A Disproportionate Number of Black Business Owners Are Out of Work Amid the Pandemic

Illustration for article titled A Disproportionate Number of Black Business Owners Are Out of Work Amid the Pandemic
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At this point in the game, we know that COVID-19 has had a disproportionate effect on black people in terms of infection rates and death. Now, news of the economic impact of the virus on black businesses is raising concerns that the damage will be felt long after the pandemic passes.

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The Washington Post reports that the number of black business owners currently working has fallen 40 percent, a far steeper decline than any other racial group. The economic shutdown that occurred in response to the pandemic resulted in the total number of active business owners dropping 22 percent overall.

“We already have disparities. African Americans have the lowest business-ownership rate in the population. … And so here we’re creating a situation of closures that’s hitting the groups with the lowest rates even harder,” Robert Fairlie, an economics professor at the University of California at Santa Cruz told the Washington Post.

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Fairlie found that 450,000 black business owners are out of work since the pandemic began. One of the core reasons behind the decline is that black-owned businesses tend to occupy sectors most hit by the shutdowns. Beauty salons, daycare centers and taxi services make up a large portion of black-owned businesses and these are all sectors that have either had to shut down completely or operate at a highly reduced capacity because of coronavirus restrictions.

Another factor contributing to this loss is the lack of financial relief from the Paycheck Protection Program, which was designed to provide relief for businesses struggling during the shutdown and has come under fire for providing assistance to big business and publicly traded companies.

From The Washington Post:

The Center for Responsible Lending, a nonprofit research and policy group, sounded alarms in April about the Paycheck Protection Program, estimating 95 percent of black-owned businesses and 91 percent of Latino-owned businesses were tiny companies with slim chances of receiving a loan in the initial round. Most of those companies are the owner’s primary source of income, according to its report.

The Treasury Department has said it is working with the Small Business Administration to prioritize minority-owned businesses and the community financial institutions that often support them, while some state and local governments and philanthropists have created programs targeted at these groups. But many still see gaps.

God forbid there’s another round of stimulus and we’re still doing the same thing,” said Eda Henries, the chief financial officer of a soul-food company who has organized fellow black professionals to help small businesses navigate aid programs during the pandemic.

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Any assistance eventually provided by the government will inevitably be short term. One of the biggest questions remaining is not just how these businesses are going to recover—if they will at all. Heidi Shierholz, policy director at the Economic Policy Institute, told The Washington Post: “All recessions exacerbate existing inequalities by race and ethnicity — and always hit black and Hispanic workers harder — but this one will be worse. It will be an absolute nightmare.”

Jr Staff Writer @TheRoot. Watcher of wrestling, player of video games. Mr. Steal Your Disney+ Password.

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DISCUSSION

For extra things on Coronavirus disparities, there was an editorial in the New England Journal of Medicine earlier this month on the need for solid data analysis on disparities. The summary paragraphs:

It is equally important, however, that in documenting Covid-19 racial disparities, we contextualize such data with adequate analysis. Disparity figures without explanatory context can perpetuate harmful myths and misunderstandings that actually undermine the goal of eliminating health inequities. Such clarifying perspective is required not just for Covid-19 but also for future epidemics. There are several key dangers of insufficient contextualization, but researchers, journalists, public health officials, and policymakers can take a few important steps to address them when discussing racial disparities, especially in the public sphere.

In sum, to mitigate myths of racial biology, behavioral explanations predicated on racial stereotypes, and territorial stigmatization, Covid-19 disparities should be situated in the context of material resource deprivation caused by low SES, chronic stress brought on by racial discrimination, or place-based risk.

Of course, these explanations do make their own assumptions that we’d need more data to vet or establish (which are talked about in some detail in the article text) unless offering them as the going assumptions against more prejudiced theories. There’s always the (small) possibility of some sort of random connection, from a cultural factor (let’s say familial piety leading to greater contact with the elderly or Shrovetide/Carnival encouraging travel and congregation at the exact worst time) to random chance (I’d say ruled out since we started getting data from multiple places, as consistency between subsets is a standard proof against a trend being random), or even something incredibly weird, as shown in the Atlantic writeup on the issue:

In the United States, the disparities broadly reflect historical injustice. Elsewhere, they do not.

If you are in Belgium and have COVID-19, your odds are not good: About one in six Belgians who have contracted the disease have died. If you are in Rwanda, a former Belgian colony with a per capita GDP about 1/60th of Belgium’s, your odds are superb. Rwanda has reported 339 cases, and none has even required admission to an ICU. Rwandans are younger than Belgians, but zero is a very small number.

In Switzerland, a country with excellent universal health care, a French-speaking Swiss with COVID-19 is 1.6 times more likely to die than a German-speaking Swiss. An Italian-speaking Swiss is 2.4 times more likely to die than a German speaker. The magnitude of these disparities is comparable to the magnitude of the disparities among white, Latino, and black people in the United States—even though there is no modern history of enslavement and genocide of Switzerland’s Italian-speaking population. (Ticino, the center of Italian-speaking Switzerland, ranks seventh out of 26 cantons in per capita GDP.) You might be tempted to attribute the disparity to the Italian speakers’ connections with the death zone of northern Italy. That could account for the difference in the incidence of the disease—but why the difference in the likelihood that you’ll die, if you already have it?

Smaller puzzles abound. Why did the area around Milan get hit harder than almost anywhere on Earth, while Rome was spared? Why has Tokyo—which is densely populated, filled with old people, reliant on packed subways, and never fully shut down—not been crushed by the disease [my opinion: Seoul and Hong Kong did similarly well despite similar demographic liabilities, so it’s likely a regional factor, probably them all having set up anti-mainland-Chinese-coronavirus systems in response to SARS]? Why do some places, when they relax their social-distancing restrictions, see case numbers rise, while Denmark, after thawing its economy, still has so few cases that its health authorities express open bafflement about their good luck?

By now it should be clear: We have no idea what is going on. Something is making the virus spare Rwandans and German-speaking Swiss and white Americans, while terrorizing Belgians and Italian-speaking Swiss and black Americans. If we can get the virus to pass over us all as if we were in the former categories, this long nightmare of a pandemic might end.