One strand of economic historians argues that the economic shock imposed by a pandemic can contribute to reduced socio-economic inequality. In The Great Leveler, for example, Walter Scheidel details how the black Death of the 1300 s triggered a substantial decline in wealth inequality in Europe (Scheidel 2017).Footnote 1 The COVID-19 pandemic, however, is hardly comparable in its effects. While it may eventually contribute to shifts in political preferences for more redistribution and a stronger welfare state, its short-run consequences, at least in the USA, have been to place a magnifying glass on the socio-economic challenges that black and Latino families, in particular, continue to face in the USA Rather than serving as The Great Leveler, the COVID-19 pandemic has, to this point, acted as The Great Revealer.
First, the pandemic has revealed to a broader audience that the American welfare state does not adequately support low-income families, nor does it treat black and Latino families the same as white families.
In the initial months after the pandemic, for example, media coverage and public attention were largely focused on the dysfunctions present within state-run unemployment insurance (UI) systems. The UI system is not simple to navigate: a mountain of administrative hurdles, particularly in states trying to reduce UI caseloads, contribute to a burdensome application process that many unemployed adults choose, at least in pre-pandemic times, to avoid altogether (Herd and Moynihan 2018). In many states, benefit payments to jobless adults are delayed by several weeks; many families are forced to scrape by in the meantime (Parolin et al. 2020b). Black and Hispanic workers, as noted, tend to be less likely to receive unemployment support, even in the midst of the pandemic (Edwards 2020; Hardy and Logan 2020).
Despite the increase in attention to the challenges of the UI system, however, the program’s dysfunctions are far from new. The primary difference now is that more Americans—including a new set of white workers with decent pre-pandemic incomes—have been forced to confront the UI system. As the less-marginalized join the ranks of their lower-income (often black and Latino) peers in navigating the American welfare state, calls for its overhaul have gained more traction. While such calls are welcome, families experiencing poverty and hardship prior to the onset of the pandemic would be right to question why, only now, their needs are deemed worthy of adequately addressing.
Consider the following. Before the onset of the pandemic, black and Latino children were around twice as likely as white children to live in poverty (Fox 2019). In fact, around 41 percent of black adults today spent at least half their childhood in poverty, compared to 5% for the average white adult (Corcoran and Adams 1997). Moreover, 17% of black and Latino families with children, on average, have experienced food insufficiency between April and November 2020, according to estimates from the Census Household Pulse Survey. But while framed in several studies as contributing to historic highs in hardship (Schanzenbach and Pitts 2020; Ziliak 2020), one should keep in mind that 72 percent of these same families report that they also experienced food insufficiency prior to the onset of the pandemic. Put simply, the American welfare state had been failing the vast majority of these black and Latino families long before the onset of the pandemic.
These racial/ethnic inequalities cannot be detached from the role of racism itself in influencing the comparative weakness of the American welfare state. A number of studies have documented the role of race and racism in reducing levels of income support for jobless adults (Alesina et al. 2001; Gilens 1999; Kohut et al. 2006; Michener 2018; Quadagno 1994; Schram et al. 2003; Soss et al. 2008). Even today, biases in state governments’ use of Temporary Assistance for Needy Families resources actively contributes to racial/ethnic differences in poverty: states with more black families, all else equal, are less likely to use their TANF resources for direct cash assistance, and more likely to spend the funds instead on influencing family formation (Parolin 2019). As a result, the black-white child poverty gap is larger than it would be if states’ were to use their TANF resources in a comparable way.
Meanwhile, non-citizen residents of the USA—a group that is heavily Latino—are barred from receiving many transfer benefits, including the stimulus checks offered after the onset of the pandemic (Parolin et al. 2020b). Put simply: the American welfare state has been tilted against black and Latino families for some time. It should be little surprise, then, that it is the same families facing the greatest levels of hardship after the onset of the pandemic. But there is one exception to this broader story of malaise: the four months in which the federal government provided the American welfare state with ample resources to invest in the nation’s residents.
This leads to the second point: the pandemic has revealed that the welfare state can work in reducing racial/ethnic differences in poverty and inequality—if the country adequately invests in it.
In late March 2020, the USA Congress passed the CARES Act, a massive spending package that provided direct cash payments to most lower-income (and many moderately high income) families, expanded access to unemployment benefits, and included a $600 per week unemployment supplement for those who could access unemployment benefits. The benefits were short-lived: the $600 supplements expired at the end of July 2020. Nonetheless, the Congressional Budget Office projected that the new income transfers would amount to more than $450 billion—more than the country spent on all direct income transfers combined in 2019 (Parolin et al. 2020b). Put simply, the CARES Act amounted to a massive increase in the size of the US welfare state.
What was the result? Over the four-month period in which the majority of benefits were distributed, poverty rates for all racial/ethnic groups actually declined (Parolin et al. 2020a). Specifically, in April 2020, a month in which unemployment spiked, the monthly poverty rate for black individuals fell 2.2 percentage points from its rate in January (23.8% to 21.6%), while the monthly poverty rate for Latino families fell 2.7 percentage points from January (23.7% to 21%). The overall child poverty rate fell from 18.7% in January to 15.5 percent in April. Again, the declines in poverty are directly attributable to the increase in income transfers.
The poverty reductions were short-lived: by August 2020, after the stimulus checks and unemployment supplement had expired, the monthly poverty rate increased to above 25% for black and Latino individuals—higher than rates observed before the onset of the crisis (Parolin et al. 2020a). The lesson, again, is rather clear: the American welfare state is capable of supporting its residents and contributing to declines in poverty, even during difficult times. But during the COVID-19 pandemic, the income support was pulled after only 4 months—even as the pandemic continued to worsen—leaving more than one in every four black and Latino individuals in poverty toward the end of 2020.
The pandemic has exacerbated racial/ethnic differences in child poverty and child well-being, yes. But more than anything, the pandemic has put a spotlight on the fact that the American welfare state insufficiently supported low-income families, and black and Latino families in particular, well before the pandemic arrived.