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Minority groups hit hard by crisis seek more congressional aid

Unemployment among minority groups has hit new record highs, matching or topping those from the Great Recession

James Johnson prepares for a haircut last week at Mason's Barber Shop as Washington, D.C., started allowing certain businesses to reopen.
James Johnson prepares for a haircut last week at Mason's Barber Shop as Washington, D.C., started allowing certain businesses to reopen. (Tom Williams/CQ Roll Call)

Minority groups that are losing jobs at higher rates amid the pandemic-driven economic crash are looking to Congress for quick action, but it may be months before lawmakers can deliver more help.

Current record-high jobless numbers among minorities suggest the crisis may hit these communities harder than during the Great Recession. In April, unemployment hit 16 percent among African Americans and 18 percent among Hispanics. The rate was 14.5 percent for Asian Americans. The Bureau of Labor Statistics will release May unemployment numbers on Friday.

University of California economics professor Robert Fairlie said the longer the crisis goes on, the more damage it will wreak on minority households and their wealth. 

The unemployment numbers for the current crisis are already as bad as the last recession, which started in 2007. African American unemployment peaked at more than 16 percent in 2010. For Hispanics, unemployment hit a high of 13 percent in 2009. The unemployment rate among both groups did not return to pre-recession levels until late 2016.

The economic blow comes at the same time minorities are getting hit disproportionately hard by coronavirus infections. African Americans, in particular, are dying of COVID-19 at higher rates than whites, according to the Centers for Disease Control and Prevention. The jobless numbers only deepen the community’s vulnerability, said Congressional Black Caucus chairwoman Rep. Karen Bass, D-Calif.

“You have essentially a double whammy: You have an economic hit and a health hit that is obviously going to have long-term economic consequences,” Bass said in an interview.

[Protests may add COVID-19 cases and compound racial disparities]

In a Census Bureau survey released last month, more than half of Hispanic and African American respondents said a member of their household lost income since March. More than 17 percent of Hispanic homeowners and 19 percent of African American homeowners had no or some confidence they could make their June mortgage payments, compared with about 6 percent of white homeowners.

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While the pandemic’s economic crisis has not yet endangered household wealth in the same way the Great Recession did a decade ago, it’s already having a larger impact on minority-owned businesses, according to research by Fairlie. Many small proprietors have their net worth tied up in a venture, and losing that could knock their savings back by years.

“This could be pretty devastating for these businesses,” Fairlie said in an interview. “That is going to be a major impact on wealth accumulation, and that could have a disproportionate impact on minorities.”

Fairlie’s research, based on Census Bureau data, shows that more than 40 percent of African American business owners did not work in April. How they fare in the months ahead depends on numerous factors, including how quickly the economy reopens and how much consumer spending returns, he said.

“There are so many unknowns here it is incredible,” Fairlie said.

Rep. Linda T. Sánchez, D-Calif., is among members of the Congressional Hispanic Caucus urging swift government action.

“Without a proper federal response, it’s going to take years for the community to recover,” she said at a Ways and Means hearing last month.

Congressional action

An additional federal response may take months, though.

The House will be gone until late June, having left last month after passing a $3.5 trillion package meant to build on the previous pandemic relief legislation. Majority Leader Mitch McConnell has rejected the House bill but says he’s open to additional aid legislation, but a GOP alternative hasn’t yet emerged.

The Congressional Black Caucus in a letter to House and Senate leaders last month laid out a series of proposals to address economic disparities, like $2.9 billion for the Minority Business Development Agency and mandates for banking regulators to help minority depository institutions. Some of the CBC’s priorities did make it into the $3.5 trillion relief bill that the House passed but has not seen action in the Senate.

In the meantime, Republicans including Sen. Tim Scott of South Carolina have emphasized tools already in law, like federal “opportunity zones” created in the GOP’s tax overhaul in 2017. Scott told Politico on Tuesday that the Senate should include sector-targeted relief in the next round of recovery legislation, as well as liability protections and tweaks to opportunity zones to change incentives for medical supply companies and others currently working abroad.

“If we can provide the incentives so companies can make the right decisions, that would be helpful,” Scott said.

He added that he believes the economy will likely improve quickly because of pent-up demand from the shutdowns.

Rep. Joaquin Castro said that might not happen in his community without federal help. The Texas Democrat, who chairs the Congressional Hispanic Caucus, said current laws fail to remedy the disparities. For example, many Hispanic-owned businesses lack relationships with traditional banks that could help them gain access to programs like the small-business Paycheck Protection Program and, he said, have been left behind as a result.

“Many Latino business owners have had to close their doors, many of them permanently,” Castro said. “They have had trouble accessing federal loan programs.”

He and other Democrats advocate for changing the March law to allow tax rebates for noncitizens, a sore spot for the administration.

The CBC proposal also includes forbearance on mortgages for rental properties. Bass pointed out that many landlords are from the same communities as their tenants.

“Many of the renters in these communities, they are renting from other community members,” she said. “It doesn’t help in the long run to have a community member hurt by this.”

Outside of Congress, community leaders and celebrities like Magic Johnson have stepped up to help. The NBA Hall of Famer last month announced he would help finance $100 million in loans specifically for minority-owned businesses. 

That’s considerably smaller than a possible federal response, which Democrats still want. Castro pointed to research from Pew and others that found Hispanic household wealth declined by two-thirds from 2005 through 2009. In the years since, the average Hispanic household has gained wealth but still lags behind white households, Pew found.

“We finally started to see over the last several years this comeback take shape. This crisis has knocked a lot of that down,” Castro said.

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