By Earlene Greene
- Since 2017, median income has increased only 1.8% among African Americans (from $40,963 to $41,692)
- With a spending power of over $1.4T, closing the income gap would mean more Black dollars to invest in the economy
The COVID-19 pandemic has exacerbated the Black income gap by reducing the resources needed to keep the doors open and operating for Black businesses. More than 40% of Black-owned small businesses have shut down representing 440,000 doors permanently closed, more than twice the rate of white small businesses. The impact of the virus in addition to years of systematic racism and economic disparities, has Black businesses reeling with less of a cushion to withstand this crisis, forcing the income gap to widen.
Why This Matters: The pandemic has put further pressure on the income gap which has experienced a slowdown in overall median household growth that has been uneven by race and ethnicity since 2017. Specifically, median income has increased 4.6% among Asians (from $83,376 to $87,194), 1.8% among African Americans (from $40,963 to $41,692). With the amount of Black-owned businesses shuttering their doors it will become more difficult to narrow the income gap. A professor at the University of California, found the reason why Black-owned businesses lost more during the pandemic is because they tend to concentrate in industries deemed nonessential, with hospitality and personal services like laundry being the most affected.
More than 40% of Black-owned small businesses have shut down representing 440,000 doors permanently closed
The Black middle class has made strides in recent years to close the income gap, but the coronavirus pandemic is threatening that progress as Black professionals and business owners lose their livelihoods. “Entrepreneurship is a critical path to building wealth and a Black middle class. Business owners on average build 12 times the net worth of other people”, according to Pew Research. For Black-owned bars and restaurants that had been able to hold on through shutdowns and were beginning to reopen, they are now being slammed again as COVID-19 cases start to spike across the country.
Situational Awareness: Constantly subject to setbacks, the Black middle-class has had ongoing interruptions in their ability to build wealth. If this demographic is able to close the income gap, in turn they will help close the wealth gap by increasing Black homeownership, asset accumulation, family inheritances, retirement, etc. With a spending power of over $1.4 trillion, closing the income gap would mean more Black dollars to invest in the economy, and into the pockets of every race along with a wide array of businesses.
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