Racial Economic Inequality Amid the COVID-19 Crisis

Home , Diana Farrell, Economic inequality

ESSAY 2020-17 | AUGUST 2020

Bradley L. Hardy and Trevon D. Logan

i The Hamilton Project • Brookings MISSION STATEMENT

The Hamilton Project seeks to advance America’s promise of opportunity, prosperity, and growth. The Project’s economic strategy reflects a judgment that long-term prosperity is best achieved by fostering economic growth and broad participation in that growth, by enhancing individual economic security, and by embracing a role for effective government in making needed public investments. We believe that today’s increasingly competitive global economy requires public policy ideas commensurate with the challenges of the 21st century. Our strategy calls for combining increased public investments in key growth-enhancing areas, a secure social safety net, and fiscal discipline. In that framework, the Project puts forward innovative proposals from leading economic thinkers — based on credible evidence and experience, not ideology or doctrine — to introduce new and effective policy options into the national debate.

The Project is named after Alexander Hamilton, the nation’s first treasury secretary, who laid the foundation for the modern American economy. Consistent with the guiding principles of the Project, Hamilton stood for sound fiscal policy, believed that broad-based opportunity for advancement would drive American economic growth, and recognized that “prudent aids and encouragements on the part of government” are necessary to enhance and guide market forces.

ii The Hamilton Project • Brookings Racial Economic Inequality Amid the COVID-19 Crisis

Bradley L. Hardy American University

Trevon D. Logan The Ohio State University

AUGUST 2020

This policy essay is an essay from the author(s). As emphasized in The Hamilton Project’s original strategy paper, the Project was designed in part to provide a forum for leading thinkers across the nation to put forward innovative and potentially important economic policy ideas that share the Project’s broad goals of promoting economic growth, broad-based participation in growth, and economic security. The author(s) are invited to express their own ideas in policy papers, whether or not the Project’s staff or advisory council agrees with the specific proposals. This policy paper is offered in that spirit. The author(s) did not receive financial support from any firm or person with a financial or political interest in this article. They are currently not an officer, director, or board member of any organization with an interest in this article. these gaps have widened over the second half of the 20th Introduction century.

COVID-19 confronts Americans with two crises: a public Growth in the Black–white wage gap has accelerated in recent health crisis and an economic crisis. The two operate together, years, as evidenced by a more than 20 percent increase in the since the public health crisis has dramatically reduced Black–white wage gap between 2000 and 2020 (Gould 2020; economic activity and overall spending. Moreover, this crisis Wilson 2020). Wage earnings are the largest subcomponent of has broader distributional consequences than any economic income, which represents the total ongoing flow of resources event in recent memory, altering most aspects of how we live, available to households independent of wealth, and in many work, and conduct business—and in truth, who will survive. instances contribute to wealth accumulation.

Across the economy and society, the distributional This wage gap in part reflects persistent racial differences in consequences of COVID-19 are uneven: the pandemic labor market outcomes. Black workers are more likely to work and its broader economic and health consequences are within the low-wage labor market (Chandra 2000; Gould and disproportionately impacting Black Americans. Wilson 2020; Hardy, Smeeding, and Ziliak 2018). In addition to lower average earnings, Black workers face work hours that The outsized challenges that Black Americans are facing are a are less predictable, along with harder-to-predict schedules reflection of the generally diminished economic position and (Schneider and Harknett 2019), and relatively unstable health status that they faced prior to this crisis. Several pre– employment overall (Ziliak, Hardy, and Bollinger 2011). COVID-19 economic conditions—including lower levels of Black workers also disproportionately reside in states where income and wealth, higher unemployment, and greater levels the relatively low federal minimum wage is binding (Wilson of food and housing insecurity—leave Black families with 2019). fewer buffers to absorb economic shocks and contribute to Black households’ vulnerability to the COVID-19 economic Moreover, Black workers have higher income volatility, crisis. driven in large part by higher joblessness and employment exits historically (Casey and Hardy 2018; Ziliak, Hardy, and The interaction of those pre–COVID-19 economic and health Bollinger 2011). These racial earnings and employment gaps disparities—including a higher rate of preexisting health are strongly driven by labor market discrimination (e.g., conditions such as hypertension and lung disease—has Bertrand and Mullanaithan 2004; Holzer, Raphael, and contributed to higher COVID-19 mortality rates for Black Stoll 2006). Skills do not appear to close these gaps, either; Americans (e.g. Benitez, Courtemanche, and Yelowitz 2020; Black Americans receive lower, albeit positive, returns to Weimers et al. 2020). According to the APM Research Lab, post-secondary education relative to other groups (Bartik Black Americans continue to experience the highest overall and Hershbein 2018). Rather, these racial earnings and actual COVID-19 mortality rates (80.4 per 100,000)—more employment gaps are strongly driven by labor market than twice the rate of white Americans (35.9 per 100,000) discrimination (e.g. Bertrand and Mullanaithan 2004; Holzer, or Asian Americans (33.1 per 100,000), who have the lowest Raphael, and Stoll 2006). COVID-19 mortality rates. In 2020 more Black Americans will die of COVID-19 than will succumb to diabetes, strokes, As a result of those racial differences, the typical Black accidents, or pneumonia. In fact, COVID-19 is currently worker and family have lower earnings with which to absorb the third leading cause of death for Black Americans (APM a large-scale economic shock such as the one brought on by Research Lab 2020). COVID-19.

Black families, relative to other families, also generally lack the savings and wealth that provide a buffer in the event of Lower Wealth, Lower Income, job loss or unanticipated expense volatility—for example, and Weaker Labor Market to handle emergency medical expenses or transportation expenses (Darity and Mullen 2020; Emmons, Kent, and Outcomes Ricketts 2018; Pfeffer and Killewald 2017). Recent research has shown that, even at the same income level as white Median net worth of white families is 10 times higher households, Black households have more-severe and more- than that of Black families (McIntosh et al. 2020). Such prolonged consumption declines for the same income racial wealth gaps are well-documented and attributable shock (Ganong et al. 2020); this shows the vulnerability of to historical discrimination and exclusion from education, Black households relative to other households in the face of housing, capital, and loanable funds markets. Importantly, economic disturbances (Board of Governors of the Federal Reserve System 2020). The consensus explanation for this

2 The Hamilton Project • Brookings FIGURE 1. Median Family Income and Net Worth in 2018, by Race

180

160

s 140 r ll a

o 120 d 100 2018

f o

s 80 d n a

s 60 u

o Income h

T 40 Net worth 20

0 Black White All households

Source: Current Population Survey Annual Social and Economic Supplement (ASEC) 2019; Survey of Consumer Finances (SCF) 2016; authors’ calculations. Note: Income data are from the 2019 ASEC, which measures income in 2018. Net worth data are from the 2016 SCF, adjusted for inflation to 2018 dollars. greater intensity of economic shocks is the relative lack of lower rates of income mobility than white Americans. Finally, wealth among Black households (Ganong et al. 2020; Maxwell Black Americans generally received inferior public goods, and Solomon 2020). limited investment in human capital, and insufficient legal protection. Figure 1 shows Black–white income and wealth gaps in 2018. In the most recently available data, the median Black We call attention to the case of homeownership. Among household’s income is approximately $40,000, relative to the all racial groups, Black Americans are the least likely to median white household’s income of approximately $70,000. be homeowners, and Black homeownership lags white Median Black net worth is less than $20,000, which is roughly homeownership considerably even after controlling for 10 percent of white median net worth. Taken together, the education, age, and geographic location (Choi et al. 2019). In package of economic resources available to Black families fact, Black homeownership today is at a lower level than it was is far weaker and less capable of buffering against economic 30 years ago (Olsen 2018). insecurity. For the Black Americans that do own homes, research has There are several historical factors behind the large and shown that Black households pay significantly more in growing racial wealth gap. First, large wealth transfers in property taxes than other groups, on average more than 10 American history deliberately excluded Black Americans. percent higher (Van Dam 2020; Wiltz 2020). This is due to These include the Homestead Act, Southern Homestead the fact that although properties owned by Black Americans Act, GI Bill, Veterans Benefits, and other wealth transfers. are generally less valuable than properties owned by others, Second, Black Americans faced intense discrimination in the assessors systematically overstate the value of Black labor and credit markets, which not only blocked their access homes. And as Figure 2 shows, more Black households spend to wealth, but also diminished the value of assets they were a greater share of their income on housing than do white able to secure, such as housing. Third, Black Americans households or the average household. This results in a higher were subject to wealth capture. There have been numerous cost of homeownership for Black households. instances wherein Black wealth was stolen, expropriated, and pillaged in racial attacks (Francis 2020); in addition, political intimidation left Black Americans prone to underinvest, given Convergence of the Economic and the strong disincentives imposed by a government apparatus historically permissive of, if not outright promoting, racial Public Health Crisis injustice and violence against Black Americans (e.g., Acharya, Blackwell, and Sen 2018; Darity and Mullen 2020). Fourth, The current context must be highlighted, since the already housing policy deliberately limited the scope and scale of weaker economic position of Black workers is further Black homeownership, the single greatest source of wealth. worsened by the unprecedented economic shock along with Fifth, Black Americans, historically and today, have much a higher likelihood of Black Americans doing frontline,

3 The Hamilton Project • Brookings FIGURE 2. Share of Housing Cost Burdened Households in 2017, by Race

50 Cost burdened 45 40 s d

l 35 o

e h 30 Severely cost s

u burdened o

h 25

f o

e 20 r a h

S 15 10 5 0 Black White All households

Source: American Housing Survey 2017; authors’ calculations. Note: “Cost burdened” is defined as households whose housing costs represent at least 30 percent of the household’s income. “Severely cost burdened” is defined as households whose housing costs represent at least 50 percent of the household’s income.

essential work during the pandemic. Work in the low-wage 58 percent of Black households do (Pew Research Center employment sectors of America includes grocery store, retail, 2013). This increases the scope for exposure to COVID-19 food services, and health-related fields. This is a particularly in living quarters for Black households. For nearly all of difficult convergence of circumstances: Black workers face a the health conditions that increase the likelihood of serious higher likelihood of exposure to COVID-19, and have fewer COVID-19 complications, Black Americans have higher rates economic resources to potentially avoid the health risks of prevelance (Centers for Disease Control and Prevention associated with on-site employment where they are in direct [CDC] 2020). For example, Black Americans are more likely contact with customers and coworkers (Gould and Wilson to have cancer (Simon 2019), to be obese, to have diabetes, 2020). and to have kidney disease relative to white Americans (National Institute of Diabetes and Digestive and Kidney Figure 3 shows the Black–white gap in employment in essential Diseases 2014). Black Americans also have higher rates of work. While there are more white workers doing essential lung disease than do white Americans (Kochanek et al. 2019), work, Black and Hispanic workers are disproportionately which is particularly pertinent for a respiratory illness such likely to be essential workers. as COVID-19. Death rates among Black Americans due to In particular, Black Americans are more than twice as diabetes, heart disease, kidney disease, and obesity are all likely as the average worker to be employed in the health- higher than among white Americans (CDC 2018). care support service industry, which has been decimated by COVID-19 in assisted living facilities and nursing homes. Black Americans are also significantly overrepresented in the How Changes in the Safety Net personal care and service and food preparation industries, which are disproportionately essential worker industries. and State Economic Relief Would Black Americans also comprise more than a quarter of the Affect Black Households meatpacking industry’s frontline workforce, which has seen several outbreaks of COVID-19. And, among those The reduced demand and reduced economic activity related out of the labor force, the outbreak of the virus among the to COVID-19 ushered in large economic relief packages. incarcerated has a disproportionate racial impact as well, These have had positive impacts, likely reducing poverty given the overrepresentation of Black Americans in the prison and improving economic well-being as a result; nonetheless, population (Cox 2015). poverty will likely rise beyond levels observed during the In addition to this, Black Americans on average share their Great Recession as the economic crisis continues without living quarters with more people—while only 48 percent of additional significant policy intervention (Parolin and white households have three or more members, more than Wimer 2020). For Black households affected by a pandemic-

4 The Hamilton Project • Brookings FIGURE 3. Essential Workers in 2020, by Race 70

50 p u

o 40 r g

f o e

r 30 a h

S Essential 20 workers Other workers 10

0 Black White Hispanic Other

Source: Nunn, O’Donnell, and Shambaugh 2020. Note: Data are from the Current Population Survey for April 2020. Please see the appendix table in Nunn, O’Donnell, and Shambaugh (2020) for a detailed list of essential occupations.

related job loss, the policies proposed in the recent HEROES Americans (Pitts 2011). Such aid would also support state act would cut poverty rates by an estimated 50 percent government safety-net programs as well as state government– (Giannarelli et al. 2020). funded nonprofits that provide food and housing assistance. In addition to providing aid to state residents facing Given that Black Americans are overrepresented among the financial hardship, supporting nonprofits would help buoy poor and near-poor (Heggeness and Hokayem 2014), they employment. Nonprofits represent 12 percent of the American are more economically vulnerable during an economic crisis. workforce. Collectively, aid packages that retain government This means that policy uncertainty surrounding the provision and nonprofit employment likely support the employment of and extension of federal aid via transfer programs and many Black families. social safety-net benefits—including federal unemployment compensation and food assistance—disproportionately affects Black households. Consequences of COVID-19 for Federal enhancements to safety-net programs administered by state and local governments could yield substantial benefits Black Households for many Black Americans, supplementing lower incomes and the relatively lower benefits that many Black Americans The unprecedented public health and economic shock of receive. Prior to COVID-19, evidence pointed toward stark COVID-19—and the additional burden placed on family differences in the level of unemployment insurance benefits, economic resources and health—will potentially worsen the cash assistance, employment security, and minimum wages already diminished long-run outcomes expected for Black by state—with the implication that many Black Americans households. Even prior to COVID-19, long-run outcomes were likely to receive relatively lower benefit levels due in were worsened by inequality in access to strong safety nets, part to residing in less-generous states (Bitler and Hoynes along with low wealth, low and unstable incomes, and 2016; Edwards 2020; Floyd 2020; Hardy, Samudra, and Davis residency in high-poverty, segregated neighborhoods (e.g., 2019; Parolin 2019; Wilson 2019). Separately, evidence also Morrissey and Vinopal 2018). suggests that Black Americans face discrimination in the In the current crisis, what is emerging is a very plausible link welfare system (e.g., Fording et al. 2007). Accordingly, federal between COVID-19 and race, with economic status as an economic relief can help to mitigate these pre-COVID gaps in important—though incomplete—mechanism. New research safety-net generosity. shows that a 10-percentage-point increase in the number Federal aid to state governments would boost the aggregate of Black residents within a zip code is linked to 9.2 more economy, in part by helping to maintain public-sector COVID-19 cases per 10,000 residents. Although a meaningful employment—the largest labor market sector for Black share of this neighborhood-level disparity in COVID-19 cases can be explained by income mobility and incarceration 5 The Hamilton Project • Brookings rate differences, much of the disparity remains unexplained one in five renters could face eviction by the end of September (Benitez, Courtemanche, and Yelowitz 2020). (McKay, Neumann, and Gilman 2020). Throughout July and August, evictions were already underway in many U.S. Meanwhile, a relatively larger proportion of Black households, cities (Wiltz 2020). Much of this economic insecurity existed and the dependent children within these households, face food pre–COVID-19, and housing represents a primary form of insecurity (U.S. Department of Agriculture [USDA] 2018) financial distress (Ellen et al. 2020). Such forms of economic and housing instability (Greene and McCargo 2020). Figure hardship have consequences for two generations as well, 4 shows measures of food insecurity among all households given that food insecurity (Alaimo et al. 2001) and housing and households with children from April to July 2020, and instability (Brennan, Reed, and Sturtevant 2014; Hardy and very low food security among children from June and July Marcotte 2020) are both negatively associated with children’s 2020. Food hardship is elevated over the past few months, as educational performance and achievement. a result of job loss as well as the loss of subsidized school meal programs through the K–12 educational system. The increase STRESSES FOR BLACK FAMILIES WITH CHILDREN in food insecurity has occurred even though pandemic food Access to affordable and high-quality child care represents assistance benefits have reduced these hardships substantially another challenge disproportionately affecting Black (Bauer et al. 2020). families. Child care promotes learning and socioemotional In the current economic environment, housing insecurity development during a child’s earliest years, and it facilitates looms as a constant risk due to the potential for evictions parental labor force participation (Morrissey and Warner and foreclosures. Between July 16 and 21, 2020, 12.5 percent 2007). In the absence of access to high-quality child care, of Americans were experiencing housing distress—meaning many workers must make difficult choices about whether and they were late on their rent or mortgage payments or their how they can ensure the safety and healthy development of payments were deferred (Ricketts 2020). Housing distress their children during work hours. Child care was relatively among Black renter families is more acute, at 30 percent of less affordable for Black families prior to the pandemic, and Black renters compared to 15 percent of white renters. As they will now face additional supply constraints, given that such, expiring eviction bans and loan forgiveness agreements many child-care centers have been closed in the interest could exert additional pressure on many Black families. of public health. Owing to the convergence of economic and public health considerations, this has adverse labor Importantly, Black Americans are twice as likely to rent their market consequences for Black families, since they make home as compared with their white counterparts (Brenson, up a disproportionate share of the workers in the child-care Fulton, and Overton 2020). And, in the absence of continued sector—one that has lost a quarter of its jobs since the outset federal aid or an accelerated economic rebound, as many as of the pandemic. Many essential workers without child-care

FIGURE 4. Food Insecurity Rates during COVID-19, by Race 45

s Food insecurity t 30

e n (among households d

n with children)

o 25 p Food insecurity (all) e s r

f 20 o e

r Very low

a 15

h food security S 10 (among children)

0 Black White All respondents

Source: Census Household Pulse Survey 2020; Schanzenbach and Tomeh 2020; authors’ calculations.

6 The Hamilton Project • Brookings alternatives will choose between a set of bad choices: return to amount of stress related to COVID-19 on Black households work with unstable or unsafe care options for their children, will continue to take a toll. Indeed, social scientists have or forgo work altogether (Sethi, Johnson-Staub, and Robbins previously documented that exposure to toxic levels of stress 2020). within a child’s family and neighborhood environment could translate to longer-term developmental consequences (Evans Disconnectedness from in-person education represents and Wachs 2010; Ganzel and Morris 2011; Hardy, Hill, and yet another mechanism that could disproportionately hurt Romich 2019; Shonkoff et al. 2012). socioeconomic outcomes of Black Americans in the long run. The potential racial and economic inequality emerging from the shift to online education, and the differential responses that affluent and white families are disproportionately able Conclusion to make in response (e.g., at-home tutors and other supports), could exacerbate educational achievement gaps (Bueno 2020). America’s economic situation has substantially deteriorated As the pandemic exacerbates many forms of inequality, since the onset of the COVID-19 crisis. Gross domestic including educational inequality, there are documented product fell at an annualized rate of 32.9 percent from April to economic gaps in online educational engagement and the end of June 2020, the largest decline on record (Bureau of participation (Opportunity Insights 2020). Such challenges Economic Analysis 2020). Families across race and ethnicity will also shape the experiences of Black Americans who are feeling the pain, but Black Americans are generally in an pursue postsecondary credentials and degrees. even weaker position to absorb this economic adversity. Black families face a range of economic risks without the buffer To the degree that educational activities are disrupted, it from stable employment, adequate earnings, or sufficient may be more difficult for many Black students to restart savings and wealth accumulation. along planned educational pathways. This is especially true given that Black students’ families typically face harsher Amid substantial economic and policy uncertainty, there economic conditions relative to their white counterparts. is the potential for this crisis to have negative, long-term Lowered educational achievement and attainment could have economic and educational consequences. COVID-19 has substantial long-term negative consequences. Initial survey exposed and further highlighted existing racial inequality evidence points toward racial gaps in how COVID-19 has across economic and health status. As a result, these disrupted educational plans; Black and Hispanic students are preexisting factors have left many Black families at greater more likely to have altered or terminated their post-secondary risk to bear the consequences of this historic economic education plans (Strada Center for Consumer Insights 2020). crisis. Inadequate additional federal economic relief—such as legislation that does not provide enough unemployment Stress levels for adults who are more likely situated in low-wage assistance and supplements to the safety net—potentially work with high levels of scheduling instability are generally threatens the economic security of Black families (Brenson, higher, which leads to greater psychological distress, lowered Fulton, and Overton 2020). sleep quality, and lower self-reported happiness (Schneider and Harknett 2019). The pandemic likely worsened these Ultimately, robust, reliable fiscal policy responses to the crisis sources of stress in many workplaces. This has consequences will help to reduce the negative impacts of the pandemic on for both the adults directly affected by these changing families. If the economic and public health crisis continues conditions, as well as for the children who are dealing with at its current pace, many American families will require enormous challenges and then interacting with their parents such assistance, including a disproportionate share of Black within this new reality. Going forward, the disproportionate families.

7 The Hamilton Project • Brookings References

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8 The Hamilton Project • Brookings Floyd, Ife. 2020. “Cash Assistance Should Reach Millions More Heggeness, Misty L., and Charles Hokayem. 2014. “Factors Families.” Center on Budget and Policy Priorities, Influencing Transitions Into and Out of Near Poverty: Washington, DC. 2004–2012.” SEHSD Working Paper 2014-05, U.S. Census Fording, Richard C., Joe Soss, and Sanford F. Schram. 2007. Bureau, Washington, DC. “Devolution, Discretion, and the Effect of Local Political Holzer, Harry J., Steven Raphael, and Michael A. Stoll. 2006. Values on TANF Sanctioning.” Social Service Review 81 (2): “Perceived Criminality, Criminal Background Checks, and 285–316. the Racial Hiring Practices of Employers.” The Journal of Francis, Dania. 2020. “Estimating the Value of Black Land Loss, Law and Economics 49 (2): 451–80. 1910–1990.” Working Paper. Kochanek, Kenneth D., Sherry L. Murphy, Jiaquan Xu, and Ganong, Peter, Damon Jones, Pascal Noel, Diana Farrell, Fiona Elizabeth Arias. 2019. “Deaths: Final Data for 2017.” Greig, and Chris Wheat. 2020. “Wealth, Race, and National Vital Statistics Report 68 (9). Center for Disease Consumption Smoothing of Typical Income Shocks.” BFI Control and Prevention, Atlanta, Georgia. Working Paper, Becker Friedman Institute for Economics McIntosh, Kriston, Emily Moss, Ryan Nunn, and Jay Shambaugh. at the University of Chicago, Chicago, IL. 2020. “Examining the Black-White Wealth Gap.” Up Front Ganzel, Barbara L., and Pamela A. Morris. 2011. “Allostatis and (blog), Brookings Institution, Washington, DC. February the Developing Human Brain: Explicit Consideration of 27, 2020. Implicit Models.” Development and Psychopathology 23 (4): McKay, Katherine Lucas, Zach Neumann, and Sam Gilman. 2020. 955–74. “20 Million Renters Are at Risk of Eviction; Policymakers Giannarelli, Linda, Laura Wheaton, Kevin Werner, Ilham Dehry, Must Act Now to Mitigate Widespread Hardship.” The and Gregory Ac. 2020. “2020 Poverty Projections: Aspen Institute, Washington, DC. Assessing Three Pandemic-Aid Policies.” Urban Institute, McKernan, Signe-Mary, Caroline Ratcliffe, C. Eugene Steuerle, Washington, DC. Caleb Quakenbush, and Emma Kalish. 2017. “Nine Charts Gould, Elise. 2020. “Black-White Wage Gaps Are Worse Today about Wealth Inequality in America (Updated).” Urban than in 2000.” Working Economics (blog), Economic Policy Institute, Washington, DC. Institute, Washington, DC. February 27, 2020. Morrissey, Taryn, and Katie Vinopal. 2018. “Center-Based Early Gould, Elise, and Valerie Wilson. 2020. “Black Workers Face Two of Care and Education and Children’s School Readiness: Do the Most Lethal Preexisting Conditions for Coronavirus— Impacts Vary by Neighborhood Poverty?” Developmental Racism and Economic Inequality.” Economic Policy Psychology 54 (4): 757–71. Institute, Washington, DC. Morrissey, Taryn, and Mildred E. Warner. 2007. “Why Early Care Greene, Solomon and Alanna McCargo. 2020. “New Data Suggest and Education Deserves as Much Attention, or More, than COVID-19 Is Widening Housing Disparities by Race and Prekindergarten Alone.” Applied Developmental Science 11 Income.” Urban Wire (blog), Urban Institute, Washington, (2): 57–70. DC. May 29, 2020. National Institute of Diabetes and Digestive and Kidney Diseases. Hardy, Bradley, Heather Hill, and Jennie Romich. 2019. 2014. “Race, Ethnicity, & Kidney Disease.” National “Strengthening Social Programs to Promote Economic Institues of Health, Washington, DC. Stability During Childhood.” Social Policy Report 32 (2): Nunn, Ryan, Jimmy O’Donnell, and Jay Shambaugh. 2020. 1–36. “Examining Options to Boost Essential Worker Wages Hardy, Bradley, and Dave Marcotte. 2020. “Education and the during the Pandemic.” Up Front (blog), Brookings Dynamics of Middle-Class Status.” Brookings Institution, Institution, Washington, DC. June 4, 2020. Washington, DC. Olsen, Skylar. 2018. “Black and White Homeownership Rate Gap Hardy, Bradley, Rhucha Samudra, and Jourdan Davis. 2019. “Cash Has Widened Since 1900.” Zillow, Seattle, WA. Assistance in America: The Role of Race, Politics, and Opportunity Insights. 2020. “Economic Tracker: Percent Change Poverty.” Review of Black Political Economy 46 (4): 306–24. in All Consumer Spending.” Opportunity Insights, Hardy, Bradley, Timothy Smeeding, and James P. Ziliak. 2018. Cambridge, MA. “The Changing Safety Net for Low Income Parents and Parolin, Zachary. 2019. “Temporary Assistance for Needy Families Their Children: Structural or Cyclical Changes in Income and the Black-White Child Poverty Gap in the United Support Policy?” Demography 55 (1): 189–221. States.” Socio-Economic Review.

9 The Hamilton Project • Brookings Parolin, Zachary, and Christopher Wimer. 2020. “Forecasting Strada Center for Consumer Insights. 2020. “Many Americans Estimates of Poverty during the COVID-19 Crisis.” Poverty Lack Confidence in the Career Value of Postsecondary & Social Policy Brief 4 (6): 1–18. Education and Their Own Ability to Succeed as Learners.” Pew Research Center. 2013. “Households, by Family Size, Race Strada Education Network, Indianapolis, IN. and Ethnicity: 2013.” Table 40, Statistical Portrait of U.S. Census Bureau. 2017. “American Housing Survey.” U.S. Census Hispanics in the United States, 2013. Pew Research Center, Bureau, Washington, DC. Washington, DC. U.S. Census Bureau. 2020. “Household Pulse Survey: Measuring Pfeffer, Fabian T., and Alexandra Killewald. 2017. “Generations Social and Economic Impacts during the COVID-19 of Advantage: Multigenerational Correlations in Family Pandemic.” U.S. Census Bureau, Washington, DC. Wealth.” Social Forces 96 (4): 1411–42. U.S. Department of Agriculture (USDA). 2018. “Key Statistics & Pitts, Steven. 2011. “Research Brief: Black Workers and the Public Graphics.” U.S. Department of Agriculture, Washington, Sector.” Center for Labor Research and Education, DC. University of California Berkeley, Berkeley, CA. Van Dam, Andrew. 2020. “Black Families Pay Significantly Higher Schanzenbach, Diane, and Natalie Tomeh. 2020. “Weekly Food Property Taxes Than White Families, New Analysis Insecurity Rates during COVID-19.” Institute for Policy Shows.” Washington Post, July 2, 2020. Research, Northwestern University, Evanston, IL. Wiemers, Emily E., Scott Abrahams, Marwa Al Fakhri, V. Joseph Schneider, Daniel, and Kristen Harknett. 2019. “Consequences of Hotz, Robert F. Schoeni, and Judith A. Seltzer. 2020. Routine Work-Schedule Instability for Worker Health and “Disparities in Vulnerability to Severe Complications Well-Being.” American Sociological Review 84 (1): 82–114. from COVID-19 in the United States.” MedRxiv preprint Sethi, Shiva Sethi, Christine Johnson-Staub, and Katherine available at https://doi.org/10.1101/2020.05.28.20115899. Gallagher Robbins. 2020. “An Anti-Racist Approach Wilson, Valerie. 2019. “The Raise the Wage Act of 2019 Would Give to Supporting Child Care Through COVID-19 and Black Workers a Much-Needed Boost in Pay.” Economic Beyond.” CLASP (The Center for Law and Social Policy), Policy Institute, Washington, DC. Washington, DC. ———. 2020. “Inequities Exposed: How COVID-19 Widened Shonkoff, Jack P., Andrew S. Garner, Benjamin S. Siegel, Mary Racial Inequities in Education, Health, and the Workforce.” I. Dobbins, Marian F. Earls, Andrew S. Garner, Laura Testimony before the U.S. House of Representatives McGuinn, John Pascoe, and David L. Wood. 2012. “The Committee on Education and Labor. Economic Policy Lifelong Effects of Early Childhood Adversity and Toxic Stress.” Institute, Washington, DC. Pediatrics 129 (1): e232–e246. Wiltz, Teresa. 2020. “Black Homeowners Pay More Than ‘Fair Simon, Stacy. 2019. “Gap in Cancer Death Rates Between Blacks Share’ in Property Taxes.” Stateline (blog), Pew Charitable and Whites Narrows”. American Cancer Society, Trusts, Philadelphia, PA. Washington, DC. Ziliak, James P., Bradley Hardy, and Christopher Bollinger. 2011. “Earnings Volatility in America: Evidence from Matched CPS.” Labour Economics 18 (6): 742–54.

10 The Hamilton Project • Brookings ADVISORY COUNCIL

STEPHANIE AARONSON TIMOTHY F. GEITHNER ROBERT D. REISCHAUER Vice President and Director, Economic Studies President, Warburg Pincus Distinguished Institute Fellow & Senior Fellow, Economic Studies, The Brookings Senior Counselor, The Hamilton Project President Emeritus Institution Urban Institute JOHN GRAY GEORGE A. AKERLOF President & Chief Operating Officer NANCY L. ROSE University Professor Blackstone Charles P. Kindleberger Professor of Applied Georgetown University Economics, MIT Department of Economics ROBERT GREENSTEIN ROGER C. ALTMAN Founder & President DAVID M. RUBENSTEIN Founder & Senior Chairman Center on Budget and Policy Priorities Co-Founder & Co-Executive Chairman Evercore The Carlyle Group MICHAEL GREENSTONE KAREN L. ANDERSON Milton Friedman Professor in Economics & the ROBERT E. RUBIN Senior Director of Policy & Communications College Former U.S. Treasury Secretary; Becker Friedman Institute for Director of the Becker Friedman Institute for Co-Chair Emeritus Research in Economics Research in Economics Council on Foreign Relations The University of Chicago Director of the Energy Policy Institute University of Chicago LESLIE B. SAMUELS ALAN S. BLINDER Senior Counsel Gordon S. Rentschler Memorial Professor of GLENN H. HUTCHINS Cleary Gottlieb Steen & Hamilton LLP Economics & Public Affairs, Co-founder, North Island; Princeton University; Co-founder, Silver Lake SHERYL SANDBERG Visiting Senior Fellow, Chief Operating Officer, Facebook The Brookings Institution. JAMES A. JOHNSON Chairman; Johnson Capital Partners DIANE WHITMORE SCHANZENBACH STEVEN A. DENNING Margaret Walker Alexander Professor Chairman, General Atlantic LAWRENCE F. KATZ Director Elisabeth Allison Professor of Economics The Institute for Policy Research JOHN M. DEUTCH Harvard University Northwestern University; Institute Professor Nonresident Senior Fellow Massachusetts Institute of Technology MELISSA S. KEARNEY The Brookings Institution Neil Moskowitz Professor of Economics CHRISTOPHER EDLEY, JR. University of Maryland; STEPHEN SCHERR Co-Founder and President Emeritus Nonresident Senior Fellow Chief Executive Officer The Opportunity Institute The Brookings Institution Goldman Sachs Bank USA

BLAIR W. EFFRON LILI LYNTON RALPH L. SCHLOSSTEIN Partner Founding Partner President & Chief Executive Officer, Evercore Centerview Partners LLC Boulud Restaurant Group ERIC SCHMIDT DOUGLAS W. ELMENDORF HOWARD S. MARKS Technical Advisor, Alphabet Inc. Dean & Don K. Price Professor Co-Chairman of Public Policy Oaktree Capital Management, L.P. ERIC SCHWARTZ Harvard Kennedy School Chairman & CEO, 76 West Holdings ERIC MINDICH JUDY FEDER Founder JAY SHAMBAUGH Professor & Former Dean Everblue Management Professor of Economics and International Affairs, McCourt School of Public Policy Elliott School of International Affairs at The Georgetown University SUZANNE NORA JOHNSON George Washington University; Former Vice Chairman Nonresident Senior Fellow JASON FURMAN Goldman Sachs Group, Inc. The Brookings Institution Professor of the Practice of Co-Chair Economic Policy The Brookings Institution THOMAS F. STEYER Harvard University Business Leader & Philanthropist Senior Fellow PETER ORSZAG Peterson Institute for International Economics; CEO, Financial Advisory MICHAEL R. STRAIN Senior Counselor Lazard Freres & Co LLC Director of Economy Poliyc Studies and The Hamilton Project Arthur F. Burns Scholar in Political Economy RICHARD PERRY American Enterprise Institute MARK T. GALLOGLY Managing Partner & Chief Executive Officer Cofounder & Managing Principal Perry Capital LAWRENCE H. SUMMERS Centerbridge Partners, L.P. Charles W. Eliot University Professor PENNY PRITZKER Harvard University TED GAYER Chairman & Founder, PSP Partners Executive Vice President 38th Secretary of Commerce LAURA D’ANDREA TYSON Senior Fellow, Economic Studies Distinguished Professor fo the Graduate School The Brookings Institution MEEGHAN PRUNTY University of California, Berkeley Managing Director, Blue Meridian Partners Edna McConnell Clark Foundation WENDY EDELBERG Director

11 The Hamilton Project • Brookings FIGURE 1. Median Family Income and Net Worth in 2018, by Race

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