The coronavirus pandemic has disproportionately hit communities of colour in the United States with research showing that the number of active African American business owners fell 41 percent from February through April, compared with a 17 percent drop in active white business owners.
The exact drivers of that stunning inequity are the subject of a brief released earlier this week by economists at the New York Federal Reserve.
The New York Fed economists identified three main areas that left African American businesses more vulnerable to closure than their white counterparts, including higher rates of COVID-19 infections in areas where Black-owned businesses are more likely to be located, racial disparities in access to federal relief funds, and pre-pandemic funding gaps and weaker banking relationships that made “even the healthiest Black firms” financially disadvantaged when lockdowns swept the nation in March.
The New York Fed’s research illustrates the close relationship between the health and economic effects of the coronavirus pandemic.
“Data from counties nationwide show Black-owned firms are more likely to be located in COVID-19 hotspots, whereas white-owned firms are less likely to be in the most heavily affected areas,” the Fed brief’s authors, Claire Kramer Mills, Assistant Vice President and Jessica Battisto, Senior Analyst, write.
Unequal access to federal relief funds also worked against African American-owned businesses.