It's time to get down to the of the matter.
(race & financial)
According to the Economic Policy Institute, a non-partisan think tank, "On top of lower wages and incomes and higher poverty rates, Black families have significantly less access to liquid assets than White families. It’s been long established that Black families face a large and persistent wealth gap. To weather a financial loss, families often must dip into their liquid assets to pay for their living expenses. If they lose their job or experience a serious health shock, their only hope of making ends meet and continuing to pay their rent or mortgage and put food on the table is to rely on their savings.
The attainment of higher education does not bridge this divide. This gap remains large when we compare White and Black families whose heads of household have the same level of education. In fact, the absolute gap in liquid assets between Black and White families is far larger among those with a college degree or more versus those with less than a college degree. White families headed by a college-degree holder have nearly five times the access to money in transaction accounts as similarly degreed Black families. The gap persists whether the Black family owns a home or not. The gaps in liquid assets differ by what sector the family head works in, but no matter how the data are cut, white families have far more access to liquid wealth."
They continue, "Black families have lower shares of households with multiple earners. In the pre-pandemic economy, Black workers were less likely to have multiple earners in their household. Half of all Black households had only one earner, while nearly half of all White households had at least two earners. This racial disparity in the number of household earners is not just a function of how many working-age adults live in the household, or family structure, but is another measurable consequence of the persistent 2-to-1 ratio between the Black and White unemployment rates. The inequities Black workers experience in the labor market have larger consequences for the economic vulnerability of Black households because it is far more likely that when one household member loses their job, it translates into a complete loss of income for that household. Black households are less likely to have a second earner to fall back on to make ends meet."
Meanwhile, pandemic lifelines were not much easier for Black Americans who aren't business owners. In the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress mandated a one-time payment of $1,200 to people with adjusted gross income below $75,000, and $2,400 to married couples filing taxes jointly who earn under $150,000. Additionally, families with children were eligible to receive $500 per qualifying child. Based on the median Black household income, the vast majority of Black Americans were qualified to receive the payments. However, according to the Federal Deposit Insurance Corporation (FDIC), 16.9% of Black households were unbanked in 2017 (compared with 3.0% of White households), meaning that no one in the household had a checking or savings account. Read the entire report here. So, obviously, direct deposits were not possible for those families and individuals — leaving them to wait up to months for any help.
From a report called Forced to Walk a Dangerous Line: "Though the proportion of Black and White Households with debt are similar, proportionally more Black Household experience difficulties with debt and bill payments. Troublesome debt is a symptom of the racial wealth divide and perpetuates discrepancies in wealth development. Having troublesome debt has long-term consequences such as wage garnishment, ongoing indebtedness and restricted access to low-cost, high-quality credit, insurance, jobs, housing and utilities. More than one in four (27 percent) Black households report they sometimes miss or are late on their debt payments, compared to approximately one in seven (15 percent) White households."
The Covid-19 pandemic has had a disproportional impact on people of color — and has exposed inequalities like never before. The virus is the perfect storm for Black Americans who, thanks to decades of social and economic injustices, are much more likely to live in poverty, experience much higher unemployment rates, endure huge wage and wealth discrepancies, have less access to health care, suffer underlying health conditions that make the virus more deadly, live in at-risk housing conditions, take public transportation, and work in high-contact essential services (therefore, no telework) that expose them to lots of people.
To make matters far worse, Black business owners were — surprise, surprise — largely left out of the government lifelines. For example, the Paycheck Protection Program (PPP) was a loan enacted during the pandemic to provide an incentive for small businesses to keep workers on the payroll. PPP offered up to $10 million in loans and, if certain rules are followed, doesn't have to be repaid. Typically, the program was an uphill battle for people of color from the beginning. The main problem was that most minority business owners don't have long-term relationships with banks which, given how PPP was structured, left most of them out completely. By the time they found possibilities, their White counterparts had inhaled the available funds (the total funding level for PPP was capped). This held true even after a second-round of government funding, which earmarked billions more for minority and other underserved borrowers.
According to the Pew Research Center, a nonpartisan think tank, "Fewer than half of all American adults (47 percent) say they have emergency or rainy day funds that would cover their expenses for three months in case of sickness, job loss, economic downturn, or other emergencies; 53 percent say they don’t have this type of savings on hand.
"The share who have rainy day funds differs drastically across demographic groups. While 53 percent of White adults say they have rainy day funds, much smaller shares of Black adults (27 percent) say the same. Upper-income adults are roughly three times as likely as lower-income adults to say they have emergency funds that would cover their expenses for three months — 75 percent vs. 23 percent."
"Of the 53 percent of adults who say they don’t have rainy day funds set aside, most say they wouldn’t have easy access to money that could help them meet their financial obligations if they lost their main source of income. Only 28 percent say they would be able to cover their expenses for three months by borrowing money, using savings, selling assets, or borrowing from friends or family. About seven-in-ten (71 percent) say they would not be able to do this."