The American Fiscal Stimulus Might Help Reduce Racial Inequality

The protests following George Floyd’s death are not only the result of chronic police violence directed at the Black community; the racial inequality exacerbated by the current health crisis is also to blame. Prior to the health crisis, the American economy was enjoying a record period of growth and extremely low unemployment. At the same time, this expansion left some people behind, including the African American community.

A Lost Opportunity

America’s racial inequality did not begin yesterday. What is more disturbing, however, is that it did not go away with time, but even worsened. In fact, in the 24 years before the 2008 economic recession, the wealth gap between Blacks and whites quadrupled, which, among other factors, was due to fiscal policies favoring rich white families, such as reductions in inheritance taxes.

Furthermore, discrimination in matters of housing and access to credit, higher education and jobs also aggravated the situation. Unfortunately, the 2008 financial crisis made things even worse, with Black people hard hit by the subprime collapse. This inequality grew even wider in the recovery that followed.

The American government had an opportunity to fight the social and racial inequality which contributed to the immensity of the crisis, but it continued to pursue policies that enriched the richest and impoverished the poorest. Between 2008 and 2018, the earnings of African American families grew only 3.4% in real terms, compared to 8.8% for white families.

And before the coronavirus crisis, the mean income of a Black American was 41% lower than a white American. Also, white families were at least 10 times wealthier that Black families, partly because only 40% of Black people were homeowners compared to 72% of white people.

The Coronavirus Makes the Situation Worse

The year 2020 and its health crisis have only added fuel to the fire. First, the Black community is severely impacted by the coronavirus, with mortality rates 2.4 times higher than those of white people. This is in part because Black people are more often employed in higher-risk jobs, where working remotely is not possible, and also because they are more subject to chronic health conditions and have less access to health care.

Second, the economic fallout of the coronavirus has struck Black Americans with full force. A study by the Financial Times shows that 78% of Black people have seen their earnings fall due to the coronavirus, compared to 58% of white people. Moreover, greater numbers of Black people have lost their jobs in the American economic slowdown, and they also express more pessimism about the health crisis and its economic impact on them.

The Government Must Intervene

All the Black community can do now is make itself heard and revolt. It is absolutely necessary that the American government listens to them and helps to reduce racial inequality.

Again, according to the Financial Times, 98% of Black families say they need financial assistance from the government to get through the current situation, and over two-thirds of them claim that state funds are necessary for basic needs like food and housing. President Donald Trump’s actions since assuming office in 2016 have not helped Black people; to the contrary, 81% of Black people feel their situation has worsened under him, according to a 2019 study by the Associated Press-NORC Center for Public Affairs Research. It is true that Trump’s attack on President Obama’s health care law, which greatly helped African Americans gain access to health insurance coverage, has caused African Americans to neglect their health care needs. Trump may have promised to help disadvantaged groups in 2016, yet he has not acted on any of his proposed policies. Accordingly, his policies for economic recovery in the months to come must help solve racial inequality. For example, some business groups, including a group in Chicago, have asked Trump to set aside part of his fiscal stimulus money for Black enterprises which are more vulnerable to the current situation. This aid could take various forms, including targeted spending, increased social security or a higher minimum wage, or job training in the poorest communities.

This is not just about the Black community, but the economic recovery in general, which will be stronger if it is not accompanied by perpetuating racial inequality, but by helping the weakest members of society.