The Lockdowns Crushed Minority-Owned Businesses the Most

Meanwhile, corporations receive massive windfalls thanks to government ‘relief’ efforts.


This article was originally posted by FEE.org, and written by Brad Polumbo

Since the beginning of the COVID-19 pandemic, minorities have disproportionately suffered from the virus’s health effects. A new study reveals that the government-mandated economic lockdowns have also hit minorities hardest.


In response to the outbreak and under the guidance of federal agencies such as the Centers for Disease Control, state and local governments imposed quarantine orders and mandated shutdowns for many businesses deemed “non-essential.” Whether one supports lockdowns as a public health measure or not, they undoubtedly resulted in tens of millions of Americans and counting filing for unemployment and a sharp economic downturn.


Like all government interventions into the economy, the unprecedented shutdown has not affected everyone equally. The government’s response to this crisis contained clear carve-outs and favoritism for politically connected large corporations, yet imposed disproportionate negative impacts on less politically influential minority-owned small businesses.


A new paper from Professor Robert Fairlie of the University of California, Santa Cruz exposes this reality for all to see.


“The number of active business owners in the United States plummeted by 3.3 million or 22 percent over the crucial two-month window from February to April 2020,” Fairlie found in his analysis of nationally representative government survey data. “The drop in business owners was the largest on record, and losses were felt across nearly all industries and even for incorporated businesses.”


This is a troubling economic observation in and of itself, yet the data are even more concerning when broken down along racial lines.


“African-American businesses were hit especially hard experiencing a 41 percent drop. Latinx business owners fell by 32 percent, and Asian business owners dropped by 26 percent,” the professor reports. For context, white business owners only faced a 17 percent drop.


“Simulations indicate that industry compositions partly placed these groups at a higher risk of losses,” Fairlie continues. “Immigrant business owners experienced substantial losses of 36 percent. Female-owned businesses were also disproportionately hit by 25 percent.”

(Source: Robert Fairlie, University of California, Santa Cruz)

Remember that these abstract figures represent millions of actual people whose livelihoods were destroyed by the COVID-19 response. And as revealed in new reporting from the New York Times, the massive government programs passed as COVID-19 “relief” and “stimulus” efforts—we’re set to add a whopping $8 trillion in debt—are failing to help many of those who are most in need.


“Black-owned businesses also appear to be benefiting less from federal stimulus programs,” the paper reported. “Only 12 percent of black and Hispanic business owners polled between April 30 and May 12 received the funding they had requested.”


“It’s unfortunate that the businesses that need the funding, help and assistance the most are not receiving it,” the owner of a hair salon in the Bronx told the Times. “It’s like the Titanic. Where was the water coming up first? It was coming from the bottom. The people on the bottom were drowning first.”


Meanwhile, wealthy corporations are benefiting mightily from tax carve-outs in the congressional COVID-19 relief bill that was passed, the CARES Act.


Companies will receive more than $155 billion in benefits. This includes a whopping $862 million tax refund for the massive multinational corporation Boeing.


“The tax breaks were supposed to help ease companies' red ink and keep paychecks flowing for workers,” Axios reports. “But most of the companies mentioned above, for example, have either furloughed employees or are pushing for buyouts.”


The lesson here is quite clear. When the government launches massive interventions into the economy and then passes 300+ page bills to “fix” the problem it helped create, political distortions will result in costs disproportionately borne by disadvantaged groups in society and benefits that skew toward the well-connected.



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