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How COVID-19's Economic Impact Varies by Geography and Race


Wednesday, April 21, 2021

By Nishesh Chalise and Violeta Gutkowski, Institute for Economic Equity

This post is the first in a two-part series analyzing data from the surveys, Perspectives from Main Street: The Impact of COVID-19 on Low- to Moderate-Income Communities and the Entities Serving Them. We broke down the survey data by geography (urban and rural) and by race and ethnicity to show how the economic disruption varied. This post discusses what the economic impact was for different communities. The second post analyzes how severe the impact has been for different communities and how long recovery is expected to take.

The COVID-19 pandemic has had a major economic impact on all communities, but the effects have varied by geography, and communities of color have borne the brunt of the issues, according to our analysis of the data in a Federal Reserve survey.

The October 2020 (PDF) iteration of the Perspectives from Main Street: The Impact of COVID-19 on Low- to Moderate-Income Communities and the Entities Serving Them surveys highlighted the low- to moderate-income (LMI) communities and areas served by the community organizations that responded. (See box.)

Perspectives from Main Street Surveys and Respondents

The community development functions of all 12 Reserve banks within the Federal Reserve System and the Board of Governors surveyed representatives of nonprofit organizations, financial institutions, government agencies and other community organizations. The most recent version of the survey was conducted between Oct.7 and Oct. 16 and received 1,127 responses.

According to the responses to the October survey:

  • About a third of the entities served primarily rural areas, whereas half of the entities served primarily urban areas.
  • Of the entities serving primarily rural areas, 9% served Black communities, 8% served Hispanic communities and 76% served white communities.
  • Of the entities serving primarily urban areas, 38% served Black communities, 19% served Hispanic communities and 32% served white communities.
  • Regardless of geography or demographic served, approximately 50% of the entities were nonprofit organizations.

Respondents were able to select all the areas in which they serve, including rural, suburban and urban, and to rank them. An entity primarily serving a rural area ranked “rural” as No. 1.

An entity was referred to as serving a particular community if the respondent reported that the LMI population the entity served was made up of at least 50% of that demographic group. The values do not add up to 100% because of the incorporation of additional ethnic groups.

The data presented in each report of the surveys are aggregated and do not show differences by geography or by race and ethnicity. However, the differences in vulnerabilities of rural and urban areas and the disparate impact of the pandemic on communities of color are significant. We aimed to break down the survey data by geography and race to show how the disruption varied.

Effect on Communities by Geography

Although urban areas faced the initial brunt of COVID-19 cases, the incidence rate eventually surged in rural communities, according to a Nov. 20 report from the Centers for Disease Control and Prevention. Both urban and rural areas are vulnerable to the impacts of COVID-19 due to various factors, including population density, percentage of people of color, socioeconomic status and access to health care systems, as nonprofit Surgo Ventures highlighted in a COVID-19 vulnerability report and index.

Top Impact Question

The survey gave eight options for answers to the question: At this point in time, what is the top impact of COVID-19 on the people and communities you serve?

The options were:

  • Income loss/job loss/unemployment
  • Business impacts (short-/long-term closure, supply chain disruption and reduced demand)
  • Basic consumer needs (housing, food and other personal needs)
  • Education (child care, K-12 and higher education)
  • Health (adequate health care, access to health insurance, mental health and COVID-19 transmission)
  • Public financial supports (ability to access federal and state resources for individuals)
  • Private financial supports
  • Other

Exploring the differing ways the pandemic is impacting LMI communities in urban and rural areas can provide important insights into these issues. Key findings from the latest Perspectives from Main Street survey highlighting the differences in rural and urban areas include:

  • Entities serving primarily urban areas reported that income/job loss was the category COVID-19 hit the hardest, followed by business impacts. Entities primarily serving rural areas reported business impacts in the lead, followed by income loss. (See Figure 1.)
  • Almost 65% of entities serving urban areas said income loss had been getting worse over the previous eight weeks, with 22% saying the situation had been getting significantly worse. Comparatively, almost half of entities serving rural areas said that income loss had been getting worse, with 30% indicating the situation had been getting better. (See Figure 2.)
  • Around half of the entities serving rural and urban areas reported that the impact on businesses had gotten worse in the previous eight weeks.

Top Impacts Were Income Loss and Business Disruptions

Figure 1

Description of chart below

SOURCES: The October 2020 (PDF) iteration of the Perspectives from Main Street: The Impact of COVID-19 on Low- to Moderate-Income Communities and the Entities Serving Them surveys and authors’ analysis.

DESCRIPTION: The graph reflects the top impact on LMI communities according to entities that serve primarily urban or rural areas. The y-axis shows the percentage of survey respondents who reported the issues as top impacts. Entities serving primarily urban areas reported that income and job loss was the category that COVID-19 hit the hardest, followed by business impacts. Entities primarily serving rural areas reported business impacts in the lead, followed by income loss.


Income Loss Had Been Getting Worse before October 2020

Figure 2

Description of chart below

SOURCES: The October 2020 (PDF) iteration of the Perspectives from Main Street: The Impact of COVID-19 on Low- to Moderate-Income Communities and the Entities Serving Them surveys and authors’ analysis.

DESCRIPTION: The graph reflects the change in income/job loss among LMI communities according to entities that serve primarily urban or rural areas. The y-axis shows the percentage of survey respondents who gave the answer. Almost 65% of entities serving urban areas said income loss had been getting worse in the eight weeks leading up to the October survey. Almost half of entities serving rural areas said that income loss had been getting worse.

Impact on Communities by Race and Ethnicity

It is evident that the pandemic has had a disproportionate impact on people of color. The numbers of pandemic-related cases, hospitalizations and deaths are all highest in Native American, Hispanic/Latino and Black communities, and the disparities persist, according to CDC data and a Sept. 23 National Public Radio report. As these statistics highlight the entrenched structural inequities faced by people of color, it is important to point out the differences in the disruptions faced by LMI communities of varying races and ethnicities.

Following are key findings from the survey that place a focus on the differences in the largest groups by race and ethnicity:

  • Entities serving primarily Black and Hispanic communities reported that income/job loss was the top impact category for those communities during the pandemic. Entities serving primarily white communities reported disruptions to businesses as the main impact. (See Figure 3.)
  • Approximately three-fourths of entities serving Black and Hispanic communities (72% and 79%, respectively) reported that income loss had worsened over the previous eight weeks, with less than 15% noting the situation had improved. Comparatively, almost half of the entities serving white communities said that income loss had become worse, with around a third indicating that the situation had become better. (See Figure 4.)
  • Regarding impact on businesses, 60% of entities serving Black communities and 68% of entities serving Hispanic communities reported that the disruption had been getting worse in the previous eight weeks. Comparatively, less than half of entities serving white communities (48%) noted that the situation had worsened over that time, with almost a third of responses noting that it had improved.
  • Additionally, there were disparities in terms of impact on education. More than two-thirds of entities serving Black and Hispanic communities (70% and 74%, respectively) reported that the disruption to education had gotten worse in the two months leading up to the October survey, with almost one-third of responses indicating the situation had gotten significantly worse. Less than 15% of responses among people of color indicated that education had gotten better. Comparatively, around half of entities serving white communities said that the situation had been worsening, with almost one-fourth of respondents noting it had been improving.

Income Loss Was the Top Impact Category for Black and Hispanic Communities

Figure 3

Description of chart below

SOURCES: The October 2020 (PDF) iteration of the Perspectives from Main Street: The Impact of COVID-19 on Low- to Moderate-Income Communities and the Entities Serving Them surveys and authors’ analysis.

DESCRIPTION: The graph reflects the top impact on LMI communities by race and ethnicity, as reported by representatives of entities that serve the communities. The y-axis shows the percentage of survey respondents who reported the issues as top impacts. Income/job loss was the top impact category reported for Black and Hispanic communities.

Worsening Income Loss Reported More Often for Black and Hispanic Communities

Figure 4

Description of chart below

SOURCES: The October 2020 (PDF) iteration of the Perspectives from Main Street: The Impact of COVID-19 on Low- to Moderate-Income Communities and the Entities Serving Them surveys and authors’ analysis.

DESCRIPTION: The graph reflects the change in income/job loss among LMI communities by race and ethnicity, as reported by representatives of entities that serve the communities. The y-axis shows the percentage of survey respondents who gave the answer. Greater percentages of entities serving Black and Hispanic communities said that income loss had become worse in the eight weeks leading up to the October survey than did entities serving white communities.

Long-standing Disparities for Communities of Color

In all, the Perspectives from Main Street surveys have added to the growing body of research highlighting the differences in the pandemic’s impact by geography and ethnicity. While income and job loss were the most significant impacts in urban areas, the disruptions to businesses were the primary concern in rural areas.

COVID-19 is still causing major disruptions for all communities; however, long-standing structural disparities are contributing to communities of color facing the brunt of the impact and potentially longer recovery times. We acknowledge the effort by survey respondents who are on the front lines serving LMI communities.

ABOUT THE AUTHORS
Nishesh Chalise 

Nishesh Chalise is the director of Community-Based Policy and Analysis within the Institute for Economic Equity at the St. Louis Fed.

Violeta Gutkowski 

Violeta Gutkowski is a lead analyst within the Institute for Economic Equity at the St. Louis Fed.

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