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Lower shares of households with multiple earners

In the pre-pandemic economy, black workers were less likely to have multiple earners in their household (shown in Figure I). Half of all black households had only one earner, while nearly half of all white households had at least two earners. This racial disparity in the number of household earners is not just a function of how many working-age adults live in the household, or family structure, but is another measurable consequence of the persistent 2-to-1 ratio between the black and white unemployment rates. The inequities black workers experience in the labor market have larger consequences for the economic vulnerability of black households because it is far more likely that when one household member loses their job, it translates into a complete loss of income for that household. Black households are less likely to have a second earner to fall back on to make ends meet.

Figure I

Black households are less likely to include multiple earners than white households: Shares of nonelderly households with one earner vs. two or more earners, by race, 2018

Earners in household Black White
One earner 50.1% 39.9%
Two or more earners 32.2% 48.4%
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Notes:?White refers to non-Hispanic whites, black refers to blacks alone.?Black households are households in which the head of household is black. White households are households in which the head of household is white. Nonelderly households are those in which the heads of household are ages 18–64.

Source: Authors’ analysis of Current Population Survey Annual Social and Economic Supplement microdata, 2018.

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Higher shares of households headed by single parents

Single working parents, a subset of one-earner households, face the added burden of needing to balance the competing demands of work, online distance learning, and child care responsibilities. Black women, in particular, as shown in Figure J, find themselves at the nexus of these overlapping responsibilities since they are 3.6 times as likely as white women to be single heads of households with children under age 18 (14.4% of black households compared with 4.0% of white households).

Figure J

Black women are more likely to be single heads of households and single parents than white women: Shares of Black and white households by selected family type, 2018

Black White
Married couple family 27.1% 51.2%
Married couple family with minor children 10.6% 17.4%
Single female householder family 26.4% 8.6%
Single female householder family with minor children 14.4% 4.0%
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Note: White refers to non-Hispanic whites, Black refers to Blacks alone. Black households are households in which the head of household is Black. White households are households in which the head of household is white.

Source: U.S. Census Bureau, 2018 American Community Survey 1-Year Estimates, Table S0201.

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Less cash reserves

On top of lower wages and incomes and higher poverty rates, black families have significantly less access to liquid assets than white families. It’s been long established that black families face a large and persistent wealth gap. Darity and others have shown that no matter how it’s measured, the racial wealth gap is large and persistent (Darity et al. 2018). To weather a financial loss, families often must dip into their liquid assets to pay for their living expenses. If they lose their job or experience a serious health shock, their only hope of making ends meet and continuing to pay their rent or mortgage and put food on the table is to rely on their savings. Wealth is often tied up in housing assets, particularly for black families, and therefore is inaccessible when dealing with sudden and large losses in income.

Figure K displays one component of wealth, the total value of all transaction accounts for black and white families. Transaction accounts include checking or savings accounts, cash, prepaid cards, and directly held stocks, bonds, and mutual funds. These are assets that can quickly be used to purchase goods and services, unlike less liquid sources of wealth like homeownership or assets in 401(k)s. Overall, white families hold, on average, more than five times as much liquid assets as black families do, $49,529 versus $8,762. This makes white families far more capable of weathering the storm of COVID-19, whether it be job loss or another financial hit.

The attainment of higher education does not bridge this divide. This gap remains large when we compare white and black families whose heads of household have the same level of education. In fact, the absolute gap in liquid assets between black and white families is far larger among those with a college degree or more versus those with less than a college degree. White families headed by a college-degree holder have nearly five times the access to money in transaction accounts as similarly degreed black families. The gap persists whether the black family owns a home or not. The gaps in liquid assets differ by what sector the family head works in, but no matter how the data are cut, white families have far more access to liquid wealth.

Figure K

Black families have significantly less cash reserves to draw upon than white families: Total value of all transaction accounts, for black and white families, by education, homeownership, and employment sector (mean values, 2016 dollars)

Black White
All $8,762 $49,529
Less than college $5,289 $20,289
College or more $20,893 $96,930
Homeowner $15,129 $63,543
Non-homeowner $3,742 $13,596
Industry classifications 1 $17,558 $37,768
Industry classifications 2 $9,344 $54,633
Industry classifications 3 $5,830 $47,529
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Notes: White refers to non-Hispanic whites, black refers to blacks alone.?Transaction accounts include checking or savings accounts, cash, prepaid cards, and directly held stocks, bonds, and mutual funds. Industry classifications 1 include mining, construction, and manufacturing. Industry classifications 2 include transportation, communications, utilities and sanitary services, wholesale trade, finance, insurance, and real estate.?Industry classifications 3 include agriculture, retail trade, services, and public administration. Race is the race of the survey respondent; industry classifications are for head of household. Education is the education level of the head of household.

Source:?EPI analysis of Federal Reserve?2016 Survey of Consumer Finances?combined extract data accessed from the UC Berkeley?Survey Documentation and Analysis website. The 2016 survey is the most recent survey available.

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It is not surprising then that research by Ganong et al. (2020) finds that income volatility has a much greater impact on the spending of black households than white households. They report that these differences in ability to smooth consumption leads to a 50% reduction in black families’ ability to spend on essential goods and services as compared with white families when they are faced with similar income losses.

Underlying health factors put black workers and their families at greater risk for contracting COVID-19

Black workers also face greater underlying pre-pandemic health insecurities that make them more susceptible to the coronavirus. According to one demographic assessment of vulnerability, an estimated 30% of the country’s overall population live in the counties at greatest risk of health and economic disruption from COVID-19, while a much higher share—43%—of black Americans (17.6 million) live in those same counties (Fitzhugh et al. 2020). Below we explore some of the factors contributing to the greater risk of adverse health outcomes related to COVID, including preexisting health conditions, lack of health insurance, housing conditions, and population density.

Preexisting health conditions compound the risks faced by black workers

Preexisting health conditions—such as diabetes, hypertension, asthma, and diabetes—are associated with greater risk of death from the coronavirus. As shown in Figure L, African Americans experience all of these illnesses at higher rates than whites. The greatest racial disparities exist in the prevalence of diabetes (1.7 times as likely among African Americans as among whites) and hypertension (1.4 times as likely).

Air pollution has long been known to increase risk of heart and respiratory disease, heart attacks, asthma attacks, bronchitis, and lung cancer (Sass 2013). Therefore, environmental racism—the disproportionate impact of environmental hazards on health outcomes among people of color—is a contributing factor to these racial health disparities. According to a 2018 report by a group of scientists at the EPA National Center for Environmental Assessment, published in the American Journal of Public Health, people of color are disproportionately affected by air pollution due to their proximity to particulate-matter-emitting facilities (Mikati et al. 2018). African Americans suffer the most, with exposure 54% above average.

Figure L

African Americans have higher rates of chronic illnesses associated with greater vulnerability to COVID-19: Age-adjusted prevalence of asthma, diabetes, hypertension, and obesity among black and white adults

Black White
Asthma 9.2% 8.0%
Diabetes 16.8% 10.0%
Hypertension 40.3% 27.8%
Obesity 49.6% 42.2%
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Notes: White refers to non-Hispanic whites, black refers to blacks alone. Age-adjusted prevalence of asthma, diabetes, and hypertension among adults ages 18 and over. Age-adjusted prevalence of obesity among adults ages 20 and over.

Sources:?National Center for Health Statistics, National Health Interview Survey 2018; National Center for Health Statistics, National Health and Nutrition Examination Survey, 2013–2016, 2015–2016, and 2017–2018.

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Lack of health insurance also negatively affects health outcomes among black families

Early diagnosis and treatment are essential to minimizing the severity of chronic illnesses, and regular health care is important for promoting better overall health. The lack of health insurance often results in a choice to delay receiving health care until one’s condition is critical. Figure M shows that black workers are 60% more likely to be uninsured than white workers. This is likely an additional contributing factor to the disparity in chronic illnesses described above, but it also might result in uninsured workers waiting longer to seek care for suspected coronavirus symptoms.

Figure M

Black workers are 60% more likely to be uninsured than white workers: Shares of workers without health insurance, by race, 2018

Black White
Employed and without health insurance 12.3% 7.5%
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Note:?White refers to non-Hispanic whites, black refers to blacks alone.

Source: Authors’ analysis of 2018 American Community Survey microdata.

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Black workers and their families face greater risk of exposure to the coronavirus because they are more likely to live in densely populated housing

The health and economic risks associated with COVID-19 are not limited to individual workers, but also affect their families and communities. The high rate of contagion associated with the coronavirus has made social distancing critical to slowing the spread of infection. However, in smaller or more densely populated home environments, it can be more difficult to effectively isolate vulnerable family members from those who have been infected or who face greater risk of exposure to the virus because of their work conditions. For example, those who live in multi-unit dwellings, such as apartment or condo buildings, tend to reside in more densely populated areas where more people share highly trafficked common spaces than those who live in single-unit detached dwellings. As shown in Figure N, 54.5% of African American households live in single-unit structures, compared with 74.2% of white households. On the other hand, 29.2% of African American households live in structures that include five or more units—more than double the rate of white households.

Figure N

Black households are more than twice as likely to live in densely populated housing structures as white households: Shares of black and white households by type of housing structure

Units in structure Black White
1 unit, detached or attached 54.5% 74.2%
2 to 4 units 12.6% 5.9%
5 or more units 29.2% 14.0%
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Note: White refers to non-Hispanic whites, black refers to blacks alone. Black households are households in which the head of household is black. White households are households in which the head of household is white.?Totals may not sum to 100%. Structures categorized as mobile home, boat, RV, van, etc. are omitted.

Source: U.S. Census Bureau, 2018 American Community Survey 1-Year Estimates, Table S0201.

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Black workers are more likely to live in multigenerational households with older family members who are at high risk of contracting the virus

African Americans are also more likely to live in multigenerational households where there may be older family members who are considered high risk. As shown in Figure O, black workers are twice as likely as white workers to live in households with three or more generations, such as a grandparent living with children and grandchildren. While older people have been encouraged to isolate themselves as a preventative measure, this presents a challenge in homes where other members of the household must work outside of the home.

Figure O

Black workers are twice as likely to live in households with three or more generations than white workers: Shares of workers by number of generations in their household, 2018

Black White
One generation 37.8% 44.7%
Two generations 53.3% 50.9%
Three or more generations 8.9% 4.4%
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Note: White refers to non-Hispanic whites, black refers to blacks alone.

Source: Authors’ analysis of American Community Survey 2018 microdata.

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Policy divides: The fallacy of race-neutral policy is further exposed by COVID-19

The once-in-a-generation challenges presented by the coronavirus have required leaders in government and private industry to respond quickly in order to minimize the threat to public health as well as the economic harm. Consistent with the scale of the crisis, many of the actions taken have been widespread in terms of the number of people helped, and the magnitude of the interventions has been unprecedented. Still, even such a broad-reaching response can yield uneven results because of differential access to the resources needed to equitably implement the response.

The digital divide creates disadvantages for working and learning remotely

Decisions to close schools and most businesses have meant that work and learning are taking place at home and online, requiring access to computers and digital connectivity. While the majority of households in the United States have a computer and internet access, racial disparities exist. Figure P reveals that 5% fewer black households than white households have a computer in the home and 10% fewer have a broadband internet subscription. This racial disparity in computer and internet access is often referred to as the digital divide.

Figure P

Black households are substantially less likely to have a computer or internet access at home than white households: Shares of black and white households with a computer and broadband internet access, 2018

Black White
Households with a computer 87.9% 92.2%
Households with a broadband internet subscription 77.9% 86.5%
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Note: White refers to non-Hispanic whites, black refers to blacks alone. Black households are households in which the head of household is black. White households are households in which the head of household is white.

Source: U.S. Census Bureau, 2018 American Community Survey 1-Year Estimates, Table S0201.

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The unbanked face delays in receiving CARES Act cash assistance

One of the first critical interventions undertaken by Congress in the wake of the pandemic was the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. One of the provisions of this act includes a one-time payment of $1,200 to individuals with adjusted gross income below $75,000, and $2,400 to married couples filing taxes jointly who earn under $150,000. Families with children are also eligible to receive an additional $500 per qualifying child. Considering that the median black household income is well below those thresholds (Figure H), they are more likely to qualify; however, racial differences in access to bank accounts have presented challenges for disbursing the money to unbanked households quickly via direct deposit. According to a 2018 report from the FDIC, 16.9% of black households were unbanked in 2017, meaning no one in the household had a checking or savings account, compared with just 3.0% of white households (Apaam et al. 2018).

Black-owned businesses are more concentrated in vulnerable industries, but face challenges in applying for Paycheck Protection Program loans

Providing support to small businesses has been a top priority of legislation designed to lessen the harmful economic effects of the pandemic. While less than 10% (9.4%) of all U.S. business owners are African American, black-owned businesses are more likely to be in vulnerable industries. According to one estimate, 40% of the revenues of black-owned businesses are earned in the five most vulnerable sectors—including leisure, hospitality, and retail—compared with 25% of the revenues of all U.S. businesses (Fitzhugh et al. 2020).

In this analysis, we use the April 2020 decline in payroll employment by industry as a measure of which businesses have been most affected by reduced demand and are therefore more vulnerable to business failure due to the pandemic. According to the Bureau of Labor Statistics, the industries with the largest total job losses in April were in accommodation and food services, retail, and health care and social assistance. As shown in Figure Q, 27.6% of black-owned businesses are in those three sectors, compared with 19.7% of white-owned businesses. The large number of job losses in these industries is due in part to the fact that they employ many more people than other industries. Another way of measuring the impact of losses is to consider job losses as a share of March (the previous month’s) payroll employment. Based on this measure, the largest percentage losses in payroll employment were in arts, entertainment and recreation; accommodation and food services; and other services. These three industries account for almost a third of black-owned businesses (32.3%), but just 18.8% of white-owned businesses.

Figure Q

Black-owned businesses are a small share of overall business, but are most likely to be in industries impacted by COVID-19 shutdowns: Shares of firm ownership by industry

Industry distribution of employer firms Black-owned White-owned?
All firms 9.4% 78.0%
Other services (except public admin.) 25.1% 11.1%
Health care and social assistance 19.1% 7.7%
Retail trade 6.2% 9.4%
Arts, entertainment, and recreation? 4.8% 5.1%
Accommodation and food services 2.3% 2.6%
Admin./support/waste mgmt./ remediation srvcs. 11.4% 8.0%
Professional, scientific, and technical services 8.0% 15.4%
Transportation and warehousing 7.1% 3.9%
Construction 5.3% 11.8%
Real estate 3.0% 10.7%
Educational services 2.6% 2.4%
Finance 1.7% 3.8%
Information 1.1% 1.5%
Manufacturing 0.9% 2.3%
Wholesale trade 0.9% 2.7%
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Notes: ?Indicates the three industries that saw the largest declines in payroll employment in April 2020. *Indicates the three industries that saw the largest percent change declines in payroll employment in April 2020.?Totals may not sum to 100%. Industries making up less than 1% of total share (agriculture, mining, utilities, management of companies and enterprises) are omitted.

Source:?Authors’ analysis of U.S. Census Bureau, Survey of Business Owners (2012).

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The CARES Act also established the Paycheck Protection Program (PPP), which offers loans to small businesses to use for payroll costs, mortgage interest, rent, and utilities—loans that are forgivable on the condition that the businesses retain or rehire employees at their pre-pandemic levels of pay (SBA 2020a). At least 75% of the forgiven amount must have been used for payroll costs. While a very small share of black-owned businesses are employers—only 4.2% have employees, compared with 19.6% of all businesses and 20.6% of white-owned businesses (U.S. Census Bureau 2016a)—sole proprietorships, independent contractors, and self-employed individuals are also eligible to apply (SBA 2020b). Loans for this group of businesses can also be forgiven if 75% of the loan is used to replace 1099-MISC income or net self-employment income.

Despite such broad eligibility criteria for the PPP, there have been a number of anecdotal accounts of black business owners who have faced barriers to applying for loans in the first place, even as large publicly traded companies, including popular restaurant chains, were among the first to get loans—quickly depleting the $350 billion that was originally allocated (Flitter 2020). One of the main barriers cited by small black-owned businesses has been a lack of preexisting banking relationships with the larger lenders that were first to get the program up and running in their systems. The biggest shortcoming of the PPP was that its total funding level was capped, which made it a zero-sum dash to be the first to apply.

Although a second round of $310 billion in funding was approved in late April 2020 to cover unmet demand, if the program had initially been uncapped and everybody who qualified was guaranteed to get it, there may have been less harm in a business having to wait longer to get an application processed. The defining features of parallel plans in the United Kingdom and Denmark is that they are open-ended and hence not zero-sum among businesses (White 2020; Thompson 2020).

Conclusion

The global impact of COVID-19, both in lives lost and economic devastation, is likely to leave a lasting mark for years to come. The best path forward includes making sure that we use the painful lessons learned during this crisis to better prepare ourselves for the next one. The disparate racial impact of COVID-19 illustrated in this report should come as no surprise given the ongoing legacy of racism that continues to produce unequal outcomes affecting nearly every aspect of life in the United States. If we are to protect African Americans from suffering under the same needlessly heavy burden during the next economic or public health crisis that they are suffering under now, we must work diligently to address long-standing underlying racial disparities in economic and health outcomes.

Acknowledgment

We are grateful for the valuable research assistance of Daniel Perez.

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