Racial Inequities Have Long Existed in the Economy. A New BPC Survey Shows COVID-19 Made Them Worse.

In short, racial economic disparities are longstanding. A recent survey from the Bipartisan Policy Center, funded by the Rockefeller Foundation, shows how the coronavirus pandemic and its economic fallout have made these inequities even wider.

At the time we are writing, the coronavirus has killed almost 120,000 Americans and caused another 19.5 million to lose their jobs. It has upended millions of lives, and Americans of all races are suffering. But the virus and its economic impact have been especially harsh for Black Americans, causing longstanding disparities to widen.

The pandemic’s unequal racial toll starts with the disease itself. Because of disparities in living circumstances, work conditions, and underlying health, Black Americans are more than twice as likely to die from coronavirus as their white counterparts. Indeed, Black workers face the worst of both worlds: They are more likely than white workers to be employed in jobs deemed essential and thus exposed to infection and also more likely to work in cyclically sensitive industries that have laid off workers. As a result, the unemployment rate has risen more for Black workers than white workers (Figure 3).

BPC’s survey from May provides richer details than have previously been available on the unequal damage of this recession, though it is important to note that the survey is of likely voters rather than all adults. Another source of information is the Census Household Pulse Survey, a weekly survey that the Census Bureau recently launched to measure how the pandemic is affecting Americans’ lives. ⁵

In BPC’s survey, 40% of Black households said they had experienced either “some” or “great” financial hardship as a result of COVID, compared to only 27% of white households. Likewise, 54% of Black households are now suffering from life-stressing unemployment, reduced hours, or pay cuts, in contrast with 36% of white households, the survey found. Underneath these summary results are disparities in saving and depletion of assets, debt, and ability to afford food and housing—in short, nearly all aspects of economic life.

Black Americans Have Fewer Assets

Not only are Black Americans more likely to experience hardship in times like these, they are also less likely to have assets to fall back on when they lose income. Less than half of Black Americans owned a home in January 2020, compared to nearly three-quarters of white Americans. In 2016, the median net worth of a Black household was $17,600, a tenth of the $171,000 owned by the median white household (Figure 4).⁶ Before coronavirus hit, Black households were less likely to have savings set aside for emergencies (54% vs. 64% of white households) and about half as likely to have enough saved up to cover three months or more of normal spending (26% vs. 51%). Savings and other assets play a vital role in buffering every crisis from unemployment to medical emergencies, helping to smooth consumption and maintain a household’s standard of living. These persistent racial disparities in income, assets, and liquid savings have left many Black Americans vulnerable to economic shocks—and no recent shock has been more damaging to families and workers than the COVID-19 pandemic.

Among Black households that did have emergency savings before the crisis, 70% have needed to dip into those savings since the start of the pandemic, compared to only 34% of whitehouseholds, and a higher share of such Black households have already spent at least one-quarter of those savings (36% vs. 15% for white households). With fewer assets to draw on, Black households with retirement accounts are far more likely than white households to say they plan on withdrawing from (48% vs. 29%) or borrowing against (45% vs. 29%) those accounts.

Black Americans Are Disproportionately Struggling to Afford Food and Rent

Even though Black households are more often tapping into what savings they have, they are still struggling to afford basic necessities. In the Census Household Pulse Survey, 19% of Black respondents said they did not have enough to eat at least some of the time in the previous week, a plight affecting only 7% of white respondents. Digging deeper into these numbers reveals two important facts.

First, the data do not merely reflect preexisting inequities, but new hardship. The Census Pulse Survey found that Black Americans who always had enough to eat before March 13 are now more than twice as likely as comparable white Americans to have lacked food at least some of the time in the prior week (6% vs. 3%).⁷ Second, white households’ greater average savings can insulate them against negative shocks in a way that is hard for Black households to achieve. In the same Census data, of households where someone lost a job since March 13, the share who lacked enough food at least sometimes in the prior week jumps to 31% for Black households (a 12 percentage-point increase), while rising to 12% for white households (a 5 percentage-point increase).

In the same Census survey, not only were white renters more likely to have paid their rent last month (87% vs. 72%), 15% of Black renters said they had no confidence they could make their next rent payment (compared to 9% of white renters). Similarly, BPC’s poll found that 37% of Black households say they have already missed a credit card, utility, internet, rent, mortgage, or other important payment since the crisis began, more than double the rate for white households (17%). Here, too, Black households’ lack of savings makes their finances more precarious. Among households in which someone lost a job since March 13, the Census survey shows that 83% of white renters were still able to make their most recent rent payment, compared to 67% of Black renters.⁸ Moreover, such white renters were almost twice as likely (70% vs. 42% in the Census survey) to have moderate or high confidence they could make their next rent payment.

In short, the BPC and Census surveys demonstrate how the current economic downturn has more harshly impacted many facets of Black Americans’ financial lives. As Federal Reserve Chair Jerome Powell noted, the pandemic has both exposed “troubling inequalities” that long existed and made those inequalities wider: “A particular cruelty of the pandemic has been its disproportionate effects on many areas that were already suffering.”

Unfortunately, this is hardly a unique feature of the coronavirus recession. Higher national unemployment rates are generally associated with greater increases in the rates of unemployment, food insecurity, and poverty for Black Americans than for their white counterparts, as well as greater proportional income losses.⁹ The coronavirus is merely one more example of how Black Americans are especially vulnerable in times of crisis. Decision-makers both public and private, indeed all Americans regardless of color, must prioritize solutions to combat these longstanding inequities and close the gaps in economic wellbeing.

No set of policies will make racial and economic disparities vanish overnight. There are bipartisan solutions, however, that will at least shrink these gaps between white and Black Americans.

BPC’s recent survey of likely voters reveals strong bipartisan support for expanding eligibility for the Earned Income Tax Credit (supported by 71% of likely voters), modernizing unemployment insurance and increasing eligibility (89% support), basing student loan repayments on income (83%), and changing the tax code to encourage employers to match employees’ personal emergency savings (82%). Each of these policies would address problems that disproportionately fall on Black workers—low incomes, unemployment, crushing student loan debt, and a lack of savings. Unsurprisingly, a large proportion of Black voters say these policies would make a real and meaningful difference in the lives of people they know.

Such policy changes may seem inadequate in the face of these large and persistent inequities. BPC is the first to admit that solutions like these will not solve every problem Black households face. Still, they can make the lives of millions of Americans—across all races—better in meaningful ways. And over the long run, they can especially help Black Americans build brighter and more secure financial futures. Most importantly, these policy solutions can achieve bipartisan majorities. They deserve to be near the top of the congressional agenda.

^{1 The white unemployment rate has exceeded this threshold in 0.9% of months on record. Authors’ calculations using seasonally adjusted unemployment rates from the Federal Reserve Bank of St. Louis. Research has found that almost none of the Black-white unemployment gap can be explained by observable characteristics like education, age, or marital status.
2 This calculation was made using the median pre-tax incomes of all Black and white Americans who were old enough to work—including the unemployed, non-participants, and retirees—except for full-time students. We include all these groups to capture, in one all-in statistic, how many resources the median Black American has compared to the median white one. Authors’ calculation using the Annual Social and Economic Supplement of the Current Population Survey.
3 In these data, food insecurity is defined as experiencing problems or anxiety about consistently accessing adequate food. Authors’ calculation using the Current Population Survey.
4 These statistics use the Supplemental Poverty Measure, which among other adjustments, adds government taxes and transfers and deducts out-of-pocket medical expenses from a household’s resources. These data only go back to 1970, but they show that after 50 years of economic growth, technological progress, and expansions in the social safety net, Black Americans in 2019 were still about twice as likely to be poor as white Americans were during the first term of the Nixon administration. Data through 2014 can be found here. Data after 2014 are authors’ calculation using the Annual Social and Economic Supplement of the Current Population Survey.
5 All statistics from this point on are from BPC’s poll unless cited as otherwise or linked to an external source. Unless otherwise noted, statistics from the Census Household Pulse Survey are from the June 4-9 survey round, the latest for which data are available as of the time of writing.
6 Research finds that only 32% of the racial net worth gap can be explained by differences in age and household structure.
7 All Census Household Pulse Survey data in this paragraph require microdata to calculate. Thus, they come from the May 28-June 2 survey window, the most recent for which microdata are available for public use.
8 These and all subsequent statistics in this paragraph are from the Census Household Pulse Survey and require microdata to calculate. Thus, they come from the May 28-June 2 survey window, the most recent for which microdata are available for public use.
9 Authors’ calculations using the Current Population Survey.}