The Coronavirus Pandemic Has Intensified Systemic Economic Racism Against Black Americans

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The last day that Nicole Smith worked at her twelve-dollar-an-hour job as an after-school teacher in Smyrna, Georgia, was March 13th. A month later, her husband, Reggie, was furloughed from his job installing hardware and software for an I.T. company. For three months Reggie had no paycheck, but this week his firm asked him to return to work. Nicole doesn’t know if she’ll ever return to her job. With little savings, this African-American couple has struggled to stay current on their rent and avoid having their ten-year-old Dodge Charger repossessed. Smith spent hours on the phone getting Capital One to accept her car payment two weeks late, although she agonized over what it would do to her family’s credit score. “It was all unnaturally unnerving,” she told me.

Smith, who is fifty years old, said that she and her husband have not received the federal government’s promised twelve-hundred-dollar-per-person stimulus check, nor the five-hundred-dollar check for her sixteen-year-old daughter, Kayla. It took Smith two months to begin receiving unemployment benefits from the state—a mere a hundred and thirty-five dollars a week. Her husband received three hundred dollars a week in jobless benefits, less than half his typical pay. Reggie and Kayla both have asthma, making them vulnerable to COVID-19. In addition to worrying about their health, Smith was also shaken by the killing of Ahmaud Arbery, in southeast Georgia, in March—she joined a march for justice on his behalf.

What has kept the family above water is the six-hundred-dollar-a-week unemployment supplement passed this spring by Congress. Even with that, Smith said, “We’ve been playing catch-up on the most important bills.” For months, she voiced fears that she and her husband would fall permanently behind financially if Congress either failed to renew or slashed the unemployment supplement, which is set to expire tomorrow. Senate Republicans have proposed cutting the payment to two hundred dollars a week.

The coronavirus pandemic has highlighted America’s enduring racial disparities, which are fuelled by decades of unequal treatment, unequal opportunity, and structural barriers like job discrimination and poor schools. Blacks have been infected with COVID-19 at three times the rate of whites, and their death rate is twice that of whites. (The same is true for Hispanics.) The coronavirus is also having a hugely disparate impact on Black people’s finances and prospects. For myriad reasons, Black Americans will have a harder time rebounding economically from the pandemic, and the fact that they began this period far behind whites in average income, wealth, and home-ownership rates will only make it more difficult. On average, Black workers earn just seventy-three per cent of what white workers do, according to the Economic Policy Institute, a progressive think tank, which also found that Black college graduates earn 22.5 per cent less than white college graduates. Median household income for white households was seventy per cent higher than for Black households in 2018, $70,642 versus $41,692. As a result of these disparities, Black people will be evicted disproportionately from their homes, a process that is expected to accelerate following the July 24th expiration of a federal moratorium on evictions from buildings or homes with a government-backed mortgage. (The moratorium might be extended as part of the latest emergency-relief bill that Congress is debating.)

“There is a devaluation of Black people in virtually every domain in our society,” Darrick Hamilton, a professor of economics and the executive director of the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University, told me. “There is an economic return to one’s identity, and a Black identity has a lower return than a white identity.”

The higher COVID-19 death rate for Black people is often blamed on preëxisting health conditions, but that’s only part of the story. Blacks have asthma at a rate of 9.2 per cent, compared with eight per cent of whites; 16.8 per cent of Blacks have diabetes, compared with ten per cent of whites (Reggie Smith has diabetes); 40.3 per cent have hypertension compared with 27.8 per cent of whites. Moreover, Blacks are sixty per cent more likely not to have health insurance, making it harder for them to get treatment for COVID-19 and other illnesses: 12.3 per cent of Blacks are uninsured, compared with 7.5 per cent of whites.

“The issue of preëxisting conditions doesn’t just happen,” Hamilton said. “There’s a whole political economy that’s made Blacks more vulnerable to having preëxisting conditions.” He cited such factors as lack of medical coverage, poor living conditions, and environmental degradation. Another factor is that Black people disproportionately live in apartment complexes (where it is easier for the virus to spread), rather than single-family homes. According to a study by the Economic Policy Institute, twenty-nine per cent of Blacks live in buildings with five or more units, which is twice the rate for whites; fifty-four per cent of Blacks live in single-unit dwellings, compared with seventy-four per cent of whites.

 

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Additionally, a disproportionate percentage of Black people hold jobs that make them essential workers. Blacks represent 11.9 per cent of the total workforce, but they make up 14.2 per cent of the workforce at grocery, convenience, and drug stores; twenty-six per cent in public transit; 18.2 per cent in trucking, warehouse, and mail service; 17.5 per cent in health care; and 19.3 per cent in child care and social services. Essential workers often say that they are not adequately protected. In April, Maya Smith, an African-American cashier at a Walmart in New Orleans, told New Orleans Public Radio that her boss didn’t allow workers to wear masks, because some shoppers thought it meant the workers were infected, and Jennifer Suggs, an African-American Walmart cashier in South Carolina, said, “We’re not essential. We’re sacrificial. I will be replaced if I die from this. I don’t have a mask or gloves. The only thing I have is a stupid blue vest.” African-Americans also face a higher likelihood of being infected by the coronavirus, because a lower percentage of them can work from home—19.7 per cent of Blacks, compared with 29.9per cent of whites (and 16.2 per cent of Hispanics).

“Either you lose your job, or you stay on a job where you have much greater probability of being subjected to the disease,” William A. Darity, Jr., a professor of public policy at Duke University, told me. “If Black folks had a higher level of wealth, they would have had a greater opportunity to exit from these jobs in which they were in jeopardy.”

A new book, “From Here to Equality, Reparations for Black Americans in the Twenty-First Century,” which Darity co-authored with A. Kirsten Mullen, details the racial disparities in wealth and its causes. The authors write that while Black people make up thirteen per cent of the American population, they own just 2.5 per cent of the wealth. The median wealth of white households was $171,000 in 2016, ten times that of Black households. Darity and Mullen told me that the average net worth for white households is $933,000, but for Black households it is just $138,000. Black heads of households with a college degree, they point out, have two-thirds the median net worth of white heads of households who never finished high school.

The Pandemic Has Intensified Systemic Economic Racism Against Black Americans

 

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In their book, Darity and Mullen attribute the vast disparity in wealth to the legacy of slavery and to myriad racial injustices since abolition, starting with the federal government’s failure to make good on its promise to give freed slaves forty acres of land. Meanwhile, the U.S. enacted vast economic programs that aided whites, such as the Homestead Act of 1862, which gave a hundred and sixty acres to a million and a half families, the overwhelming majority of which were white. This provided assets that those families handed down to successive generations. Darity and Mullen argue that the failure to distribute forty acres to former slaves was a tremendous blow in holding back the accumulation of Black wealth; Lincoln approved the plan, and General William Tecumseh Sherman had announced it, but Lincoln’s successor, Andrew Johnson, overturned it. “That is the nest egg,” Mullen told me. “Had those Black folks been able to develop that land, maybe to leverage it to make other investments that they could have transferred intergenerationally, [it] quite likely could have altered the present moment. But they didn’t have a chance to do that.”

Darity and Mullen cite other factors that have sabotaged Black people’s ability to generate wealth in the century and a half since abolition, including Jim Crow laws; segregation; redlining that made it far harder for Black people to buy homes; the original versions of the Social Security and Fair Labor Standards Acts, which left out agricultural and domestic workers; and the violent suppression of Black economic success, from the lynching of Black businessmen to the Tulsa Massacre of 1921, which destroyed one of the nation’s most prosperous Black communities.

As a result of this historic disparity in wealth, white people, when facing coronavirus-induced layoffs, are less likely to fall behind on their rent, auto loans, or mortgages. “In the pandemic, if you’re someone who doesn’t have wealth or savings to fall back on, it doesn’t even have to be an unexpected expense, just paying your basic expenses will be especially challenging,” Valerie Wilson, the director of the Economic Policy Institute’s Program on Race, Ethnicity, and the Economy said. “Will I have money to get dental work done or have my car fixed? Will I be able to stay in my home? Will I be able to feed my kids? You have all these secondary losses that follow on the loss of a job.”


Various studies suggest that, as a result of the pandemic’s economic stresses and strains, Black people will be evicted disproportionately. A recent Urban Institute analysis of Census data found that forty-four per cent of Black renters and forty-eight per cent of Latino renters said they had no confidence or only slight confidence that they would be able to pay their rent next month, or that they were likely to pay late. Only twenty-three per cent of white renters reported feeling the same way. According to the Eviction Lab research group, more than fourteen hundred eviction cases were filed in June in Milwaukee, after a statewide eviction moratorium was lifted, with roughly two-thirds of them in predominantly Black neighborhoods. A far higher percentage of Blacks are renters, making them more vulnerable to eviction (and undercutting their ability to build equity and wealth). A different Urban Institute study found that the Black homeownership rate was 41.8 per cent in 2017, compared to 71.9 per cent rate for whites. That gap is the largest it has been in fifty years, and is even wider than it was when racial discrimination against Black homebuyers was still legal.

 

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Nicole Smith told me that she and her husband have “been apartment-dwellers for most of our lives. I know I’ve never been comfortable with that.” Her husband, Reggie, fought in Desert Storm, and she noted that many of the white soldiers he served alongside were able to buy homes when they returned to the United States—but Reggie couldn’t, due to a lack of wealth and a mediocre credit score.

One trend that has long troubled students of America’s labor market is that the Black jobless rate has, for decades, been roughly twice that of whites, whether the economy is weak or strong. This past February, before the pandemic hit with full force, the nation’s jobless rate was near its lowest point in fifty years, with the Black unemployment rate at 5.8 per cent and the white rate at 3.1 per cent. Disparities like these have fuelled the notion that that Blacks are, as a group, the “last hired and first fired.”

In March, when much of the country went into lockdown, setting off an extraordinary spike in layoffs, something unusual happened. Whites, Blacks, Hispanics, and Asian-Americans were laid off across the board at hotels, restaurants, airports, hair salons, and other places. The white unemployment rate soared to 14.2 per cent in April, while the Black rate jumped to 16.7 per cent, meaning that the Black unemployment fell to 1.2 times the rate for whites. (For Hispanics, the jobless rate soared to 18.9 per cent in April, up from 4.4 per cent in February.)

Hamilton said that the most recent monthly jobs report from the Bureau of Labor Statistics showed the ratio between Black and white unemployment regressing toward its unfortunate norm—whites are being rehired at a higher rate than Blacks. Although the layoffs hit all groups, Black households have suffered more, for several reasons. A higher percentage of Black households have just one earner: 50.1 per cent versus 39.9 per cent for white households. Black women are three times more likely to be single heads of households compared to whites—and the closure of schools in the spring made it especially hard for them to keep their jobs, and the likelihood that some schools won’t reopen in the fall means that many will struggle to return to work. “The initial job shock was compounded by the closed schools,” William Spriggs, an economics professor at Howard University, told me. “A lot of Black women come home without a job, and their two kids are sitting there, so there is no way to return to work because kids can’t go to school.”

Because of the economic downturn, many states and cities have slid into severe budget crises, and many governors and mayors are warning of drastic layoffs and cuts if the federal government doesn’t approve aid money. These layoffs could hit Black people hardest, because forty-eight per cent of Black female workers and twenty-one per cent of Black male workers are employed in education, health services, or public administration—with many of those jobs in state and local government. The pandemic recession has also disproportionately hurt Black-owned businesses. Over forty per cent of Black business owners said that they had stopped working in April, while seventeen per cent of white small-business owners said the same thing, according to an analysis of government data by Robert Fairlie, an economics professor at the University of California, Santa Cruz. Many Black-owned businesses are small, have a hard time moving their operations online, and are in hard-hit industries like restaurants, hair styling, and retail. Moreover, many Black business owners complained that they were squeezed out of the emergency federal loan program for small businesses (known as the Paycheck Protection Program), because so many of the loans were distributed by big commercial banks that deal predominantly with white-owned businesses.



Unless federal and state governments take bold steps to increase the economic prospects of Black Americans, they, by and large, will once again be left behind as the nation emerges from the pandemic. During the 2016 campaign, Donald Trump appealed for Black support, asking, “What the hell do you have to lose?”—a reference to the failure of past Administrations to significantly narrow economic disparities between whites and Blacks. But since taking office, Trump’s Administration has repeatedly sought to kill the Affordable Care Act, a move that would deny health coverage to many Black people. It has made it harder for people to qualify for food stamps, a move that has hurt many families of color. It has proposed weakening rules that would curb banks that issue housing mortgages from discriminating against minorities—a change that even many banks oppose. Trump’s Administration has done nothing to raise the minimum wage, which would disproportionately help workers of color, and has helped increase the racial wealth gap by significantly cutting taxes on the richest Americans, who are predominantly white.

Joe Biden is promising a series of steps that he asserts will lift Black Americans economically. In a speech on Tuesday, in Wilmington, Delaware, he vowed to address structural economic racism as part of his plan to rebuild the U.S. economy after the pandemic. “The Build Back Better plan will deal with systemic racism and advance racial equity in our economy,” Biden said. “A bold, practical plan that’s going to help build a stronger and a more just and sustainable economy for everybody. Everybody, this time included.” He called for a fifteen-thousand-dollar tax credit for first-time homebuyers, to boost home-ownership rates for minorities. He also proposed a Small Business Opportunity Fund, to channel more financing to “Black and brown small businesses.”


Biden has also praised the recommendations of a joint task force that he formed with Bernie Sanders, some of which were inspired by proposals from leading Black economists. Biden has endorsed a fifteen-dollar federal minimum wage and, in a move to make college more accessible and to help students avoid amassing huge college debt, he has proposed making public universities tuition-free for all families making less than a hundred and twenty-five thousand dollars a year.

Eighty-five per cent of Black college graduates have college debt, compared with sixty-nine per cent of whites. Biden has also promised to make community college free and double the maximum Pell grant. He has endorsed an infrastructure plan that would create hundreds of thousands of middle-class jobs to build highways, bridges, railroads, and clean-energy projects—all with an eye to promoting racial equity and making investments in “historically marginalized communities.”

 

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Among its ideas for building Black wealth, the Biden-Sanders task force highlighted baby bonds, which Darrick Hamilton, a member of the group, has championed. These bonds would be individual trusts that the federal government sets up after a child’s birth and manages until the child becomes a young adult. An amount of “seed capital” would be added each year, depending on a family’s wealth—perhaps one or two thousand dollars a year for a poor child or just twenty-five dollars for a child from a very wealthy family. For a child from one of the poorest families, Hamilton said, the amount invested might reach sixty-thousand dollars by the time the child reaches adulthood, with the average account receiving twenty-five thousand dollars. This money could help pay for college, start a business, or make a down payment on a house.

Biden has taken only a half step toward a federal jobs guarantee, which is a proposal that both Hamilton and Darity haved backed. They argue that one of the most powerful levers to lift pay for those at the bottom is to minimize the jobless rate, and there is no more surefire way to do that than providing a job to everyone who wants one.

Eleanore Fernandez, who lives in Milpitas, California, just north of San Jose, said that she wished there were some type of federal jobs program for herself and her husband. On March 20th, she received a permanent layoff notice from her job as an executive assistant at a Silicon Valley catering company. Her husband, who is Black, has seen his work dry up; he is an independent contractor who does audiovisual work for conferences hosted by tech companies. The couple have a twelve-year-old daughter.

It took two months for Fernandez’s unemployment insurance to come through, and during that time, her family struggled—their rent is two thousand eight hundred dollars a month. “We ate a lot of ramen and hot dogs and spaghetti,” she told me. When her unemployment benefits and six-hundred-dollar weekly supplement finally arrived, it made a huge difference—she has even been able to save some money—but she worries that Congress and President Trump will not renew the payments. “It’s important. It helps me pay the regular bills,” Fernandez told me. “It is expensive in the Bay Area, and with me and my husband being both out of work . . . it is what keeps us up at night.” She said that many people in her three-hundred-unit apartment complex have moved out in recent weeks because they couldn’t pay rent.

Fernandez, who is forty-eight, said that she prays for her company to hire her back—“I’m a little bit hopeful, but there’s no guarantee.” She has interviewed for numerous other jobs, without success, but she also worries that if she does find a job, she won’t be home to supervise her daughter when schools begin remote learning in the fall. As for her husband (who asked that his name not be used), the outlook in his field is bleak, because the pandemic has put an end to in-person conferences, at least for the near future. He also plays bass guitar in jazz bands, but the groups are not expecting to book many gigs, due to public-health restrictions. “It has always been a bit of a struggle being a family of color and multiracial,” Fernandez said. “We feel we’re conditioned to always watch our backs.” She said that her husband often asks her to go to the post office for him because he says that she, not being Black, will receive better service.

Neither she nor her husband, who is the youngest of seven children, has inherited any wealth to help cushion them during the pandemic. Both of their fathers had careers in the Navy. Her mother helped run a child-care center at the Presidio; his mother worked as a nurse. “It’s hard to build wealth when generations before us weren’t given an opportunity,” Fernandez said. “We are basically on our own. I just talked to my landlord about paying in installments. I think everybody is going through the same thing.”

The Pandemic Has Intensified Systemic Economic Racism Against Black Americans