The Racial Gap In Jobless Aid Is Growing
Jessica Menton at USA Today details how the extra $600 in aid from the federal government began chipping away at a longstanding racial gap in jobless aid received by Black Americans and white Americans. However, with Congress at a months long impasse over a new relief package that would renew the $600, which expired in late July, that racial gap in jobless aid is widening again just as household financial distress, particularly for Black workers, is increasing.
Whenever President Trump is pressed on race, he asserts that his administration recorded the “best Black unemployment numbers in the history of our country.” While the jobless 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.
That $600 Was Huge
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 only cover 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.
Racial Gap in Jobless Aid
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.
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.
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.
Blacks’ greater propensity for living in the South is a big reason they trail whites in receiving jobless 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 one in four Black workers lives in just three states: Texas (8.5%), Florida (8.1%) and Georgia (8%).
States in the South with more Black workers have less generous unemployment benefits. As a result, nationally, the average maximum weekly benefit for black workers is $40 short of the amount received by white workers. This means nationally, Black workers are less financially supported on unemployment than white workers simply by virtue of where they live.
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.
The History of the Racial Gap In Jobless Aid Is Still With Us Today
Unemployment is administered by states — unlike Social Security, which is federally operated — dates back to the New Deal legislation in the 1930s; specifically, 1935 when 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.
The Supreme Court had struck down key provisions in prior New Deal legislation for being an unconstitutional use of the interstate commerce clause, leaving some lawmakers 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.
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 so Northern Democrats had to give Southern Democrats the means to exclude Black people from receiving benefits.
More precisely, the legislation barred agricultural and domestic workers from the unemployment program, which had a disproportionate impact on Black workers, particularly Southern sharecroppers. 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.
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. According to the Urban Institute, an economic think tank, 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.