COVID-19’s outsized impact on Black workers

This is Working Together, a weekly series on the changing face of U.S. business. These are challenging times and we are all trying to work out what the coronavirus means for our lives and our careers. If there are topics related to the virus that you’d like us to discuss as a community, let me know. Next week, I’ll be off, but I’ll see you back here on May 13. 

Black Americans are disproportionately affected when the country faces a crisis. And in the age of the coronavirus, the inequity is readily apparent.

Some 39% of all jobs held by Black Americans are threatened by cuts in the wake of the coronavirus, according to a recent report out by McKinsey. That represents around 7 million jobs where workers are likely to be laid-off, furloughed or lose part of their income. Meanwhile, Black Americans are also overrepresented in nine of the 10 lowest-paid, high-contact essential service positions, including roles like nursing assistants, restaurant workers and childcare workers. Many must choose between a paycheck and risking their health to go to work. 

“It's classic ‘rock in a hard place.’ Bills need to get paid and you have to continue to bring in an income,” McKinsey Partner Jason Wright told me in a live interview. “Especially if the folks in your household are in a more corporate job, or something that is non-essential, which are at a higher risk of losing their jobs due to rapid acceleration of automation programs and things that disproportionately affect Black workers.” 

Black small business owners and their staff have also been disproportionately hit by this crisis: 40% of the revenue of black-owned businesses are in sectors like leisure, hospitality and retail, which have seen major slowdowns since the crisis began. And while there is stimulus funding available for small business owners through the $2 trillion economic relief plan, experts are skeptical that such funds are accessible to the Black community. 

Previous research has shown that Black and Latino business owners are denied loans at a higher rate and have weaker banking relationships than their white peers.  

“Black businesses, that skew smaller on average, are having a more difficult time accessing these funds,” McKinsey Partner Shelley Stewart said. “While there is help out there, there is some concern that it won’t reach Black businesses. 

Meanwhile, Black women, who are overrepresented in low-wage healthcare occupations such as nursing assistants and home-health aides that are in high demand right now, are facing unique challenges of their own. Half of Black households with children are led by a single woman, which makes balancing work with childcare during nationwide school closures particularly challenging. Of the households led by single Black women, 38% live below the poverty line. 

Companies can help address the outsized risk the Black community faces during this crisis, McKinsey’s Wright says. Some employers are offering essential workers hazard pay, additional income to account for the elevated risk of coming to work. Also, companies who furlough or lay off portions of their workforce need to track the data to ensure that people of color are not being let go at a higher rate.

“If you assume good intent, you are going to start to see that the disproportionate number of people that are being let go are people of color, and no one feels good about that and it makes you pause and reassess the strategy,” Wright says. 

It’s also critical that government officials keep tabs on the allocation of COVID-19-response resources. If Black Americans are not receiving stimulus funding, they will certainly recover more slowly. The sooner we detect a problem, the better. “If it ends up being a forensic accounting in three to six months, then we will have missed the opportunity because the funds will be gone,” McKinsey’s Stewart said. 

Ultimately, this will take collaboration between the private, public and social sectors to ease the pandemic’s long-term impact on the Black community. Black communities do not have equal access to broadband data, Wright notes, which is particularly challenging when people need to access work, school and even health care remotely. If these sectors are able to come together to democratize access, we would see outsized benefit once the crisis comes to an end. 

Otherwise, we may see an even slower recovery for the Black community than we did during the last recession. 

“We know that traditionally after recessions, Black Americans tend to stay unemployed for longer and suffer from higher foreclosure rates,” he said. “Forty percent of Black businesses are in these sectors where there is just a big question mark of what the rate of acceleration will be and what the new normal will look like.” 

For more insights on the topic, check out the full interview with Wright and Stewart here. 

What’s Working

Opportunity in travel? Earlier this week, I caught up with Peek.com CEO Ruzwana Bashir to learn how she is navigating her travel booking site during these challenging times. Like most entrepreneurs I’ve spoken to, she views the crisis as an opportunity: Bashir thinks that coming out of this, she’ll see an increased demand for activities that customers can do locally in their own community. Catch the full interview above. 

Preventing gender backslide. As I wrote last week, organizations have a choice to either invest in or ignore diversity efforts during this crisis. All Raise CEO Pam Koska explains why venture capitalists need to do the former. “Female founders are the architects of tomorrow, and, when the architects of tomorrow better reflect the world, our world is better served,” she writes. [LinkedIn] 

#WomenOnTheFrontlines 

What topics do you want to discuss next time? Let me know in the comments below using #WorkingTogether