African Americans bear the brunt of Covid-19's economic impact

Pandemic spotlights racial disparities, with black workers expected to feature disproportionately in the 26m recent unemployment claims
Gregory Stark, 54, an employee at a laundromat poses for a picture in Miami on 17 April 2020. Workers of color, particularly black Americans, have long been overrepresented in the lowest-paying service and domestic occupations. Photograph: Chandan Khanna/AFP via Getty Images

Lauren Aratani and Dominic Rushe-Tue 28 Apr 2020 

Just two months ago in the Cabinet Room of the White House, sitting at a table surrounded by a handful of his black supporters, Donald Trump once again praised his job creation record. “Black people right now are having the best, statistically, the best numbers that you’ve ever had, and it’s really an honor,” he said. “Nobody has done more for black people than I have. Nobody has done more.”

That was 27 February and Trump was also still claiming he had done an “incredible job” with the looming coronavirus pandemic. Now the virus has led 26 million Americans to file for unemployment. While the US Bureau of Labor Statistics will not release unemployment figures broken down by race until the beginning of next month, economists are certain that black Americans are suffering the brunt of Covid-19’s economic impact and will probably suffer the most dramatic consequences of the looming recession.

Even before Covid-19 hit the US in full force and as the overall unemployment rate hit record lows, black Americans had an unemployment rate that was almost twice the national rate.

In February 2020 when the overall unemployment rate was 3.5%, a 50-year-low, the black unemployment rate was 5.8%. The white unemployment rate was 3.1%.

“The usual relationship that we see between the national unemployment rate and the black unemployment rate is typically really close to a two to one,” said Valerie Wilson, director of the Economic Policy Institute’s program on race, ethnicity and the economy.

“Whatever is being projected for the national unemployment rate, in most instances, we expect to see something close to twice that for black Americans.”

This was true for unemployment figures during the Great Recession. The overall unemployment rate peaked at 9.6% in 2010. For black Americans, it was 16%.

William Rodgers, former chief economist at the US Department of Labor, has estimated that the real unemployment rate for African Americans may have reached 19% in March.

“The reason why African Americans bear the brunt of downturns more is that when firing decisions start to occur the least educated and those with the least experience tend to be let go first. There is also continued discrimination in the workplace,” Rodgers said.

Economists who focus on race have long said that this “last hired, first fired” phenomenon dramatically affects black Americans more than any other group in the US due to the country’s history of racism and segregation of black Americans in the work sector.

Workers of color, particularly black Americans, have long been overrepresented in the lowest-paying service and domestic occupations, such as taxi drivers and restaurant servers. Working in these fields leads to lower wages – black Americans have the lowest median wage of any racial group in the US – and the jobs are often seen as the most expendable during an economic downturn.

Those who got to keep their jobs during the last recession saw little relief even after the recession’s recovery period. Even with a low unemployment rate, wage growth for low-wage workers, especially for black workers, has been slow. Black Americans have seen the slowest wage growth compared with other groups of Americans, reaching a growth rate that was four times slower at certain wage distribution levels, according to a 2018 Economic Policy Institute report.

“Even though overall on aggregate we were in a better position, many of the underlying weaknesses of our economy were still there – inequality both on class and race,” Wilson said.

 A policeman directs a citizen where to pick up an unemployment form in Miami, Florida, earlier this month. Photograph: Michele Eve Sandberg/Rex/Shutterstock

Low wages have a ripple effect on a family’s ability to save money and build wealth.

For Yolanda Murray of Detroit, Michigan, not having savings meant weeks of panic trying to figure out how she was going to pay the bills that came on 1 April after she was furloughed from her job at a hotel.

“You got the rent, the bills, you got the car insurance, you got groceries and disinfectant supplies …

It’s like how am I going to maintain all of this?” Murray said. Weeks after she filed her application for unemployment insurance, payments started coming in and Murray was able to pay her bills again.

But Murray has long-term concerns about what an upcoming recession could mean for her. Just a year and a half ago, in October 2018, Murray and her unionized co-workers spent 28 days striking for higher wages and better healthcare. At the time, workers at the hotel had not had wage rises since before the last recession, and healthcare costs were so expensive that Murray could only afford to cover herself, leaving her two children out of her plan.

The workers reached a deal with the hotel, and she was able to get her children under her healthcare plan, but Murray is worried about what an economic downturn would mean for her and her co-workers. “I just don’t want to see us go backwards right now,” she said.

Trump’s repeated claims that he has been the best president for African Americans was repeatedly pegged to falling unemployment numbers. But those numbers only tell a partial story, as work by Rodgers and others has shown.

Black families are especially vulnerable to economic downturns because they lack the savings that can act as a buffer against unexpected layoffs or lost wages. And during the last recovery they lost ground against their white peers.

The median net worth of black families is $17,600, compared with $171,000 for white families. A white family is likely to have $10 for every $1 a black family has. The percentage of black families that have a net worth at or below zero dollars is 10 points higher than the percentage of white families in the same financial situation – 19% compared with 9%, respectively. And the black homeownership rate is the lowest of any racial group in the US and has consistently been about 30% lower than the white homeownership rate over the years, even as the economy was getting stronger.
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“Wealth allows you to respond to that unexpected health emergency, that broken hole in the tire you have to replace. It also allows you to buy a home, put your kids through school,” said Danyelle Solomon, vice-president of the race and ethnicity program at the Center for American Progress.

Having less wealth also has some dire health consequences. Experts agree that being poor has costly effects on a person’s health: for adults living in extreme poverty, being poor can cost up to 15 years of life expectancy.

It is no surprise, then, that black Americans – who are less likely to be insured and more likely to have existing health conditions than their white counterparts – have seen higher death rates due to Covid-19 compared with any other group in the US. Black Americans made up 25% of deaths from Covid-19 in the US though they make up a little under 13% of the US population.

“National emergencies, pandemics, epidemics, what they do is they spotlight inequality,” Solomon said. “What we see in Covid-19 is no different. It’s highlighting racial disparities at every single level that have been with our society for a very long time.”