Despite being back at work, Kashirah Jackson is still a long way from recovering from the economic upheaval that the coronavirus pandemic has wreaked in her finances.
The independent hairdresser’s business in Charlotte, North Carolina, did well early last year, collecting her income on a down payment on a home. But the state lockdown did not let her see her customers and forced her to use up her savings so she and her one-year-old daughter could survive.
Now only about 60% of their customers have returned. And while Jackson is still on unemployment benefits, her pre-pandemic income is lagging behind.
Worse, the rise in house prices over the past year will make it even more difficult for them to buy their own home anytime soon.
“Now I have to work harder and longer to get back to where I was,” said Jackson, 35, adding that as a tenant, you cannot refinance a mortgage to cover your expenses like those who own a home . “My only cushion was my savings.”
While the coronavirus pandemic has ravaged many people’s bank accounts, it has also exposed the economic uncertainty that many black Americans face.
According to a poll by the Pew Research Center earlier this year, a quarter of black Americans said their current financial situation is worse now than it was a year ago, before the pandemic, compared to 17% of their white counterparts. Among adults who can usually save, 44% of black respondents said they were saving less than they did in early 2020, compared with just over a quarter of white Americans.
And many more black Americans said they were worried about being able to afford food, cover their rent or mortgages, and pay their bills, said Khadijah Edwards, a research fellow at Pew.
Part of this inequality arises from the fact that black Americans have far fewer assets and savings than white Americans during difficult times. And the gaps also give black households fewer stepping stones to recover when the economy picks up again.
“If you don’t have the wealth, it’s a gamble like you will be on the other end,” said Fenaba Addo, associate professor of public policy at the University of North Carolina at Chapel Hill, of the pandemic-fueled impact Downturn on black Americans. “It can take a while before people can rebuild themselves and their families from it.”
The typical non-Hispanic white household had a net worth of $ 188,200 in 2019, compared to $ 24,100 for a non-Hispanic black family, according to Federal Reserve Bank data.
The big difference in home ownership, which is critical to wealth creation, is part of the gap. Black Americans often find it harder to buy homes because they have lower median incomes, are less likely to receive inheritance or support from their parents, and grapple with historical real estate racism and its lasting effects.
According to the latest data from the Census Bureau, only 45% of black Americans own a home compared to nearly 74% of white Americans.
This also adds to their vulnerability: Black Americans are much less likely to invest in stocks or mutual funds than white Americans, and have less than a quarter of their savings reserved for emergencies.
The lower home ownership and investment rates mean many black Americans are missing out on robust real estate and stock market gains over the past year that have benefited others greatly.
According to CoreLogic, which analyzes real estate data, homeowners with mortgages gained an average of $ 33,400 in home equity between the first quarters of 2020 and 2021. And the stock market is at or near record highs.
Had Harold Jones owned a house or had more than a few hundred dollars in investment, he wouldn’t have had to turn his life upside down to weather the pandemic after losing his job with a wildlife control company in March 2020.
Despite receiving increased federal unemployment benefits and cashing in on his tiny retirement account, he still had to downsize to a smaller apartment in Baltimore, Maryland and give up his beloved 2008 Subaru Impreza, which he used to visit his mother, visit friends, and go to the beach and hike .
Jones now has better, albeit contractual, employment in the Baltimore school system as student support, which he hopes will convert to an apprenticeship position, as well as a part-time job as a bartender. Still, the pandemic has set both his career and his wallet back.
“If you come out of the pandemic with no nest egg or something to liquidate, you are at a disadvantage,” said Jones, 34, adding that he could have been better prepared for the downturn if he was over something at a young age Finances and Savings. “I would have liked to sell some stock for $ 1,200 to fix my car.”
Like Jones and Jackson, many black millennials find themselves in a particularly difficult position. Even before the outbreak, the generation had amassed fewer overall wealth than the baby boomers and Generation X of the same age. That’s partly because they grew up at the worst possible moment – when the economy collapsed after the 2008 financial crisis.
Despite the economic times between 2016 and 2019, older non-Hispanic black millennials fell even further below expectations of previous generations of the same age, according to the Institute for Economic Equity at the Federal Reserve Bank of St. Louis. Her average net worth of $ 5,000 in 2019 was 52% lower than expected. Three years earlier, their average wealth was 39% lower.
Older non-Hispanic white millennials have narrowed the gap in their expected wealth over those three years, according to the institute. The typical family had a net worth of around $ 88,000 in 2019, just 5% below expectations, compared to a 40% shortfall in 2016.
Millennials hit by the student debt crisis
One thing that weighs on older black millennials born in the 1980s is college debt. About 81% of college graduates in this group have a median of $ 52,000 in student loans, compared with just over half of older white millennials, who have a median balance of $ 40,000, according to Federal Reserve Bank data.
To give Americans a fiscal hand during the pandemic, Congress and the Trump administration have suspended repayment of federal student loans. President Joe Biden extended the break until September. That aid, along with more generous unemployment benefits, three rounds of stimulus payments and a moratorium on evictions, helped keep people afloat during the outbreak.
But most of these programs will expire in the coming weeks and months – which worries some experts.
“There has been unprecedented government aid that has made a difference for these lower-income families,” said Ana Hernandez Kent, senior researcher at the St. Louis Fed Institute. “But when this help ends, there will be a big question mark. What will happen to them? “
Black Americans as well as Hispanic Americans risk being left behind, she said.
This is exactly what worries Nick Howell of Twinsburg, Ohio. Although he retained his position as restaurant manager and his wife was fired from her job at a plastics factory for just a day, it was the federal government’s relief efforts that helped them stabilize their finances during the pandemic.
The postponement of their $ 75,000 student loan total and the economic checks allowed them to move from Howell’s home to a rental apartment and to settle some credit card debt.
Howell, 39, got a better job last month as general manager of a local chain restaurant, but the family still lives on paycheck after paycheck. The rising gasoline and food prices are also putting a strain on your wallet, as are the medical bills for your 7-year-old son who broke his arm last summer when he wanted to re-enact the tobogganing scene in “Alone at Home”.
The couple hoped the Biden administration and Congress would agree to pass student loan issuance, but that doesn’t seem likely. Now they fear repayment of their monthly payments in the fall.
“How are we supposed to handle this?” asked Howell, who has a Masters degree in higher education. “We’re still where we were – indebted, trying to work it off and hoping that no car breaks down, or children’s expenses, or anything that puts us even further behind.”