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Vox: The Near-Certainty of a Black Depression

Vox, May 6, 2020: The Near-Certainty of a Black Depression

Black Americans experience recessions the way front-seat passengers do head-on collisions. During the Great Depression, when national unemployment reached 24 percent, black unemployment neared 50 percent. During the Great Recession, when national unemployment reached 9 percent, black unemployment topped 16 percent. Today, as Covid-19 slams into the economy, black Americans again brace for the brunt of the crash.

This depression will likely be uneven. Looking back over the past 30 years, you can’t find a recession that hasn’t been more severe for black workers than for whites. It’s just history. Moving forward, black laborers can expect higher unemployment as they are underrepresented in the white-collar jobs that are more easily done from home over Zoom or Slack. Perennially crushed by lending bias, battered by employment discrimination, and neglected by high interest rates, black Americans stand poised to be ravaged by the Covid-19 downturn.

It’s hard to overstate how precarious [black-owned] companies are. According to a recent analysis by Pew Research Center economist Rakesh Kochhar, black business owners only run 2 percent of firms that have paid employees. Black Americans make up 13 percent of the United States. Given the disparity, the survival of these firms remains crucial to the communities they serve. However Congress’s policy fix to support small businesses, the Paycheck Protection Program, relies on institutional banks with a history of discrimination to distribute financial assistance.

Previously, researchers from Utah State, Brigham Young, and Rutgers universities have shown that these banks tend to discriminate against minority entrepreneursLast year, a study by the National Community Reinvestment Coalition found “better-qualified black and Hispanic testers who shopped for small business loans at Los Angeles area bank branches were treated worse than less qualified white testers” and revealed “steep declines in government-backed lending to black business owners between 2008 and 2016.”

When mass unemployment arises, businesses can filter potential hires not just by qualifications but also by desired race. Buoyed by bias during the last recession, black men’s employment-to-population share dropped lower than that of all other major male demographic groups and lower than that of women overall. The cycle often works like this: Economic contractions lead to increased unemployment. Increased unemployment leads to hiring discretion, and hiring discretion leads to more discrimination.

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