May 01 2020
Leading economists have long advocated for using “automatic stabilizers” to help counteract the destructive impact of recessions and to hasten recovery. Such mechanisms, like unemployment insurance, automatically expand when the economy worsens and shrink when it recovers. This prevents consumer demand—and the economy—from falling into a downward spiral.
Congress has acted forcefully to counteract the economic fallout of coronavirus with a dramatic expansion of unemployment insurance, aid to state and local governments and more. But that aid is temporary and, unlike enhanced automatic stabilizers, will begin to expire this summer while we likely remain in the middle of dual public health and economic emergencies.
Providing economic support to Americans during the public health emergency is critical to beating the virus. The goal in every other economic downturn has been to get people back to work quickly, but the current objective is to allow them to stay home or practice social distancing for as long as it takes to get the virus under control. Public health experts predict that
Americans will not cooperate with these measures if they can’t support their families.
Economic assistance should continue even after the end of the public health emergency, given how deep the current economic downturn is and how long it may last. We already have seen more than 24 million Americans lose their jobs in just five weeks and images of food lines have proliferated across the country, evoking the depths of the Great Depression. This will likely not end quickly: the Congressional Budget Office notes that its forecast is highly uncertain, but estimates that, without additional economic support by Congress, unemployment at the end of 2021 will be 9.5%, only slightly better than the very worst (10%) of the Great Recession.
The most sensible way for Congress to guarantee that economic assistance will continue as long as it is needed is by directly linking it to the state of the economy instead of picking arbitrary expiration dates. This would mimic the automatic stabilizer approach that economists have long urged, provide certainty to families that they will get the aid they need, ensure that support does not depend on politics and automatically turn off support when it is no longer needed. Neither economists nor epidemiologists can predict the length of this recession—some believe the economy will begin to rebound quickly while others say it will remain depressed for years. Linking aid to economic conditions accounts for either possibility.
A discretionary approach to economic support risks cutting off aid to families as they comply with public health guidelines that essentially require unemployment or wait for the economy to recover. These consequences would be especially grave for low-income Americans and people of color. This risk—in an election year with divided partisan control of Congress—is too grave.
Linking support to economic conditions, on the other hand, avoids that unnecessary risk.
Washington, D.C.—Today, Congressman Don Beyer (D-VA), the Vice Chair of the U.S. Congress Joint Economic Committee (JEC), released a report that explains why Black, Latino and low-income communities are disproportionately impacted by the coronavirus.
As the report shows, Black, Latino and low-income Americans are more likely to have pre-existing conditions such as hypertension, chronic lung disease, diabetes and heart disease—a CDC report found that nine of 10 Americans hospitalized for coronavirus had these health conditions. In addition, they are more likely to do person-to-person work in the service industry—often without benefits like paid sick leave, health insurance and the flexibility to work from home.
Black, Latino and low-income Americans are also more likely to suffer economic impacts from the recession caused by coronavirus because they historically experience higher unemployment rates, lower income and much less wealth.
“As a result of a corrosive cocktail of systemic inequalities, tens of thousands of people across the country are more likely to die from the coronavirus because of who they are, what they do and where they live,” Congressman Beyer said.
“Not everyone has a job that will allow them to work from home and those that do not are disproportionately low-income and people of color,” Congressman Beyer said. “Public-sector jobs that have been pathways to the middle class for so many black families—essential jobs to keep society running—are now risky. I keep thinking about the black bus driver in Detroit who, like so many of those in the service industry, was torn between a paycheck and protecting his health—a few weeks after complaining about the lack of health protections on his bus he died of coronavirus.”
Congressman Beyer added, “As Congress thinks through how to help the nation respond and recover from the coronavirus, it is important that we remember that race neutral programs and policies do not always have race neutral impacts. We saw this play out with some of the small business programs that were included in previous legislative responses to the coronavirus—even though they are eligible, small-business owners of color are having a harder time accessing federal loans through their local banks. I am pleased that in the bill passed yesterday we improved access by ensuring more funds are available to minority-owned businesses.”
One of the communities hardest hit by the coronavirus is the Black community. A CDC study of coronavirus hospitalization in March across 14 states showed that 33% of admitted patients were Black, despite Blacks making up just 18% of that study’s population. In Louisiana and Chicago, 70% of people who have died from coronavirus have been Black, despite Black Americans making up just one-third of the population in both places. In Washington, D.C., 81% of the people who have died from the coronavirus have been Black, despite Black Americans making up 46% of the population. Nationally, 24% of Black Americans and Latinos work in the service industry compared to 16% of Whites.
In addition to Black, Latino and low-income communities, the report shows the disproportionate impact the coronavirus is having on the Native American communities. Though national level statistics are scarce, available data show the Navajo Nation has seen the highest number of confirmed cases (1,360) and deaths (52) thus far . In New Mexico, Native Americans make up 11% of the population and 37% of those confirmed with coronavirus.