Black Americans could suffer more financially from COVID-19 pandemic, economists say

Wednesday, April 15, 2020
Black Americans could suffer more financially from COVID-19 pandemic, economists say
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Economists say black wealth is already low in America, and COVID-19 could cause it to suffer even more.

DURHAM, N.C. (WTVD) -- Economists say black wealth is already low in America, and COVID-19 will cause it to suffer even more.

Dorian Bolden owns Beyu Caffe in downtown Durham and Beyu Blue Coffee.

THE LATEST: COVID-19 updates in North Carolina

Bolden said COVID-19 has put a lot of stress on his plate. A majority of the 24 workers at his businesses have been either laid off or their hours have been reduced.

"It's been pretty devastating," Dorian said. "Eighty-five to 90 percent of our staff is black and African American,"

Bolden said he's applying for government assistance--loans from his bank to pay his employees and run his business.

"It goes back to the importance of property ownership," Bolden said. "My bank was able to step in immediately and we were able to get a little bit of cash ingestion at least to hold us."

During the crisis he has transitioned part of his business toward outreach. Remaining staff help package food and deliver it to first responders, health care workers and the Durham Public Schools Foundation. The community can support the initiative here.

The economic impacts of COVID-19 are also hitting Nicole Oxendine, owner of Empower Dance Studio. She is now conducting virtual dance classes and charging 50 percent less per session.

The hours for her majority black staff have also been cut.

Economists said the COVID 19 economic impact is having devastating effects to nearly every middle-to-low income black American because of systemic racial disparities in education, access to healthcare and jobs.

RELATED: African Americans appear to be contracting, dying from COVID-19 at disproportionate rate

There's also a disparity in who is able to work from home during the pandemic. Economist and North Carolina State University professor Michael Walden says 24 percent of service workers are black, compared to just 16 percent that are white.

"African Americans don't share in that kind of workforce that's allowing them to continue to work. It's putting them a little bit more behind during this economic curtailment," Walden said. "If you look at African Americans, about 30 percent of African American adults have a college degree or higher, but it's 40 percent for white workers, so again we see that disparity, unfortunately in this situation working against African Americans."

According to the Institute for Policy Studies, if the racial wealth divide is left unaddressed median black household wealth could hit zero by 2053.

The study said for Latinos, it could reach zero by 2073.

Dr. Henry McKoy, director of Entrepreneurship at North Carolina Central University School of Business, said many African Americans also lack the financial safety net of family and friends to stay afloat.

"We don't accumulate as much income, which doesn't accumulate much savings, which doesn't doesn't accumulate much wealth," McKoy said.

The Center for American Progress proposed nine measures federal, state and local lawmakers can take to offset the economic impacts of COVID-19:

  • Expand access to unemployment insurance benefits. In recent years, states with higher percentages of black and Latino residents have made it more difficult to obtain benefits, the center said. CAP recommended states dismantle obstacles to receiving unemployment insurance.
  • Ensure that low-income individuals can access free COVID-19 testing and treatment. Many people of color don't have access to affordable medical care or paid leave; lawmakers need to expand paid leave programs and health care coverage, including Medicaid, CAP SAID.
  • Send additional cash and financial assistance directly to households. A substantial number of black and Latino households do not have a bank account for direct deposit, according to the center, meaning they will have to wait weeks or months to receive their stimulus money. For the duration of the crisis, CAP asked lawmakers to provide additional rounds of assistance through a progressive formula that promotes equity.
  • Provide targeted assistance to minority-owned businesses. CAP said lawmakers should substantially expand the resources and authority of the Minority Business Development Agency and allocate financial assistance specifically for minority-owned businesses.
  • Prohibit evictions and foreclosures. The center said this prohibition should be extended through the end of the year.
  • Ease the burden of student loan debt. Previous relief packages suspended payments on federally held student loans. The center said the suspension should be expanded to include Perkins and Federal Family Education Loans. In addition, $10,000 in federal student loan debt should be canceled.
  • Strengthen the Consumer Financial Protection Bureau. Because people of color have fewer assets and less liquidity, they are at greater risk of financial exploitation by predatory lenders, CAP said, encouraging federal lawmakers to expand the resources and authority of the Consumer Financial Protection Bureau to combat pandemic profiteering.
  • Suspend negative credit reporting. CAP said future relief packages should temporarily restrict the effect that high balance-to-limit ratios, new credit, and delinquencies have on credit scores.
  • Enact and fully enforce employment discrimination statutes. The center said lawmakers should provide the U.S. Equal Employment Opportunity Commission civil rights attorneys with the resources they need to ensure a robust, equitable economic recovery.
Health officials pointed residents to the Affordable Care Act website and said those who lost their jobs due to COVID-19 are elligible for a special enrollment period.

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