When Congress expanded unemployment insurance this year to meet the staggering economic toll of the pandemic, it had one less-noticed effect: It made America’s fractured jobless benefits system more fair.
Starting in April, the federal government provided $600 weekly payments to unemployed workers in addition to state jobless benefits, smoothing sharp differences between more and less generous states. It also broadly expanded who qualified, removing barriers for lower-wage, seasonal and gig workers, who are typically excluded from aid. All of this had the added effect of reducing racial disparities in unemployment benefits that have for decades disadvantaged Black workers in particular.
Now, with the $600 payments expired as of the end of July and with congressional leaders and the White House debating whether to extend them, Black workers stand to be hurt the most if they fail to reach a deal.
This is in large part because Black workers disproportionately live in states with the lowest benefit levels and the highest barriers to receiving them. Without the $600 federal payments, the most an unemployed worker in Florida or Alabama can receive is $275 a week. Workers still covered under the expanded gig worker categories would potentially get even less.
“It’s just a pretty straightforward fact that one of the biggest problems facing unemployed Black workers is that they live in places with particularly inadequate unemployment insurance systems,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, who served as chief economist to Joe Biden when he was vice president.
The geographic pattern is not as stark for Hispanic workers, who have also been hit hard in the coronavirus recession. But they make up more than a quarter of workers in two states with maximum weekly benefits of less than $300 — Florida and Arizona.
Among Black workers, about one in four live in just three states: Florida, Georgia and Texas. And nearly 60 percent over all live in the South, in states that tend to put the interests of businesses ahead of those of workers, and where race itself has historically been inseparable from policy decisions about the safety net.
Unemployment insurance in America was originally devised during the Great Depression as a compromise between Northern Democrats who wanted to expand worker aid and Southern Democrats who didn’t want to empower Black workers. The resulting system — a network of state programs rather than a single federal one like Social Security — explicitly excluded domestic and agricultural workers. And the states were given wide control that they retain today over how much a worker has to earn to qualify for the program, how generous the benefits are and how onerous the requirements.
The same pattern has persisted in heavily state-controlled programs like welfare: The larger a state’s Black population, the less generous its benefits.
“Yesterday’s racist system becomes today’s incidental structural racism,” said Kathryn Edwards, an economist at the RAND Corporation.
She has found that the geographic concentration of Black workers in stingier states means that the average maximum unemployment benefit a Black worker in America can receive per week is about $40 less than the average maximum benefit a white worker can get. That number might sound small, but Ms. Edwards points out that it adds up over 26 weeks of unemployment to a median rent payment in many states, or nearly the size of a $1,200 pandemic stimulus check.
If policymakers wanted to reduce racial disparities in what seem like race-neutral unemployment programs, William Spriggs, a Howard University economist, said they would want to do precisely the two things Congress did: expand the categories of covered workers, and increase the benefits they receive.
“What I did not anticipate fully and was shocked by,” Mr. Spriggs said, “was the South is also bad about running these programs.”
The most complicated part of the federal expansion was the entirely new program, called Pandemic Unemployment Assistance, meant for workers who wouldn’t normally qualify for state unemployment. This is the benefit that covers Uber drivers, self-employed hair stylists, and tipped servers or part-time retail workers whose reported earnings were too low to qualify normally.
Georgia and Florida were among the last states to begin making payments through that additional program (Florida’s labor force also has one of the highest shares of self-employed workers). And last week, Gov. Ron DeSantis of Florida publicly acknowledged that the state’s deeply troubled unemployment system introduced under the previous governor, Rick Scott, had been set up to frustrate workers and make as few payments as possible.
Mr. Spriggs fears that racial disparities are embedded in these delays in receiving benefits, too. And because unemployment has remained stubbornly high for Blacks in surveys even as it has begun to fall for other groups, Black workers are likelier to face longer spells of unemployment without the added benefits.
All of these choices in the unemployment system are layered on top of racial disparities that exist in the economy even during better times. Black workers have less wealth to cushion them when they lose income. And they tend to experience unemployment longer, as they face discrimination finding work again. Initial evidence already suggests that Black workers were less likely to be rehired in May and June as some businesses reopened.
“We’ve come to grips with the fact that Black lives are devalued as it relates to engagement with law enforcement,” said Darrick Hamilton, who leads the Kirwan Institute for the Study of Race and Ethnicity at Ohio State. “So why is it a leap of faith to believe that that devaluation would not be limited to law enforcement?”
It exists as well, he said, in how the economy values Black workers.
The initial shock of the pandemic hit workers wherever they happened to be in the economy, particularly in jobs requiring close contact. But now the labor market is rebalancing, a process that plays out to the advantage of white workers, Mr. Spriggs said. He expects things will settle where they invariably do: with Black workers having about twice the unemployment rate of white ones.
“It stretches credulity, in the worst labor market ever, and with a record number of Americans unemployed, for someone to suggest that, ‘Oh, if I give these people money, the big problem is they won’t work,’” Mr. Spriggs said. “Their characterization of workers as inherently lazy, that’s a dog whistle to me.”
Representative Bobby Scott, a Democrat from Virginia and the chairman of the House Committee on Education and Labor, said he hears in those arguments something else.
“What I hear are things that are not true,” he said. There just aren’t jobs for many people to go back to. And workers generally can’t refuse to return to work and still keep their unemployment benefits. “It’s hard to analyze the statement in terms of impact or philosophy,” Mr. Scott said, “if you start off with an understanding that it’s not true to begin with.”