The coronavirus pandemic has exacerbated existing racial and gender inequality, widening financial and wealth gaps further as the virus creates disproportionate aftershocks across the economy. Several new reports and surveys highlighted those disparities to show the possible extent of longer-term damage resulting from the crisis—and ways to avoid further damage.
The pandemic and its aftershocks have created widespread economic pain, but certain pockets of the population that were vulnerable are taking a harder hit. Earlier in August, Democrats introduced a bill in Congress that would require the Fed to tackle economic inequality. That comes amid growing concerns the Fed’s stimulus exacerbated inequality, especially coming out of the global financial crisis.
“Black families and workers face not just pre-existing health conditions but also pre-existing economic disparities that made these families more vulnerable to this shock,” said Bradley Hardy, an associate professor in the School of Public Affairs at American University and co-author of a new paper for Brooking’s Hamilton Project, in an online briefing Thursday.
Those economic pre-existing conditions are multidimensional, built up over decades. Black workers face higher income volatility, own fewer homes, and have less wealth, including emergency savings and homeownership, to offer a buffer than the average worker. Even when factoring in skill and education levels, the gap persists, with Black Americans seeing lower returns to postsecondary education versus other groups, according to the paper.
The pandemic has also put the health disparities into the spotlight as Black people have been hit harder by the virus. Covid-19 is the third-leading cause of death among African-Americans this year, with 33,000 Black Americans having died so far from the virus, said Trevon Logan, an Ohio State University economics professor and co-author of the paper, in the briefing.
That creates its own aftershocks. Black-owned businesses have been almost twice as likely to close during the pandemic, according to a new brief co-written by New York Fed analysts Claire Kramer Mills and Jessica Battisto. The report found Black-owned companies were more likely to be located in Covid-19 hot spots, whereas White-owned firms are less likely to be in the most heavily affected areas. As a result, a higher concentration of Black-owned businesses were more likely to face greater fallout from forced closures, fewer customers, and social distancing measures, highlighting the intersection of health and economic inequalities.
Looking at higher-frequency data like the Census Bureau’s weekly Pulse survey shows further gaps in how American households are faring: 57% of Black households reported income loss, compared with 45% of White respondents. And 44% of Black households reported already deferring rent or lack of confidence they can make rent—almost double the 24% of White respondents that said the same.
The concern is these gaps will deepen financial scars from the crisis, especially those that were already economically vulnerable. Take the challenge parents are facing, with child care in short supply and many schools staying virtual. That pressure is felt especially intense for single-parent households—particularly those that can’t work from home.