Coronavirus Compounds Challenges for Low-Income Communities and Communities of Color

The COVID-19 pandemic affects everyone across the country. As new challenges
add onto existing economic and health inequities, what are the implications
for the most vulnerable people in our District? How are the human and economic
tolls of the coronavirus different for low-income communities and communities
of color? History shows that low-income communities and communities of color
suffer disproportionately during epidemics, and early numbers suggest the same for this crisis. The novel coronavirus
once again demonstrates a need to close these gaps through a strong collective
response—a response that is necessary for all communities to weather this
public health crisis.

The San Francisco Fed’s Community Development team summarizes five key
challenges where relief and resources are needed most.

1. Reduced income is a heavier burden for low-wage workers and small
businesses

People around the country are doing their part to curb the spread of the
coronavirus by sheltering in place and by limiting travel and recreation.
Companies and venues are holding their events virtually, postponing them, or
canceling altogether. These actions are essential for community health and
safety. At the same time, a slowdown in business activity disproportionately
affects the livelihood of small businesses and workers who have thin financial
cushions.

  • Small businesses cannot make payroll.
    Small businesses are at the heart of many communities, and those considered
    non-essential have closed in response to shutdown orders to protect the
    health of employees, customers, and their neighbors. However, reduced
    revenue affects payroll, with ripple effects for workers’ ability to pay for
    necessities such as food, rent, and medical expenses. Banks and local
    governments are instituting temporary relief for small businesses to help
    address immediate needs, but additional support will likely be necessary.
    The federal Small Business Administration has recently announced

    forgivable loans to small businesses

    that keep paying their workers during the shutdown.

“People need to understand this is not a typical downturn. What’s happening
here is people are being asked to close their businesses, to stay home from
work, and to not engage in certain kinds of economic activity, and so
they’re pulling back.”

  • Reduced hours and layoffs are prevalent.
    Along with small-business workers, people with lower-wage jobs in tourism,
    hospitality, food service, the performing arts, specialty trades, automotive
    service, and retail are experiencing reduced hours and massive layoffs. In
    the nonprofit space, the arts—which depend on ticket sales—are particularly
    hard hit. One bright spot is that some large companies are continuing to pay
    their hourly and contract workers, even as offices temporarily close.
  • Options for financial relief are limited.
    Many low-wage workers, such as part-time, self-employed, and gig workers, do
    not traditionally qualify for unemployment insurance. However, the
    Department of Labor announced

    expanded unemployment eligibility and benefits
    , which will temporarily extend state unemployment insurance benefits to
    cover these workers, as well as people who have had their hours reduced.
    Additionally, the Treasury Department and IRS recently announced an
    extension to the federal tax-filing and payment deadline
    and
    economic impact payments, which will provide some cash relief to lower-income individuals and
    families. Even with assistance, low-wage workers may have trouble covering
    their expenses, and those in the informal economy, such as many domestic
    workers, do not have access to unemployment benefits.
  • Financial stresses are also housing stresses.
    Worries over rent and mortgage payments are especially high. To help people
    stay in their homes, the federal department of Housing and Urban Development
    (HUD) as well as some cities and states are instituting temporary eviction
    moratoria. HUD also announced a temporary moratorium on foreclosures on
    federally-backed mortgages. In addition, local governments in the West are
    providing emergency shelter for homeless people at hotels and fairgrounds.
    However, benefits may not be enough to maintain the economic security of
    low-income people in the long run, when postponed rent becomes due and local
    governments face losses in tax revenue that they use to fund services.

2. Essential workers face higher exposure risks

Frontline medical workers and first responders are still working, but they are
not the only ones doing essential work during the COVID-19 pandemic. For
example, many restaurants offer takeout for pickup or delivery, and grocery
and office supply stores remain open. Essential retail, childcare, restaurant,
delivery service, nursing home, and hospital workers continue to show up to
work every day.

  • Frequent contact with the public increases the risk of
    transmission.

    Lower-wage work heavily concentrates in service industries that rely on
    in-person, face-to-face contact, which increases risks of getting sick. And
    the virus can quickly spread within the community when workers return home
    to potentially crowded housing.
  • Low-wage workers often lack sick leave.
    When lower-wage service workers and gig workers get sick, staying home
    becomes a financial hardship. According to the
    Economic Policy Institute, prior to this crisis less than a third of Americans in the bottom 10% of
    wage earners had access to paid sick leave, compared to 93% among the top
    10% of wage earners. Now, many will receive emergency coronavirus-related
    coverage under the
    Families First Coronavirus Response Act (FFCRA). FFCRA provides temporary sick leave to workers at companies under 500
    employees, with possible exemptions for companies under 50 employees.
    Companies with over 500 employees vary in whether they previously provided
    sick leave to lower-wage service workers and whether they are adjusting
    their policies in response to the pandemic. Additionally, some cities have
    sick leave requirements for workers in their jurisdiction, and some—such as
    Los Angeles—have expanded these policies in response to COVID-19.

3. Families are in a bind due to school and daycare closures

Larger daycare centers are closed, and schools are transitioning to distance
learning models. Parents everywhere are faced with learning how to homeschool
or juggle digital platforms for learning. For many, this comes on top of the
adjustment to working remotely. What are the implications for low-income
workers and their children?

  • Increased time off work.
    Parents who have jobs that cannot be done remotely are struggling to find
    alternative childcare options as daycare centers close, or they have to take
    time off work to care for their children.
  • A scramble to access technology.
    As schools move to online distance learning in the wake of closures,
    low-income and rural families that may lack broadband access or home
    computers need to find workarounds. School districts are allowing parents
    and guardians to pick up basic laptops and tablets along with textbooks. The
    California Department of Education
    is collaborating with Google to provide laptops and WiFi hotspots for
    students in rural areas until the end of the school year. Still, state
    education officials estimate the efforts will help about half of the
    students without digital access.
  • Food insecurity.
    Many low-income children receive free or reduced-cost meals at school, and
    closures may worsen food security issues. Some school districts are allowing
    parents to pick up meals that their children would normally receive in the
    cafeteria.

4. Low-income communities and communities of color are more susceptible to
COVID-19 complications

Homelessness, living in close quarters, and postponing seeking medical care
because of high costs all increase COVID-19 risks for low-income
communities.

  • Underlying health conditions already disproportionately affect low-income
    people and people of color.

    Low-socioeconomic status, experiences of racism, and related stress have
    been associated with diminished endocrine and immune functioning.
    Chronic conditions and respiratory disease that are more common among
    low-income people and in communities of color add to the risk of developing
    severe or fatal cases from complications related to COVID-19. People with
    chronic conditions face obstacles to seeking routine in-person care during
    the pandemic, such as reduced public transit service and reduced hours at
    clinics, which could lead to worse health outcomes or a need for emergency
    care.
  • Access to the doctor and effective treatment, once diagnosed, might take
    more time.

    Many people lack a regular source of medical care and have difficulty
    securing timely appointments. Given predicted medical care shortages, access
    will likely depend on having a regular source of care, citizenship status,
    and English fluency. In addition, gaps in culturally-relevant and
    high-quality care—as well as fears related to immigration status—may worsen
    these issues.
  • Seniors are particularly vulnerable.
    Low-income older adults are more likely to have existing health conditions
    and fewer economic resources, which makes them particularly vulnerable. In
    addition, the rise in homelessness among older adults is particularly
    concerning given compounding exposure and health risks.

5. Community service providers are feeling the strain, too

As more and more individuals seek services and resources to cope with
financial strains and health concerns, nonprofits across the West are
reporting high call volumes and spikes in demand. But their budgets are
stretched to the limit because of canceled critical revenue sources, such as
annual conferences and fundraising galas. At the same time, many nonprofits
were not set up for remote work conditions, so shifting operations from
traditional in-person services is a challenge. For example, food banks are
facing an increase in demand, but their usual processes for preparing and
distributing food are being disrupted by social distancing protocols.

The importance of a collective response is clear

Coronavirus-related impacts are disproportionately burdening low-income
communities and communities of color. They are worsening existing economic and
health inequities. The strength of our collective response depends on our
ability to mitigate these underlying inequities related to issues of
employment, cost of living, and healthcare.

What will help now?

  • Support for low-wage workers and small businesses facing lost wages and
    revenue.
  • Ongoing efforts to reduce ripple effects through communities.
  • Providing financial and other services, such as backup dependent care and
    sick leave to reduce financial burdens.

At a moment like this, it is more evident to all of us that our collective
health as a country depends on creating conditions for each of us to thrive.

The current crisis highlights the many gaps in systems needed to support
low-income communities, communities of color, and areas where more action is
needed in response to COVID-19. Our hope is that lessons from this public
health crisis may also provide an opportunity to strengthen the safety nets
that will enable a more resilient and inclusive economy in the future.

Bina Patel Shrimali
is a senior researcher in Community Development at the Federal Reserve Bank of
San Francisco, where she conducts research at the intersection of economic
opportunity and health. She holds a Doctorate in Public Health from UC
Berkeley.

Elizabeth Mattiuzzi
is a senior researcher in Community Development at the Federal Reserve Bank of
San Francisco, where she conducts research on regional transportation and
housing governance, equity, and economic opportunity. She holds a Doctorate in
City and Regional Planning from UC Berkeley.

Laura Choi
manages the Community Development research team at the Federal Reserve Bank of
San Francisco, where she also serves as the Community Development regional
manager for Hawai’i. She holds a Master of Public Policy from the University of
California, Berkeley.

You may also be interested in:

The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.