can be more difficult to effectively isolate vulnerable family members from those who have been infected or who face greater risk of exposure to the virus because of their work conditions. For example, those who live in multi-unit dwellings, such as apartment or condo buildings, tend to reside in more densely populated areas where more people share highly trafficked common spaces than those who live in single-unit detached dwellings. As shown in Figure N, 54.5% of African American households live in single-unit structures, compared with 74.2% of white households. On the other hand, 29.2% of African American households live in structures that include five or more units—more than double the rate of white households.
Black households are more than twice as likely to live in densely populated housing structures as white households: Shares of black and white households by type of housing structure
|Units in structure||Black||White|
|1 unit, detached or attached||54.5%||74.2%|
|2 to 4 units||12.6%||5.9%|
|5 or more units||29.2%||14.0%|
Note: White refers to non-Hispanic whites, black refers to blacks alone. Black households are households in which the head of household is black. White households are households in which the head of household is white. Totals may not sum to 100%. Structures categorized as mobile home, boat, RV, van, etc. are omitted.
Source: U.S. Census Bureau, 2018 American Community Survey 1-Year Estimates, Table S0201.
Black workers are more likely to live in multigenerational households with older family members who are at high risk of contracting the virus
African Americans are also more likely to live in multigenerational households where there may be older family members who are considered high risk. As shown in Figure O, black workers are twice as likely as white workers to live in households with three or more generations, such as a grandparent living with children and grandchildren. While older people have been encouraged to isolate themselves as a preventative measure, this presents a challenge in homes where other members of the household must work outside of the home.
Black workers are twice as likely to live in households with three or more generations than white workers: Shares of workers by number of generations in their household, 2018
|Three or more generations||8.9%||4.4%|
Note: White refers to non-Hispanic whites, black refers to blacks alone.
Source: Authors’ analysis of American Community Survey 2018 microdata.
Policy divides: The fallacy of race-neutral policy is further exposed by COVID-19
The once-in-a-generation challenges presented by the coronavirus have required leaders in government and private industry to respond quickly in order to minimize the threat to public health as well as the economic harm. Consistent with the scale of the crisis, many of the actions taken have been widespread in terms of the number of people helped, and the magnitude of the interventions has been unprecedented. Still, even such a broad-reaching response can yield uneven results because of differential access to the resources needed to equitably implement the response.
The digital divide creates disadvantages for working and learning remotely
Decisions to close schools and most businesses have meant that work and learning are taking place at home and online, requiring access to computers and digital connectivity. While the majority of households in the United States have a computer and internet access, racial disparities exist. Figure P reveals that 5% fewer black households than white households have a computer in the home and 10% fewer have a broadband internet subscription. This racial disparity in computer and internet access is often referred to as the digital divide.
Black households are substantially less likely to have a computer or internet access at home than white households: Shares of black and white households with a computer and broadband internet access, 2018
|Households with a computer||87.9%||92.2%|
|Households with a broadband internet subscription||77.9%||86.5%|
Note: White refers to non-Hispanic whites, black refers to blacks alone. Black households are households in which the head of household is black. White households are households in which the head of household is white.
Source: U.S. Census Bureau, 2018 American Community Survey 1-Year Estimates, Table S0201.
The unbanked face delays in receiving CARES Act cash assistance
One of the first critical interventions undertaken by Congress in the wake of the pandemic was the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. One of the provisions of this act includes a one-time payment of $1,200 to individuals with adjusted gross income below $75,000, and $2,400 to married couples filing taxes jointly who earn under $150,000. Families with children are also eligible to receive an additional $500 per qualifying child. Considering that the median black household income is well below those thresholds (Figure H), they are more likely to qualify; however, racial differences in access to bank accounts have presented challenges for disbursing the money to unbanked households quickly via direct deposit. According to a 2018 report from the FDIC, 16.9% of black households were unbanked in 2017, meaning no one in the household had a checking or savings account, compared with just 3.0% of white households (Apaam et al. 2018).
Black-owned businesses are more concentrated in vulnerable industries, but face challenges in applying for Paycheck Protection Program loans
Providing support to small businesses has been a top priority of legislation designed to lessen the harmful economic effects of the pandemic. While less than 10% (9.4%) of all U.S. business owners are African American, black-owned businesses are more likely to be in vulnerable industries. According to one estimate, 40% of the revenues of black-owned businesses are earned in the five most vulnerable sectors—including leisure, hospitality, and retail—compared with 25% of the revenues of all U.S. businesses (Fitzhugh et al. 2020).
In this analysis, we use the April 2020 decline in payroll employment by industry as a measure of which businesses have been most affected by reduced demand and are therefore more vulnerable to business failure due to the pandemic. According to the Bureau of Labor Statistics, the industries with the largest total job losses in April were in accommodation and food services, retail, and health care and social assistance. As shown in Figure Q, 27.6% of black-owned businesses are in those three sectors, compared with 19.7% of white-owned businesses. The large number of job losses in these industries is due in part to the fact that they employ many more people than other industries. Another way of measuring the impact of losses is to consider job losses as a share of March (the previous month’s) payroll employment. Based on this measure, the largest percentage losses in payroll employment were in arts, entertainment and recreation; accommodation and food services; and other services. These three industries account for almost a third of black-owned businesses (32.3%), but just 18.8% of white-owned businesses.
Black-owned businesses are a small share of overall business, but are most likely to be in industries impacted by COVID-19 shutdowns: Shares of firm ownership by industry
|Industry distribution of employer firms||Black-owned||White-owned|
|Other services (except public admin.)||25.1%||11.1%|
|Health care and social assistance||19.1%||7.7%|
|Arts, entertainment, and recreation||4.8%||5.1%|
|Accommodation and food services||2.3%||2.6%|
|Admin./support/waste mgmt./ remediation srvcs.||11.4%||8.0%|
|Professional, scientific, and technical services||8.0%||15.4%|
|Transportation and warehousing||7.1%||3.9%|
Notes: †Indicates the three industries that saw the largest declines in payroll employment in April 2020. *Indicates the three industries that saw the largest percent change declines in payroll employment in April 2020. Totals may not sum to 100%. Industries making up less than 1% of total share (agriculture, mining, utilities, management of companies and enterprises) are omitted.
Source: Authors’ analysis of U.S. Census Bureau, Survey of Business Owners (2012).
The CARES Act also established the Paycheck Protection Program (PPP), which offers loans to small businesses to use for payroll costs, mortgage interest, rent, and utilities—loans that are forgivable on the condition that the businesses retain or rehire employees at their pre-pandemic levels of pay (SBA 2020a). At least 75% of the forgiven amount must have been used for payroll costs. While a very small share of black-owned businesses are employers—only 4.2% have employees, compared with 19.6% of all businesses and 20.6% of white-owned businesses (U.S. Census Bureau 2016a)—sole proprietorships, independent contractors, and self-employed individuals are also eligible to apply (SBA 2020b). Loans for this group of businesses can also be forgiven if 75% of the loan is used to replace 1099-MISC income or net self-employment income.
Despite such broad eligibility criteria for the PPP, there have been a number of anecdotal accounts of black business owners who have faced barriers to applying for loans in the first place, even as large publicly traded companies, including popular restaurant chains, were among the first to get loans—quickly depleting the $350 billion that was originally allocated (Flitter 2020). One of the main barriers cited by small black-owned businesses has been a lack of preexisting banking relationships with the larger lenders that were first to get the program up and running in their systems. The biggest shortcoming of the PPP was that its total funding level was capped, which made it a zero-sum dash to be the first to apply.
Although a second round of $310 billion in funding was approved in late April 2020 to cover unmet demand, if the program had initially been uncapped and everybody who qualified was guaranteed to get it, there may have been less harm in a business having to wait longer to get an application processed. The defining features of parallel plans in the United Kingdom and Denmark is that they are open-ended and hence not zero-sum among businesses (White 2020; Thompson 2020).
The global impact of COVID-19, both in lives lost and economic devastation, is likely to leave a lasting mark for years to come. The best path forward includes making sure that we use the painful lessons learned during this crisis to better prepare ourselves for the next one. The disparate racial impact of COVID-19 illustrated in this report should come as no surprise given the ongoing legacy of racism that continues to produce unequal outcomes affecting nearly every aspect of life in the United States. If we are to protect African Americans from suffering under the same needlessly heavy burden during the next economic or public health crisis that they are suffering under now, we must work diligently to address long-standing underlying racial disparities in economic and health outcomes.
We are grateful for the valuable research assistance of Daniel Perez.
Apaam, Gerald, Susan Burhouse, Karyen Chu, Keith Ernst, Kathryn Fritzdixon, Ryan Goodstein, Alicia Lloro, Charles Opoku, Yazmin Osaki, Dhruv Sharma, and Jeffrey Weinstein. 2018. 2017 FDIC National Survey of Unbanked and Underbanked Households. Federal Deposit Insurance Corporation, October 2018.
Card, David, Francesco Devicienti, and Agata Maida. 2011. Rent-Sharing, Hold-Up, and Wages: Evidence from Matched Panel Data. IZA (Institute for the Study of Labor) Discussion Paper no. 6086, October 2011.
Darity Jr., William, Darrick Hamilton, Mark Paul, Alan Aja, Anne Price, Antonio Moore, and Caterina Chiopris. 2018. What We Get Wrong About Closing the Racial Wealth Gap. Samuel DuBois Cook Center on Social Equity and Insight Center for Community Economic Development, April 2018.
Economic Policy Institute (EPI). 2020. Economic Indicators: Jobs and Unemployment. Last updated May 8, 2020.
Fitzhugh, Earl, Aria Florant, J.P. Julien, Nick Noel, Duwain Pinder, Shelley Stewart III, Jason Wright, and Samuel Yamoah. 2020. COVID-19: Investing in Black Lives and Livelihoods. McKinsey & Company, April 2020.
Flitter, Emily. 2020. “Few Minority-Owned Businesses Got Relief Loans They Asked For.” New York Times, May 18, 2020.
Ganong, Peter, Damon Jones, Pascal Noel, Diana Farrell, Fiona Greig, and Chris Wheat. 2020. “Wealth, Race, and Consumption Smoothing of Typical Income Shock.” University of Chicago, Becker Friedman Institute for Economics Working Paper no. 2020–49. http://dx.doi.org/10.2139/ssrn.3583707.
Gould, Elise. 2020a. State of Working America Wages 2019: A Story of Slow, Uneven, and Unequal Wage Growth Over the Last 40 Years. Economic Policy Institute, February 2020.
Gould, Elise. 2020b. “The Unemployment Rate Is Not the Right Measure to Make Economic Policy Decisions Around the Coronavirus-Driven Recession: Policymakers Should Use the Employment Rate to Continue or Stop Economic Assistance.” Working Economics Blog (Economic Policy Institute), March 20, 2020.
Gould, Elise, and Heidi Shierholz. 2020. “Senate Coronavirus Bill Is Crucial—But It’s a Fraction of What’s Needed.” Working Economics Blog (Economic Policy Institute), March 18, 2020.
Manning, Alan. 2003. Monopsony in Motion: Imperfect Competition in Labor Markets. Princeton, N.J.: Princeton Univ. Press.
Meepagala, Shawn, and Carl Romer. 2020. “Mapping Racial and Ethnic Differences with COVID-19” (interactive data tool). Center for Global Data. Accessed May 29, 2020.
Mikati, Ihab, Adam F. Benson, Thomas J. Luben, Jason D. Sacks, and Jennifer Richmond-Bryant. 2018. “Disparities in Distribution of Particulate Matter Emission Sources by Race and Poverty Status,” American Journal of Public Health 108, no. 4: 480–485. https://doi.org/10.2105/AJPH.2017.304297.
National Advisory Commission on Civil Disorders. 2016. The Kerner Report. Princeton, N.J.: Princeton Univ. Press.
Rho, Hye Jin, Haley Brown, and Shawn Fremstad. 2020. A Basic Demographic Profile of Workers in Frontline Industries. Center for Economic and Policy Research, April 2020.
Rothstein, Richard. 2017. The Color of Law: A Forgotten History of How Our Government Segregated America. New York: Liveright.
Sass, Jennifer. 2013. “Air Pollution Linked to Deadly Lung Cancer.” Expert Blog (Natural Resources Defense Council), October 17, 2013.
Shierholz, Heidi. 2020. “Nearly One in Four Workers Has Applied for Unemployment Benefits.” Working Economics Blog (Economic Policy Institute), May 21, 2020.
Small Business Administration (SBA). 2020a. “Paycheck Protection Program” (web page). Accessed May 2020.
Small Business Administration (SBA). 2020b. “PPP Loans for 1099 Independent Contractors” (web page). Accessed May 2020.
Thompson, Derek. 2020. “Denmark’s Idea Could Help the World Avoid a Great Depression.” Atlantic, March 21, 2020.
U.S. Census Bureau. 2016a. “Statistics for All U.S. Firms by Industry, Gender, Ethnicity, and Race for the U.S., States, Metro Areas, Counties, and Places: 2012” [Table]. Data from the Survey of Business Owners (2012), published September 25, 2016. Accessed May 2020.
U.S. Census Bureau. 2016b. Survey of Business Owners (2012). September 2016.
U.S. Census Bureau. 2018. “Table S0201: 2018 American Community Survey 1-Year Estimates, Selected Population Profiles.” Accessed May 2020.
White, Andreas. 2020. Transatlantic Trends from the UK’s Coronavirus Job Retention Scheme and the Paycheck Protection Program in the US. Kinsley Napley, May 7, 2020.
Wilson, Valerie, and William M. Rodgers III. 2016. Black–White Wage Gaps Expand with Rising Wage Inequality. Economic Policy Institute, September 2016.
Zipperer, Ben, and Elise Gould. 2020. “Unemployment Filing Failures: New Survey Confirms That Millions of Jobless Were Unable to File an Unemployment Insurance Claim.” Working Economics Blog (Economic Policy Institute), April 28, 2020.