According to a report, more than 41 per cent of businesses owned by black people have been shuttered as compared to 17 per cent of white-owned businesses.
The stress of a pandemic along with economic disparities and systemic racism has pushed more than half of black-owned businesses into reeling. The ones who were hopeful and began re-opening were slammed again after the US was hit by the second wave. The fortunes of black socialites and business persons have dropped devastatingly and the most affected areas were the bars and restaurants owned by black people.
The black-owned businesses have been the worst hit by the COVID-19 shutdown and some 440,000 businesses owned by black people have been shuttered according to research by the University of California. Economists had anticipated this economic depression but couldn’t guess that it would be devastating.
“After 90 days without positive cash flow, you will feel a lot of pain”, said the former Philadelphia Commerce Secretary and senior advisor at Bellevue Strategies, Harold T. Epps. He further added, “It doesn’t matter if you are a barber, beauty supply store, food provider, or other retail outlets. Many are challenged by cash flow on a good day, and over the last 90 days, it’s been nonexistent. That will result in one out of every two not returning.”
Why are Black-owned Businesses More Vulnerable?
“The disparate racial impact of the virus is deeply rooted in historic and ongoing social and economic injustices. Persistent racial disparities in health status, access to health care, wealth, employment, wages, housing, income, and poverty all contribute to greater susceptibility to the virus- both economically and physically,” according to the Economic Policy Institute.
According to specialists, the Black Americans are still recovering from the economic collapse of 2007-2009 which had a shattering impact on their wealth. “Unlike other communities, African Americans are not as equipped today to recover from the second period of economic collapse,” said Kristen Clarke. According to Epps, “When it comes to education, income, business, or health, we are disadvantaged and devastated to a much larger extent than white people.”
Andre Perry, author of the book Know Your Price: Valuing Black Lives and Property in America’s Black Cities and a fellow at Brookings Institution in Washington states that the lack of wealth of the Black community has had a huge impact on its ability to survive the pandemic. “Because a lot of Black business owners don’t have the kind of equity due to structural racism, they have less of a cushion to withstand this particular moment”, says Perry. He believes that had Black business persons the same cushion as the Whites; the situation wouldn’t have been this bad.
According to an economist in the US Santa Cruz, half of the American Black families have total wealth less than $9000 whereas the average wealth of white families is $130,000. Thus, if $10,000 is required to survive a rough time, it is evident who will survive. The interest rates for loans meted out to black people are reportedly higher than the whites which make it even more difficult for them to revive.