Biden economic team faces challenge in delivering help to Black communities
President-elect Joe BidenJoe BidenTrump floats a Doug Collins run against Kemp for Georgia governor Defiant Trump insists election was ‘rigged’ at rally for Georgia Senate Republicans Biden victory, vaccine and an anniversary: good karma for the Mediterranean? MORE‘s economic team faces a daunting task in delivering policies that will help Black and other minority communities who have been disproportionately rocked by the pandemic.
Biden has received decent reviews so far for assembling an economic team that includes Black voices. If confirmed, Cecilia Rouse would be the first Black woman to head the Council of Economic Advisers and Wally Adeyemo, tapped to be the Treasury’s No. 2 official, would be the highest-ranking Black American in the department’s history.
Nonetheless, with the country gripped by the pandemic’s third wave, the economic team faces a real uphill battle to introduce economic policies that produce meaningful relief for Black people and Black-led businesses.
It has been well-documented that people of color are more likely to be hospitalized and die from COVID-19. According to the Centers for Disease Control and Prevention, Black people in the U.S. are 3.7 times more likely to be hospitalized and 2.8 times more likely to die than white people.
While seemingly separate from the disparate economic hardships faced by Black businesses, the two are in fact linked, according to an August report by the Federal Reserve Bank of New York.
The report found that “Black-owned firms are more likely to be located in COVID-19 hot spots, whereas white-owned firms are less likely to be in the most heavily affected areas.” Additionally, Black-owned businesses, the analysis found, tend to be “geographically concentrated” and correlate with “Black population density.”
“Given the high geographic concentration of firm activity and the Black population in general, business disruptions in these particular places can have outsized effects on African American well-being at large,” the report states.
Also noted in the study were the problems Black-owned businesses have had receiving loans from the Paycheck Protection Program (PPP) that was established by Congress with the CARES Act in March to help small businesses stay afloat.
New York Fed assistant vice president Claire Kramer Mills led the analysis; she told The Hill that PPP has been one of the main resources that have helped small businesses during the pandemic.
“We know … liquidity issues are more acute for African American owned businesses. … PPP was essentially a lifeline to businesses that have really taken the blow of revenue drops. … Those that did not receive PPP didn’t get that lifeline,” Kramer Mills said.
The issue of obtaining PPP loans is one reason why Black and other minority-owned businesses suffered far greater rates of failure during the depth of the pandemic. In April, the number of Black business owners plummeted 41 percent from where it had been in February.
The number got better throughout the summer as businesses around the country began to reopen, with Black businesses returning to just above pre-pandemic numbers in September.
Kramer Mills said that an additional $10 billion of PPP loans allocated for Community Development Financial Institutions (CDFIs) proved helpful for minority-owned businesses.
“We know that there are differences in banking relationships as well and there have been historical issues with access to small banks and large banks for minority entrepreneurs,” Kramer Mills said.
“When they extended the PPP to include CDFIs, a broader range of authorized SBA lenders, that really helped,” she added.
However, Ohio State University economics professor Trevon Logan expressed skepticism that Black businesses were clear of pandemic-induced hardships.
“We have still not recovered to the point we’re back on trend,” Logan told The Hill. “Imagine digging yourself a hole that’s halfway to the center of the Earth, and you’ve cut out eight feet. That is progress, but you still have an incredibly long way to go.”
Unemployment numbers support the notion that the country still has a long road to travel economically, with the path being even longer for people of color.
After peaking at 14.2 percent in April, the white unemployment rate declined to 5.7 percent in November, according to data released Friday by the Labor Department. The unemployment rate for Black Americans, however, has only declined from 16.7 percent in April to 9.8 percent in November, while the unemployment rate for Latinos has only fallen from 18.9 percent in April to 8.3 percent in November.
There are still approximately 9.4 million people who’ve yet to find work after losing their jobs to the pandemic. This could come to a head at the end of the year, as millions of Americans could see their unemployment benefits dry up.
The length of states’ short-term unemployment programs vary, but max out at 26 weeks. The CARES Act extended these benefits nationwide an additional 13 weeks but is set to expire at the end of the year. Also due to expire is the Pandemic Unemployment Assistance program, which has given unemployment benefits to millions of Americans who would not usually qualify for unemployment, such as gig workers.
Economists say the unequal toll of the pandemic is also rooted in centuries of discrimination against minorities and unequal access to financial services.
Black and Hispanic households have historically been less connected to the financial sector due to discrimination, hindering their access to credit and economic well-being. Nearly 14 percent of Black households and more than 12 percent of Hispanic households lacked an account with a bank or credit union in 2019, according to the Federal Deposit Insurance Corp., compared to just 2.5 percent of white households.
The Biden campaign and Democrats have proposed ambitious programs to help bring more minorities into the financial system. A unity task force composed of representatives from the presidential campaigns of Biden and Sen. Bernie SandersBernie SandersBiden economic team faces challenge in delivering help to Black communities On The Money: Unemployment gains lower than expected | Jobs report lights fire under coronavirus relief talks Sanders says he can’t support bipartisan COVID-19 relief proposal in its current form MORE (I-Vt.) proposed reviving basic banking services through the U.S. Postal Service, and Reps. Alexandria Ocasio-CortezAlexandria Ocasio-CortezBiden economic team faces challenge in delivering help to Black communities Progressives push for direct payments to be included in COVID-19 relief deal Rubio and Ocasio-Cortez spar on Twitter: ‘Work more, tweet less’ MORE (N.Y.) and Rashida TlaibRashida Harbi TlaibBiden economic team faces challenge in delivering help to Black communities Progressives push for direct payments to be included in COVID-19 relief deal Biden Cabinet picks largely unify Democrats — so far MORE (Mich.) introduced a bill to create a national public banking system.
Federal bank regulators are also attempting to modernize the Community Reinvestment Act, a 1977 law intended to encourage banks to lend in low-income areas and penalize those who don’t.
Logan said that in the end, the diversity of the White House economic team won’t matter if policies meant to help Black Americans aren’t put forward.
“The question is, are the people there going to do things that would be a benefit to … in a broader sense to the American economy and specifically to Black people,” Logan said.
The professor cited the records of Rouse and former Federal Reserve Chair Janet YellenJanet Louise YellenCan Biden find a third way between Trumpism and Obama-era globalism? Biden can wait no longer to choose his secretary of Defense The economic challenges facing the Yellen-Powell policy duo MORE, tapped to be Biden’s Treasury secretary, as reasons to suspect that they would target issues salient to Black communities.
“It is the case that systemic unemployment, systemic and structurally high unemployment and long-term unemployment are particularly prominent in the black community; both [Rouse and Yellen] have their eye on them and that is important.”