Job Losses to Hit Harder for Black, Hispanic Families in U.S.
(Bloomberg) -- The millions of coronavirus-caused job losses will disproportionately impact the spending patterns of families of color, according to a study Tuesday from the JPMorgan Chase Institute.
Black and Hispanic families will likely experience larger income declines than white families because they’re slightly more likely to be paid hourly wages and less likely to have access to paid leave, the authors wrote in a companion paper published by the institute. Such families already tend to have have lower incomes than white families.
The median black family earns just 71 cents for every dollar in take-home income earned by white families, according to the study. The median Hispanic family earns 74 cents. The racial gap widens as income increases. But the racial gap in liquid assets -- like savings and checking accounts -- is twice as large as the gap in take-home income.
The study was based on data from 1.8 million checking-account holders in Florida, Georgia and Louisiana. The institute uses anonymized data from Chase bank and credit-card customers for its research studies.
The researchers, including institute President Diana Farrell, a former economic adviser to President Barack Obama, found that a $500 decline in monthly income as a result of a layoff meant black and Hispanic families reduced their monthly spending by roughly $230 and $215, respectively, compared to $140 by white families.
That’s because black and Hispanic families tend to have less of a cash buffer than white families.
Black men earn 66% of what white men earn and only hold the equivalent of 29% of the liquid assets held by white men. The gap is slightly smaller for women, but still large, with black women earning 78% of what white women bring home and holding the equivalent of 36% of the liquid assets, according to the report.
The increase and expansion of unemployment insurance benefits and $1,200 stimulus checks will help all, but the aid will prove especially helpful for smoothing consumption in families of color, the authors wrote. They also suggest policy makers should consider focusing support on families with the lowest liquid asset buffers.
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