People walk by a Help Wanted sign in the Queens borough of New York City on June 4. | Spencer Platt/Getty Images
By eleanor Mueller
June 25, 2021
The decision by more than two dozen governors to slash federally supplemented unemployment benefits will have a disproportionate impact on Black and Latino workers and, some economists say, could have lasting economic repercussions for them.
Of the 17.4 million workers who applied for and received unemployment benefits between January and May, a disproportionate 21.5 percent were Latino and 18.4 percent were Black, Census data show. That’s greater than their respective shares of the overall workforce: About 18 percent of employees in 2020 were Latino while 12 percent were Black, according to the Bureau of Labor Statistics.
The differences are even more pronounced in states that have cut jobless aid or are about to. In Georgia, 61.4 percent of those who have received unemployment benefits between January and May are Black, according to the Census data. In Texas, 35.8 percent are Latino. In Mississippi, 46.3 percent are Black. And in South Carolina, 28.7 percent are Black.
"It's going to be worse for them, the way it was in January 2020" before Covid hit, Kathryn Edwards, an economist at the RAND Corporation, said. "Black workers are not equal to white workers in our economy."
"This is just slowly piling onto the inequality that is already there. When you're in a trough, it's really hard to tell who's falling faster."
While the overall unemployment rate declined to 5.8 percent in May, the unemployment rates of Black and Hispanic workers remained elevated at 9.1 percent and 7.3 percent respectively, according to the Bureau of Labor Statistics.
Some economists say the benefit cuts will have lasting repercussions, making longstanding racial economic inequality even worse.
"The facts are pretty clear: Winding down UI will have disparate impacts on minority groups for sure," Mark Zandi, chief economist at Moody's Analytics, said. "These groups are still financially very disadvantaged" despite the federal aid.
"They came into the pandemic behind the financial ball. The pandemic hit them hardest. And they're going to come out the other side of this financially hobbled."
So far, 26 states including Florida, Georgia and Alabama have decided to opt out early from short-term federal programs that provided jobless workers with an extra $300 a week; made gig workers, part-time employees and the self-employed eligible; and extended the length of state-provided benefits in response to Covid. The state cutoffs started in June and are set to continue into July, while the federal expiration is set for the beginning of September.
All except Louisiana are led by Republican governors, who say the generous federal benefits are keeping unemployed people from looking for jobs amid employee shortages in some industries. Democratic lawmakers, unions and other advocates have pushed the Biden administration to countermand the cutoffs, but Labor Department officials have concluded there's little they can do.
The rollbacks will affect an estimated 4 million jobless people.
Many of the states cutting benefits have more Black and Latino workers overall.
"The state variation [in unemployment systems] does not work in the favor of Black workers," Edwards said. "Black workers are not randomly distributed throughout the United States."
Georgia Gov. Brian Kemp announced in May he would cut off federally supplemented insurance starting June 26. More than 32 percent of Georgia's workforce is Black.
Sharon Shelton Corpening, 60, is a freelance writer living in Georgia. When Covid hit, she was working as a cashier at T.J.Maxx while waiting for a gig with the U.S. Census Bureau to start.
But in March, both employers paused their operations — and since then, she said, she's been unable to find and keep another job. Employers for whom she’d worked before, like the U.S. Census Bureau, didn’t offer the remote options that would have allowed her to manage the worsening pain caused by her fibromyalgia.
Corpening, who lives with her mother, currently receives $377 a week in jobless benefits under the Pandemic Unemployment Assistance and Federal Pandemic Unemployment Compensation programs. Starting June 26, she says she won't receive anything since her state benefits have expired.
“I’m late with my car payment; I’m late with power,” Corpening, who is Black, said. “I needed the extra” money.
Senate Finance Chair Ron Wyden (D-Ore.) is seizing on the disproportionate impact as a reason why the U.S. should have one overarching unemployment insurance system, rather than 50-plus state- and territory-level ones.
“A lot of those people, especially vulnerable women of modest means, are going to have an income of practically zero,” Wyden said. “That makes the need for federal reform that much more serious.”
Republicans and conservatives counter that governors should retain the right to make choices for their states. Many have wildly different labor markets, they point out. They also question whether the federal government would even be able to erect a well-oiled program encompassing all 50 states and territories.
"If we're talking about setting up a federal program ... we've got to expect a high level of misuse and abuse out of such a program," Rachel Greszler, an economist at the conservative Heritage Foundation, said.
There are a variety of reasons why Black and Latino unemployment rates remain higher than those of their white counterparts, many of which some experts attribute to structural racism. Black and Latino workers were not only less likely to remain employed when Covid hit but — as was the case before the pandemic — less likely to be called back to work or be able to find new employment.
“The reason why Black and brown people are receiving disproportionately more benefits is because we are more likely to be locked out of the job market,” Andre Perry, an economist at the Brookings Institution, said. “Many employers still are not hiring Black and brown people. We saw the unemployment differences with the jobs report.”
Even in cases where non-white workers are able to find new work, they may have more difficulty than white workers getting enough hours to support themselves. Schedule instability is 16 percent higher among non-white workers compared with white workers, University of California Berkeley researchers found.
“People of color end up getting worse and worse schedules,” Rachel Deutsch, senior attorney for worker justice at the liberal Center for Popular Democracy, said. “They’re more likely to be underemployed, more likely to have volatile, last-minute changes — and that really is an area where we see just actual racism playing out in the workplace.”
Some workers say these trends, while longstanding, may be worsening as the U.S. emerges from the recession.
Earl McCarthy, 47, was working at a senior living community in Georgia when he was laid off. A Black father of four, he received state jobless benefits and, later, federally supplemented Pandemic Emergency Unemployment Compensation benefits as he searched for a job and was met with rejection after rejection.
Finding work “was really difficult,” McCarthy, now employed as a sales development representative, said. “Number one, definitely, race played a factor” more than it had in previous job searches.
“You just face all of those kinds of pushback on an interview,” McCarthy said. “I would say that the interview process is definitely a lot longer [post-Covid].”
The racial repercussions of slashing jobless benefits could last far beyond the recovery — particularly when added to moratoriums on rental assistance and evictions, Perry said.
“This can have absolutely devastating effects,” he said. “You can see more people evicted, more in abject poverty, a number of long-ranging effects because there's some things you don't come back from. It's hard to build back up when you don't have an income, when you're struggling to make ends meet.”
“For states to pull the rug out of underneath families without addressing real structural problems in various sectors? … If you're not fixing the structural changes that necessitated the need for supplemental insurances, then you're not ready to remove them.”
Edwards points out that many Black workers make less than their white counterparts, meaning more of them will be pressured into taking low-paying jobs. The median annual income for a Black household in 2019 was $46,073, according to the Census Bureau; for a white householder, it was $72,204.
"It pushes people into jobs, but it has a scar of being in the low-wage labor market," Edwards said. "And you're just pushing that scarring onto Black workers."
Rebecca Rainey contributed to this report.