COVID-19 Ravaging Black America's Economy
In April 2020, COVID-19 swept across the nation. This prompted businesses to close their doors and furlough workers as many states, counties, and cities issued “shelter in place” orders, public and private gathering restrictions, and rules barring many businesses from opening their doors to the public. America’s unemployment rate leapt to 14.7 percent. As the social distancing mandate began, many companies furloughed and laid off workers. Some businesses were forced to cease operations and close their doors forever.
COVID-19 has wreaked economic havoc on the Black community. High unemployment and small business closings are a problem nationally, but Black Americans have been hit especially hard. An April survey by the Pew Research Center showed that 73 percent of Black adults did not have enough reserve funds to cover three months of expenses, compared to 47 percent of White adults.
A July 2, 2020 report by the Bureau of Labor Statistics shows a decline in the unemployment rate for the month of June from 13.3 percent to 11.1 percent -- a 2.2 percent decline. However, when you look at the representative data by race, you’ll see that 15.4 percent of Black Americans over the age of 16 are unemployed. While this is a decline of 1.4 percent from May, you can see that Black unemployment has been consistently higher than the national percentage. The only group hit as hard were Hispanic Americans, who had not only the highest unemployment a few months ago in April (18.9%), they’ve also had the greatest rebound since then. With an overall 4.4 percent decline in unemployment rates, 14.5 percent of Hispanic Americans are without a job.
Black Owned Small Businesses
From February to April, the U.S. lost 3.3 million business owners. According to the National Bureau of Economic Research, this dip represented an unprecedented 22 percent decline in overall business owners, the largest decline on record. Black America was hit harder. Black business owners accounted for 1,079,116 businesses in the country in February 2020. By the end of April, there were only 637,769 Black business owners. This loss of 441,347 businesses accounts for a 41 percent drop in Black business owners.
While many businesses were kept afloat by the government’s Paycheck Protection Program, Black entrepreneurs appeared to have significant hurdles to receiving those funds. Based on the rules and regulations for receiving the assistance funds, the Center for Responsible Lending states that nearly 95 percent of Black owned companies were likely to be locked out of accessing loans.
Another factor in this closing was discrimination in banking. A study by the National Community Reinvestment Coalition showed a sharp decline in SBA lending to Black businesses from 2008 to 2016, and that Black and Hispanic business owners were required to submit more business documents and paperwork for their loans than their White and Asian Counterparts. Given these circumstances, many Black business may have very well been unable to access the funds that could’ve saved their businesses.