As millions of people have lost jobs in the coronavirus-induced recession, the extra $600 in aid from the federal government began chipping away at a long-standing gap between the unemployment benefits received by Black Americans and white Americans.
But with Congress at a months-long impasse over a new relief package that would renew the $600, which expired in late July, that gap is widening again just as household financial distress, particularly for Black workers, is increasing.
The $600 weekly supplement to unemployment benefits, included in the CARES Act, passed by Congress in March, along with expanded eligibility for the aid, raised incomes for low-wage workers. State benefits alone cover only roughly 40% of workers’ prior wages typically, says Eliza Forsythe, a labor economist and assistant professor at the University of Illinois at Urbana-Champaign.
The $600 weekly bonus helped narrow historic income inequality between Black workers and white workers that worsened early in the health crisis when layoffs largely affected people in low-paying jobs disproportionately held by Blacks and Latinos.
Gap in unemployment benefits for Blacks and whites grows
Although most of the disparity in job losses between demographic groups such as Asians and whites narrowed as of July, the gap between Black and white workers doubled in size, according to Forsythe.
“For Black workers, it’s gotten worse as the pandemic has dragged on," Forsythe say. "They’ve been less likely to bounce back and find jobs than other groups.”
Structural racism in the U.S. has played a role in access to benefits in the past, according to Michele Evermore, senior researcher and policy analyst for the National Employment Law Project. But she said that accessing jobless aid disproportionally affects people of color.
“The CARES Act filled in a lot of the inequalities,” says Evermore, adding, “but now we’re definitely moving back to a place where the inequalities are coming out again.”
In fact, Black Americans are more likely to be unemployed but are the least likely to receive jobless aid, experts say. One reason is that some Black workers who are eligible for benefits don’t apply, according to Alix Gould-Werth, director of family economic security policy at the Washington Center for Equitable Growth.
In 2012, Gould-Werth’s research showed that in some instances Blacks workers were discouraged from applying because they thought that they were ineligible, they didn’t know where or how to apply, or they didn’t know benefits existed.
Those workers could face discrimination when applying for benefits, have difficulty completing the application process or face difficulty satisfying eligibility criteria.
Gould-Werth published separate research in 2016 that noted how employers and workplace climates can shape both white and Black workers' access to benefits. Some Black respondents reported that they thought they didn't work enough or earn enough. Because of unequal treatment, there could be disparities in Black workers’ benefits, though Gould-Werth’s 2016 study didn’t examine this question.
Black workers less likely to get aid
President Donald Trump asserted at Thursday’s final presidential debate that his administration recorded the “best Black unemployment numbers in the history of our country.”
To be sure, the unemployment rate for Black workers dropped to a record low of 5.4% in August 2019. The worst global pandemic in a century, however, has undone years of gains.
From April to June, only 13% of Black workers who were unemployed received unemployment checks, compared with 24% of white workers, 22% of Hispanic workers and 18% of workers from other races, according to an analysis by Nyanya Browne and William Spriggs of Howard University, who used COVID Impact Survey data from the National Opinion Research Center at the University of Chicago.
A reason for the low rate among Blacks is that they're more likely to live in Southern states that were among the slowest to roll out the enhanced benefits, Spriggs says.
After continuing to falter as white workers recovered faster, Black unemployment has remained elevated during the pandemic. In May, Black unemployment climbed to 16.8%, the highest in more than a decade as the pandemic wiped out more than 22 million jobs.
Jobless rates for whites and Blacks have fallen in recent months as more parts of the economy reopen, but the rate for whites has come down much faster. In September, the white jobless rate fell to 7%, compared to 12.1% for Blacks; 10.3% for Latinos and 8.9% for Asians.
“It’s a double whammy for Blacks and Latino workers,” Forsythe says. “Both groups are more likely to have been affected by the virus and also have their economic fortunes upended. They’re really bearing the brunt of both sides to this crisis.”
The gap in unemployment between Blacks and whites narrowed in September for the first time in five months after hitting the widest level in nearly six years over the summer. But it came as nearly 200,000 African Americans dropped out of the labor force last month.
In September, unemployment for Black men and women stood at 12.6% and 11.1%, according to the Labor Department. That compares with 6.5% for white men and 6.9% for white women.
Racial disparity in unemployment aid
Blacks' greater propensity for living in the South is a big reason they trail whites in receiving unemployment benefits, according to Kathryn Edwards, an associate economist at RAND Corporation, a nonprofit policy think tank.
Six states have a near-zero percentage of the country's Black workforce: Maine, South Dakota, Idaho, Vermont, Wyoming and Montana, according to RAND. Another dozen states have fewer than 0.5 percent each. And 1 in 4 Black workers lives in just three states: Texas (8.5%), Florida (8.1%) and Georgia (8%).
Another problem, Edwards argues, is that states in the South with more Black workers have less generous unemployment benefits. Nationally, Black workers are less financially supported on unemployment than white workers simply by virtue of where they live, she says.
Unemployed Black workers – and unemployed Black women workers – also have been much less likely to receive jobless benefits due to “racist biases” against low-income workers of color, according to the Washington Center for Equitable Growth.
As a result, nationally, the average maximum weekly benefit for black workers is $40 short of the amount received by white workers.
State variation in benefits are wide
In Massachusetts, the most generous state, benefits are capped at $823. But in Mississippi, the least generous state, the cap is $235. About 7.3% of the labor force is Black in Massachusetts, compared with 36.2% of the labor force in Mississippi, according to the Census Bureau.
Depending on the state, the withdrawal of the additional $600 leads to a median cut in benefits of 52% to 72%, data from the Washington Center for Equitable Growth shows. Arizona, Louisiana and Mississippi are among states that will see the biggest reductions in benefits, with median declines of 71%, 71%, and 72%, respectively.
“Based on where Black workers live, they’re going to get less in unemployment insurance because they aren’t evenly distributed across the U.S.,” Edwards says.
“This is the danger of having policies that vary by state. The differences could mean that you end up with wide disparities in unemployment benefits since some states are more generous than others."
Unemployment's history with Black workers
Scholars have debated whether the unemployment insurance system was built to be racist, or whether it's not intentional that Black workers benefit less.
Edwards and Evermore argue that there was racist intent behind the exclusions based on the design of the program and who it intentionally, or incidentally, leaves out.
The reason unemployment is administered by states – unlike Social Security, which is federally operated – dates back to the New Deal legislation in the 1930s, experts say.
In 1935, Congress passed the Social Security Act, which created unemployment insurance. The federal government oversaw Social Security, while states ran the unemployment programs. Both were social-insurance programs: Workers paid into trust funds via a payroll tax, making them eligible for benefits, according to Edwards.
Some lawmakers were concerned that the Social Security Act would have been stuck down by the Supreme Court if the unemployment insurance system were federal, so states were left to run the program. That gave states leverage to decide who was eligible.
State-level was perceived to be a safer bet after the Supreme Court had struck down key provisions in prior New Deal legislation for being an unconstitutional use of the interstate commerce clause.
Northern Democrats had to make a bargain with Southern Democrats to get enough votes in Congress to pass the New Deal legislation. Southern Democrats feared that an economically empowered Black worker posed a political threat to segregationist social structures, Edwards says. So Northern Democrats had to give Southern Democrats the means to exclude Black people from receiving benefits, she said.
More precisely, the legislation barred agricultural and domestic workers from the unemployment program, which had a disproportionate impact on Black workers, particularly Southern sharecroppers, according to Evermore.
About 65% of Black workers at the time fell outside the Social Security Act, compared with 27% of white workers, according to the Social Security Administration.
Racial disparities remain
Today's inherited unemployment system has racial implications that persist since Black workers are more likely to live in states with more stringent benefit systems, experts warn. Evermore, citing the Urban Institute, an economic think tank, said that during the Great Recession, Black workers were on average 13% less likely than white workers to receive benefits, and Latino workers were 4% less likely.
In 2010, the Social Security Administration argued that excluding the majority of Black workers from unemployment wasn’t the result of “prevailing racial biases.” Instead, the agency said leaving out agricultural and domestic workers from the program early on was due to concerns about workers who would pose tax-collection problems for the Treasury.
Eighty-five years after the Social Security Act passed, disparities remain in terms of the share of unemployed Black workers who get benefits, the length of time it takes to get them and the amount, Edwards says.
“The urgency of the pandemic is getting aid to workers to keep them solvent and preventing the scars of the recession from hitting too deeply,” Edwards says. “But the perennial question about unemployment insurance now is whether this is helping Black workers as much as it’s helping white workers. Unfortunately, the evidence points to no."
Stimulus talks falter as relief dries up
Spriggs of Howard University argues that Congress needs to boost benefits for unemployment workers as the pandemic drags on and permanently expand who is covered by unemployment.
The CARES Act expanded who was covered by unemployment with Pandemic Unemployment Assistance, which allowed people who previously didn’t qualify under traditional unemployment to seek aid, including temporary and part-time workers. That opened the door for more minorities in lower-paying jobs to qualify, Spriggs says.
But many out-of-work Americans will exhaust their regular state unemployment aid by Christmas.
"History hasn't changed. We have to rewrite the unemployment insurance laws," Spriggs says. "Despite recent efforts by Congress, Blacks are still disproportionately in jobs that were originally written out of the Social Security Act. We haven't fundamentally changed who has access to unemployment insurance."
With Congress deadlocked on a new relief package, Trump in August issued an executive action that allowed states to tap $44 billion from disaster relief funds, which provided $300 a week in enhanced aid for unemployment workers. But those funds have dried up since states were authorized to pay up to just six weeks of benefits from the week ended Aug. 1.
Black workers typically have less of a financial cushion during recessions andexperience longer bouts of unemployment, Spriggs added.
"These racial disparities have real consequences. Many people are going to be evicted and have a very hard time putting their lives back together," Spriggs says. "Despite people's best efforts, they get hit again in another recession and these disparities will wipe out their savings. You can't change the racial wealth gap until we face what we got wrong."
This article originally appeared on USA TODAY: Stimulus: Gap widens between unemployment aid for Blacks, whites