Over the last few months our world has been rocked by COVID-19. Almost no economy or country is left unscathed. The health and economic toll are even greater here in the US with over 100,000 deaths, cases topping 2 million at the time of writing, and over 20 million jobs lost. Like with previous health and economic crises, the pain is borne more heavily by our poorest citizens, and in the US that burden is acutely on our black and Hispanic communities.
On June 5th, the Bureau of Labor Statistics shocked economists with a surprise May jobs report that showed a gain of 2.5 million jobs. Many were predicting the job losses to sink even deeper past the 14.4% unemployment rate reported in April, so for some a 13.3% unemployment rate was reason to celebrate. However, this number once again doesn't paint the full picture, because this unemployment is not distributed equally among all people.
In keeping with trends prior to the pandemic, the unemployment rate for black and Hispanic workers remained higher than their white counterparts. According to the Bureau of Labor Statistics black unemployment fell to an average of 6.1% in 2019, dipping as low as 5.4% in August 2019. According to a recent article by the Wall Street Journal, the unemployment rate gap between white and black workers sat at 2% in August 2019, bringing black workers closer than ever before to their white counterparts. Even wage growth, which has remained stubbornly low, especially for African-Americans, started to tick up, and the African-American poverty rate fell below 30% for the first time on record dating back to the mid-70s.
However, as Covid hit in early 2020 we saw these gains immediately start to evaporate. As the job losses started to mount, the distribution across races remained fairly even, but as the recovery started these racial disparities resurfaced. Despite the overall unemployment averaging 13.3%, white unemployment fell to 12.4%, black and Hispanic unemployment remained well above at 16.8% and 17.6% respectively.
Some of this disparity is due to the makeup of the workforce, with white private-sector jobs returning more quickly, while municipalities and school systems– large employers of African-Americans– cut thousands of jobs due to decreased tax revenue. Making the problem more acute for black families is the large disparity in financial cushion and overall wealth. Federal reserve data from 2016 shows that the median net worth for African American families was $17,600, compared to $171,000 for white families. In a recent study of 1.8 million JP Morgan Chase banking customers, researchers found for every $1.00 of liquid assets held by white families, black families held just 32 cents and Hispanic families just 47 cents.
The tangible result of this disparity was most notably visible in how families cut back on spending of non-durable goods, such as food, cleaning products, or medication. The cuts across all ethnic groups were stark, but while white families cut their spending by 28%, black and Hispanic families had to pull back by 45%.
As we move forward from not only a post-Covid world, but a world more aware and in tune with the economic disparities faced by minority families, it will take both policy change and private sector involvement to make the recovery more equitable.
Sources and Additional Resources
Wall Street Journal - Coronavirus Obliterated Best African-American Job Market on RecordBureau of Labor Statistics - Race and Hispanic or Latino EthnicityFeature Image by Joshua Lott/Reuters