The COVID-19 recession hit Latino workers hard. Here’s what we need to do

by Aaron Klein and Ariel Gelrud Shiro

The nature of the COVID-19 recession is a double whammy for Latino workers. First, Latino workers are disproportionately concentrated in industries more deeply impacted by the recession (restaurants, hotels, construction). Second, they are underrepresented in the industries least impacted (finance, telecom, information).

The result is that Latino workers are experiencing greater economic hardship and facing a more challenging future. Compounding this problem, the Trump Administration has chosen to reduce access to COVID-19 recession relief for many Latino families. Future relief by Congress needs to counter these policy choices to promote both economic growth and fight against systemic inequality.

Many Latino jobs were lost and they’re not coming back quickly

When COVID-19 struck there was no way to avoid a major blow to Latino workers and families. Latinos comprised about one out of every six (16%)  workers before the recession, but their share varies largely by industry. Latinos make up more than one in four (27%) workers in construction, over one in five (22%) in leisure and hospitality, and nearly one in five (19%) in mining and oil extraction. This explains much of the growth in the unemployment gap between Latino and white workers; a gap that is nearly three times what it was at the beginning of the year.

The racial gap in the unemployment rate has nearly tripled

Latino unemployment

The leisure and hospitality industry, which employed more than 16 million people before COVID-19, lost 8 million jobs in the first two months of the recession. Many of these jobs simply have not returned: nearly 1 in 4 jobs in leisure and hospitality that existed in February have not come back in August. That is almost four million jobs in an industry that is 22% Latino. Job losses are even more acute among hotel workers where 38% of jobs have disappeared.[1]

The first two months of the recession also saw more than 1 million construction jobs vanish. A subsequent rebound has brought back a little more than half of those jobs. And roughly 1 in 7 jobs in mining and oil extraction remain lost.

What about the gig-economy? Before Covid struck, Latinos comprised 1 in 4 gig workers. In July 2020, half of all Latino households in Arizona, Florida, and Texas lost some income from gig or contract work according to a survey conducted by Unidos. Job losses from the recession in the gig-economy are disproportionately impacting Latino families.

Other sectors of the economy were less affected

At the same time, the industries that have fared the best during the COVID-19 crisis are those with low shares of Latino workers. For example, finance has essentially experienced no job loss in the COVID-19 recession (99.5% of all prior jobs remain intact), but only 1 in 9 workers in the industry are Latino. Similarly, the information industry (comprised of telecommunications, data processing, publishing, and broadcasting) has lost about 11% of its jobs, but only 1 in 10 workers are Latino.

The industries least impacted by the recession employ fewer Latinos while the industries most impacted are heavily Latino. This explains why half of all Latino workers lost their jobs or took pay cuts when the COVID-19 shutdown began in March, compared to only one in three Americans broadly.

Policies should recognize the reality Latino workers face 

The Treasury Department notably denied eligibility for stimulus payments to those who are married to immigrants lacking social security numbers and to children with a non-citizen parent. Denying these families access to the $1,200 per adult and $500 per qualifying child disproportionately hurts Latino families who are already facing greater economic hardship in this recession.

The Treasury Department should immediately overturn this decision on the basis of both economic logic and fairness. Absent that, Congress needs to change the law to require the Treasury to do the right thing. The House of Representatives has proposed this change in the HEROES Act, providing benefits to an additional 3.5 million children and 4.3 million tax-paying adults. Children should not be punished for their parents’ place of birth, especially as many of them are going hungry.

Extend unemployment payments, not PPP 

A second policy solution is to extend enhanced unemployment benefits. Congress initially provided an extra $600 a week to those who had lost their job through no fault of their own due to the COVID-19 recession. As documented, jobs are not quickly returning in the leisure and hospitality industry, while they have almost all returned in finance. Failing to extend enhanced benefits means those who worked in certain industries will suffer more than others. Unemployment benefit extension is thus particularly important for Latino workers.

One policy solution unlikely to help fix this gap is another round of funding for the Paycheck Protection Program (PPP). Originally designed as a grant program to help businesses keep employees on payroll during a temporary COVID-19 lock-down, PPP struggled to get money to minority-owned businesses. More than 3 out of 7 PPP dollars went to larger firms asking for $1 million or more to cover eight weeks of payroll; hardly mom and pop shops. New proposals in Congress allow for forty percent of PPP funds to pay business expenses, not workers. Another round of PPP is unlikely to address the problem.

The COVID-19 recession is far from over. Its full duration and the shape of its recovery are unknown. What is known is that the industries hit hardest are those that employ the greatest share of Latinos and other racial minorities, while the industries least affected are disproportionately white. Congress and the Administration should be focused on solutions that help workers in severely impacted industries, recognizing that Latinos are particularly affected.

[1] Unless otherwise stated, job numbers and levels are based on the Bureau of Labor Statistics monthly employment report using February for the baseline pre-COVID-19 and August figures (reported as of the date this article is published) for current data. Latino composition relies on prior BLS surveys cited in the piece.

 


Aaron Klein is a fellow in Economic Studies and serves as policy director of the Center on Regulation and Markets at Brookings.

Ariel Gelrud Shiro is an assistant reseearcher at Brookings

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