Government policy created this racial wealth gap. Federal housing practices and the GI bill, for example, systematically excluded black families from wealth-building opportunities, following centuries in which white wealth was built up from the theft of enslaved black labor. In 2016, the median black household’s wealth was roughly 10 percent that of the median white household. The gap persists even after controlling for factors such as education, marital status and income — a typical college-educated black household has 30 percent less wealth than a typical non-college-educated white household. A report from the Center for American Progress estimates that “without intervention, these disparities are expected to persist for at least another 200 years.”
The pandemic is certainly an intervention — of the worst kind. With far less wealth to cushion the painful effects of economic shocks, black people are more likely to fall behind on bills and into debt in times of emergency. Fewer than 20 percent of black Americans have jobs which enable them to work from home. Of particular concern is the hit to black-owned businesses, which are a significant source of black wealth and are overrepresented among businesses at most immediate risk in the pandemic, according to the Brookings Institution.
To avoid exacerbating racial inequality, pandemic policies must take this vulnerability into account and take deliberate steps to avoid replicating structural exclusions. The Paycheck Protection Program (PPP), established in March by the Cares Act, is struggling on this front. The intended purpose of the program was to rapidly provide forgivable loans to businesses to help them continue paying their employees during the pandemic-inflicted disruption. The first-come, first-served approach favored businesses with existing commercial lending relationships, which disadvantaged black-owned businesses, which are far less likely to have such relationships.
The creation of the PPP was met with a flood of concrete recommendations from experts on how to make the program more equitable in practice — including a greater role for Community Development Financial Institutions, which tend to have stronger relationships with black communities than do large banks. Major policies should be accompanied by racial equity impact assessments, which can surface potential equity-enhancing mechanisms in advance.
Any policy touching on race has to be carefully designed to pass constitutional muster. But the government certainly has a compelling interest in ensuring that its recovery policies do not aggravate the wealth gap. The virus and economic shutdowns are not harming everyone equally. If colorblind policies — even those that are truly colorblind in operation — cannot address that reality, then rescue policies must be designed and implemented to reach those who are most endangered.