New York (CNN Business)Black-owned businesses have been hit substantially harder by the coronavirus pandemic than companies overall, according to the Federal Reserve Bank of New York.
The New York Fed on Wednesday unveiled a study on the virus’ impact on business owners nationwide, and the results show disparities in how the business owners of various races have struggled.The report estimates that 41% of Black-owned businesses across the country shut down between February and April, echoing the findings of a similar University of California, Santa Cruz study released in June. About 32% of Latino businesses and 26% of Asian businesses shut down over the same time span. Only about 17% of white businesses shut down during the same period, the study authors found.
The authors cite lack of financial savings, less access to capital, including federal PPP loans, and funding gaps that existed prior to the pandemic as causes for the demographic disparities.”Covid-19 has exacerbated these issues and businesses in the hardest hit communities have witnessed huge disparities in access to federal relief funds and a higher rate of business closures,” the authors wrote in their report.Read MoreThe coronavirus infection and mortality rate is much higher for Black Americans than the general population. But the New York Fed study also determined economic shutdowns meant to limit the virus’ spread have an outsized effect on Black business owners, particularly in major cities.
Stephanie Byrd, co-owner of The Block, poses for a photo with chairs on the tables while the restaurant is closed due to the coronavirus in Detroit on May 21, 2020.For Black Americans in particular, deciding whether or not to keep economic shutdown orders in place has “acute and heartbreaking tradeoffs,” according to New York Fed Assistant Vice President Claire Kramer Mills.”There does seem to be a relationship in the easing of protocols and the number of operating businesses,” Mills told CNN Business. “But some of those places have already reversed course because of the health effects. … There are incredibly close ties.” The United States has 3,000 counties, but 40% of Black-owned businesses are concentrated in just 30 — about 1% of all the counties across the country. Black businesses tend to be concentrated in metropolitan areas where larger clusters of Black Americans live.The study authors focused on 10 of the nation’s most populated counties and metro regions, — including Los Angeles, Chicago, Houston, Detroit, Washington, Manhattan, New York, Atlanta and Miami — which also have major black populations and large clusters of black-owned businesses.The researchers found two-thirds of black businesses are in regions with the highest levels of Covid-19 cases.”This tells us that a more targeted geographic focus on the hardest hit and most underserved places is needed,” Mills said in a statement about the report. “This brief shows the disturbing relationship between high geographic incidence of Covid-19 and the economic health of Black-owned businesses.”Many Americans have been promoting “buy black” programs this summer to help save Black-owned businesses struggling to stay afloat as the pandemic and related government shutdowns rage on across the country.
The country’s PPP program administrators have made efforts to address racial disparities in who gets approved for the loans in recent weeks. Mills said the New York Fed’s study shows more targeted federal programs must be enacted to address those disparities.”Certain [demographic groups] haven’t been as well served by policy to date,” she said.