US labor secretary: Unemployment rate can get below 10% by end of year
Labor Secretary Eugene Scalia argues the many jobs lost to the coronavirus pandemic will come back quickly.
The number of African American business owners plunged more than 40 percent during the coronavirus pandemic and related economic lockdown, facing far steeper losses than any other racial group, according to a new paper.
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The closure of nonessential businesses and strict stay-at-home guidelines decimated businesses throughout the country, but the losses were most pronounced among small business owners who are black, according to a paper published by Robert Fairlie, an economics professor at the University of California in Santa Cruz.
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During the two-month period from February to April, the number of working black business owners dropped by 41 percent, plunging from 1.1 million to 640,000. Nationally, the number of active business owners declined by 3.3 million, or 22 percent.
The disparities were apparent among every minority group, the findings show.
The number of Latino business owners fell 32 percent from February to April, while the number of Asian business owners shrank by 26 percent. Immigrant business owners dropped by 36 percent.
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“The negative early-stage impacts on minority- and immigrant-owned businesses, if prolonged, may be problematic for broader racial inequality because of the importance of minority businesses for local job creation (disproportionately for other minorities), economic advancement, and longer-term wealth inequality,” Fairlie wrote.
The damage inflicted by the outbreak of the virus, and the economic shutdown, is far more severe than the effect of the global financial crisis on small businesses. During the Great Recession, business owners decreased by 730,000 — representing a 5 percent reduction.
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The report highlights a growing disparity in the economic toll of the crisis across racial groups. While the national unemployment rate fell to 13.3 percent in May from 14.7 percent in April, according to the Labor Department, the jobless rate remained persistently high among some minority groups.
The white unemployment rate dropped to 12.4 percent last month from 14.2 percent in April, but the unemployment rate for black workers climbed to 16.8 percent from 16.7 percent, and for Asian workers, it rose to 15 percent from 14.5 percent.
In general, minority-owned businesses already face additional challenges when compared to their white-owned counterparts: A 2019 report released by a regional Federal Reserve bank found that 46 percent of black-owned businesses were profitable at the end of 2017, compared with 55 percent of white-owned firms.
Businesses owned by minorities also tend to face bigger financial challenges. For instance, 78 percent of black-owned businesses reported financial struggles, compared to 62 percent of white-owned businesses.
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