Same Storm but Different Boats
Everyone affected by the coronavirus or its effects on the economy is at a different stage of grief as we wade through a new modern experience of the human existence. People have not necessarily gone through all of the stages, or had an experience within each one, but our shared experience is that grief is an internal process brought on by external stimuli — a pandemic, in this case. What is clear though is that those external elements — the experiences and outcomes of this “coroneconomy” — are affecting us in disparate ways. We’re not just processing it differently, it is processing us differently.
Those with platforms say “we’re all in this together,” or words to that effect. I’ve shared before that we’re awash in the same storm, but we are in vastly different boats. The people who make up the economy are in pain, and that pain is not evenly distributed. For some, the coroneconomy recession has ended. Those in yachts can see the lightning on the horizon and absorb what swells lap the freeboard — with cash on hand perhaps and a recovering investment portfolio. Closer to the gales, the ketches and yawls may be pitched about, but those in them are able to find new work if they suffered a job loss or can rearrange payments, and generally can see sunlight. But closer to the eye, millions upon millions of Americans are undulating between trough and crest, their lashed-together makeshift skiffs taking on water, and are the ones most ill-equipped to weather the bow waves. We knew these truths in the early days of the pandemic as they related to the strata in the economy. Now, they are presenting themselves as lagging indicators in the ways non-whites are affected by medical outcomes and economic survival.
The good news of late? US jobless claims for the week ending August 8th fell below 1M for the first time in 21 weeks — “only” 963,000 filed first-time jobless claims. The bad? The US reported the highest number of Covid-19 deaths in one day since May.
Economically and medically, Black and Latino populations are suffering more in this coroneconomy than their white neighbors. The New York Times filed a Freedom of Information Act (FOIA) suit against the Centers for Disease Control (CDC) to get all federal data on the coronavirus and its effects on Black and Latino populations. The result of its suit was federal data that showed Black Americans are three times more likely to contract Covid-19 and twice as likely to die as their white neighbors. Black Americans have been disproportionately affected regardless of geographic category — urban, suburban, rural, and in every age group. There was early data that Black America was ground zero for Covid-19, and the CDC’s data release underscored and expanded upon it. Add in that the hardest-hit areas have elite hospitals chartered as charities that focus on specialty treatments to the well-to-do at the expense of the poor, and the obstacles mount against minority populations’ ability to receive the best care available.
A recent New York Federal Reserve report confirms Black businesses have been hit particularly hard by the pandemic. In the coronavirus economy and specifically within the Payroll Protection Program of the CARES Act, the difficulty for minority-owned businesses began with banks — specifically their relationships with them. Stories abound of Black business owners who reached out to multiple banks but were refused since banks sought to leverage their Small Business Association relationships for their existing clients first. This infers that Black businesses have fewer, and arguably insufficient, financial relationships with banks.
The New York Federal Reserve’s report shows that the number of Black business owners fell 41% between February and April. Latino business owners fell by 32%; Asian business owners fell by 26%. White business owners contracted by 17% — less than half the percentage decline of Black business owners. The report shows disparities are due to access to capital, where Black businesses are more likely to utilize friends, family, retirement funds, and predatory lenders rather than banks for funding. Black owned businesses are concentrated in areas where the virus has hit hardest. The statistic that stands out the most here? 40% of revenue from Black-owned businesses nationwide are concentrated in only 30 counties, and 66% of those counties are those that have experienced the highest level of Covid-19 cases.
Within one’s personal economy, non-white populations are hurting more than their white counterparts due to the pandemic. I’ve shared in this space the disaggregation of unemployment data that shows how Black and Latino workers are unemployed at higher rates than whites. But we see that suffering also in personal economies: One need look no further than home ownership and the flexibility provided to homeowners for deferments.
Years of rising home values have fueled record levels of equity. Black Night economist Andy Waldon states this trend is likely to continue, as low interest rates has people shopping for homes and a reduced nationwide home inventory — which existed before the pandemic — has driven prices northward. Enter the pandemic and a resulting reduction in the velocity of money, and banks are making it difficult to draw on that equity with either cash-out refinances or home equity lines of credit (HELOCs). All that equity has made it possible for Congress to allow those with federally backed mortgages to defer payments up to a year. If they must, households can skip the mortgage payment to pay for other necessities. For the 35% of households that rent, they don’t have that skip-a-payment luxury. More renters will lose their housing as most moratoriums on evictions have lifted around the country and the additional unemployment insurance that so many used for housing has ceased. This furthers the story of haves-vs-have-nots, where the system is set up to support homeowners, but doesn’t protect renters. Bill Emmons, the lead economist with the St. Louis Federal Reserve’s Center for Household Financial Stability, says homeowners have more stability. They also tend to be white. Black and Latino people are much less likely to own their homes and their houses tend to appreciate more slowly.
It is not a stretch to say that BIPOC health and wealth are intertwined, far more than whites. One way to change the outlook where Black businesses have been hit hardest is to provide direct assistance — something that requires federal action and regulation, such as a targeted federal loan program. Yet when those who write laws and control policy do not see the economy beyond a stock index, they are less inclined to take the type of action that will provide the direct financial effects necessary for true, local economic rescue. I mean, why take action when the July retail report was good? And in a country where employment still provides the most surefooted access to health care, economic assistance has the potential to improve medical access and treatment outcomes.
These are simply the economic and medical concerns that are tactically obvious in the first five months of this pandemic. Unexplored here and deserving of far more space than a short essay are the systemic, generational disparities that injure non-whites, such as access to education, food, services, and funding that enable and contribute to individual improvement. Fred Krupp, president of the Environmental Defense Fund, shared “the pandemic has exposed for the American public the inequities that have existed, including access to health care.” The storm has been here all along. To what extent will the yachts return to the churning waters? Do they feel compelled to do so? Given the recent “good news” of reduced first time unemployment insurance applications and an improving retail sales outlook, as well as the fact that Congress left town without providing a new aid package for people and doesn’t return to Washington, D.C. until early September, those in the yachts probably don’t feel compelled to help much at all.
