Study explores economic impact of COVID-19, CARES Act on Black workers and businesses in Virginia

A person wearing a mask looks at a laptop computer.
A new VCU study analyzes the federal response to the current economic crisis brought about by the COVID-19 pandemic, specifically its impact on Black workers and businesses in Virginia. (Getty Images)

At Virginia Commonwealth University, researchers have been launching projects to address and assess the impact of the novel coronavirus. Their work ranges from vaccine development and building biobanks to study the virus to examinations of how the pandemic is affecting food access in vulnerable communities. These are some of their stories.

In response to the Great Recession, the American Recovery and Reinvestment Act of 2009 sought to save jobs and create new ones, with an emphasis on a few strategic industries, including renewable energy.

Yet the recovery act’s green economy jobs relief failed to do much for Black workers and businesses, which were disproportionately affected by the economic meltdown.

Elsie Harper-Anderson, Ph.D.
Elsie Harper-Anderson, Ph.D.

“African American workers and businesses were systematically excluded from participating [in] and prospering from the resources offered due to their underrepresentation in many of the industries favored by the legislation,” said Elsie Harper-Anderson, Ph.D., an associate professor of urban and regional planning in the L. Douglas Wilder School of Government and Public Affairs at Virginia Commonwealth University.

Harper-Anderson’s study of the racial disparities in economic stimulus after the 2008 financial crisis was published in Economic Development Quarterly and revealed what greening the economy meant for African American workers, entrepreneurs and communities.

Harper-Anderson is now conducting a similar analysis of the federal response to the current economic crisis, brought about by the COVID-19 pandemic.

Her new project, “An Analysis of the Economic Impact of COVID-19 and the CARES Act on African American Workers and Businesses in Virginia,” is one of 31 supported by VCU’s COVID-19 Rapid Research Funding Opportunity, led by the VCU Office of the Vice President for Research and Innovation  with support from the C. Kenneth and Dianne Wright Center for Clinical and Translational Research. The program provides funding for VCU research that will help better understand and respond to the pandemic.

“Broadly my research looks at how macroeconomic change influences urban economies and labor markets with an emphasis on inequality,” Harper-Anderson said. “Historically, economic crises have had a disproportionately negative impact on African Americans and policies aimed at economic recovery have been less beneficial to this group.”

The economic impact of COVID-19 will be profound, she said, and there is already evidence that the $2 trillion Coronavirus Aid, Relief, and Economic Security Act has left out some of the country’s most vulnerable people, even as the virus’ health and economic impacts are having disproportionate negative consequences on minorities and low-income populations.

“For example, African American businesses had a more difficult time accessing payroll protection funds due to the way the legislation was written, which allowed preexisting systematic inequalities in banking relationships to dictate the distribution of funds,” Harper-Anderson said.

African Americans workers, businesses and communities will be disproportionately impacted by both the crisis and the legislation in a myriad of harmful ways.

The pandemic is forcing innovations in how we work and do business, she said, and those changes will affect each population of workers and type of business differently.

“As with any economic transformation, there will be winners and losers,” she said. “The new normal level of telework will exacerbate issues of the digital divide, which previous research has documented to impact minorities and low-income workers to a greater extent than whites.”

Harper-Anderson expects to find that the CARES Act has embedded in it many “levers that will usher in yet another round of inequality further solidifying an already widening racial gap.”

“African Americans workers, businesses and communities will be disproportionately impacted by both the crisis and the legislation in a myriad of harmful ways,” she said.

The study has three goals: To estimate the potential economic impact of COVID-19 on African American workers and businesses in Virginia relative to that of whites; to analyze the CARES Act from a racial equity framework to assess its implications for African American workers, businesses and communities; and to develop policy recommendations on ways to address potential equity issues embedded in the act and Virginia’s implementation of it.

It will rely primarily on data from the U.S. Bureau of Labor Statistics, the Virginia Employment Commission and other government agencies to analyze unemployment, industry and occupation distributions and business performance by race.

Harper-Anderson hopes the research will lead to policy recommendations to mitigate long-term equity issues in economic recovery in the wake of the pandemic.

“The cycle of economic and social inequality in this country is a wicked problem with many layers and facets,” she said. “Public policy has the potential to either help level the playing field or exacerbate preexisting systematic inequalities. Analyzing the implications of the CARES Act and the current crisis allows us to begin to think about ways to offset or mitigate racially unjust outcomes.”

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