A new report by the Federal Reserve Bank of New York shows that government pandemic aid packages have failed Black-owned businesses. 41% of Black-owned businesses in America have closed down in the pandemic, compared to just 17% of white-owned businesses.
There are multiple reasons, all of them intrinsically tied to racism. A large chunk of Black-owned businesses are concentrated in some of the same areas of the country that have allowed the pandemic to spiral out of control, places that not coincidentally had sparse healthcare resources to begin with. A disparity in pandemic deaths between white and non-white America quickly became evident as the virus spread to places like Southern California, Georgia, and Texas. Non-white Americans tend disproportionately to be in jobs that cannot be done remotely. And pandemic relief to business owners hasn't been getting to Black Americans because of the way Congress and the administration structured that aid, routing it through banking institutions that have continued to systemically discriminate against Black Americans. The results were baked into the program.
The central sin of the main employer relief package to date, known as the Paycheck Protection Program (PPP), is that it was channeled through the private banking system. (For disclosure: Kos Media has received a loan through the PPP.) Due to historic discrimination, Black business owners are less likely to have established relationships with the banks responsible for managing loan distribution, rendering it far more difficult for Black-owned businesses to apply to the program.
By early July, lawmakers were both acknowledging that pandemic relief was leaving Black-owned businesses behind and pushing new packages to attempt to fix it. And banks themselves, straining under the overwhelming need for the program, were by the beginning of July asking Congress to leave them out of future relief machinations by instead giving relief as direct grants rather than bank-channeled loans.
The New York Fed comes to the same conclusion: The reliance on banks heightened racial disparities in pandemic relief, and the next rounds of pandemic relief should be "more targeted" towards the most hard-hit areas and areas that lack "critical infrastructure" like banks and hospitals.
The next question is whether there will be more pandemic relief at all. The Republican-held Senate continues to resist further relief targeted towards employees or small businesses. (Though 100% tax breaks for business lunches continues to be An Idea Someone Actually Had.) Both the White House and Senate seem to have instead staked themselves to a notion that rapid reopening of the economy, the same plan that spiked pandemic cases in Arizona, Texas, and Florida, will somehow take place this fall despite increased pandemic dangers. It remains a baffling "plan."
