Building a Foundation for Economic Equity in the Wake of the COVID-19 Pandemic

Scott Astrada

Abstract: One of the most glaring consequences emerging from the economic fallout of the pandemic is that COVID-19 exacerbated the already glaring cracks in the socioeconomic foundations that support the country’s most vulnerable populations. Even more troubling is that this pre-existing financial vulnerability is, in large part, the corollary of historical and entrenched policies steeped in historical economic racial exclusion. The stark reality is that prior to the COVID pandemic, millions of Americans were embroiled in financial insecurity and poverty. A federal response to the COVID-19 pandemic must specifically address the health of all Americans and needs to prioritize current and future support for the economic well-being of the most vulnerable Americans. As such, the federal government’s response to the COVID pandemic can provide a model to build and expand upon, to ensure that the most vulnerable are given the crucial resources they need to weather the COVID pandemic, and to rebuild economic prosperity by addressing the historical inequities that have aggravated the public health crisis. This article will thus provide a discussion of COVID’s impact in the context of an unequal economic recovery since the Great Recession, and the exacerbating impact COVID has had on the lives of millions of people, decimating health and economic well-being. The article also reframes how to develop, implement and measure policy solutions to address the pandemic’s economic devastation, and expand upon the COVID legislation of 2020: Families First Coronavirus Response Act (P.L. 116-127); and the Coronavirus Aid, Relief , and Economic Security Act (P.L. 116-136)

I. Introduction

One of the most glaring consequences emerging from the economic fallout of the pandemic is that COVID-19 exacerbated the already stark cracks in the socioeconomic foundations that support the country’s most vulnerable populations. Even more troubling is that this pre-existing financial vulnerability is, in large part, the corollary of historical and entrenched policies steeped in historical economic racial discrimination. The stark reality is that in the run up to the pandemic, millions of Americans were embroiled in financial insecurity and deep poverty (Lei 2013; Health and Human Services 2021). This has occurred as the broader economic recovery after the Great Recession took hold. Yet for the most financially insecure, especially communities of color, the recovery has been tepid at best. Any gains have been undermined due to COVID-19’s impact on jobs, household finances, and physical safety. In responding to the economic fallout and health crisis, a broad and inclusive federal and state government response that specifically addresses the health of all Americans, including economic support for the most vulnerable Americans, is sorely needed. Of particular note, is a focus on the term inclusive.  Which, in the context of this article, refers to quantitatively measured policy outcomes that ensure resources and relief are targeted in order distribute gains equitably across subgroups of Americans –especially those that are frequently marginalized in broader macroeconomic discussions. For example, the traditional reliance on indicators such as GDP to track signals of an economic recovery have obscured an accurate picture of how some communities have been decimated by the economic crisis. COVID hit working class Americans hard. As a result, what is needed to ensure relief policies are targeted to benefit the hardest hit communities, which ultimately requires an expansion of the traditional metrics signaling economic recovery and growth – traditional metrics that do not fully capture an uneven recovery.  (Andriotis 2020; Parker 2020; and Macoilek 2020). Economic policies targeting these populations thus need to be prioritized. As such, the federal government’s response to the COVID pandemic can provide a model to build and expand upon, to ensure the most vulnerable are given the crucial resources they need to weather the COVID pandemic, and to rebuild economic prosperity by addressing the historical inequities that have exacerbated  the health crisis. This article will provide a discussion of COVID’s impact in the context of an uneven economic recovery since the Great Recession, and the exacerbating impact COVID has had on the lives of millions of people, decimating their health and economic well-being. The article also reframes how to develop, implement and measure policy solutions to address the pandemic’s economic devastation, and expand upon the COVID legislation of 2020. 

II. COVID-19’s Intensifying Effect on Economic Inequality 

As Americans struggle to meet the economic challenges that COVID-19 has caused, in parallel to its health dangers, they are beleaguered by various crises such as job loss, reduction of hours, furloughs, business closures, decimated small business revenue, and wage cuts. The economic repercussions are enormous and extend to housing instability, food insecurity and rising health care costs. Low and Moderate Income (LMI) Americans are particularly vulnerable, as are communities of color, as they are overrepresented in front-line professions and generally work in the hardest hit industries (Powell 2020). The day-to-day financial lives of working class Americans were already precarious before COVID. For example, 2019 Federal Reserve research showed that 40% of Americans could not afford $400 in case of an emergency from savings (Smialek 2019). 

As our nation is facing unprecedented turmoil, millions of Americans are facing financial ruin in addition to a health crisis. This is especially problematic because the partial shutdown of the US economy in response to COVID had the most devastating impact on vulnerable Americans, who make lower wages, have little savings, and have reduced work opportunities during normal business (Butchireddygari 2020; Reeves 2020).  In the labor market at the outset of the crisis, about 50% of the 22 million jobs lost during the first quarter of 2020, and into April, were re-gained by the end of the 3rd quarter, as states reopened, and people returned to work (Powell 2020). However, economic activity remained below pre-pandemic levels, and the economy still faces many potential headwinds as the health crisis worsens (Powell, 2020). As the Chairman of the Federal Reserve, Jerome Powell, stated in his testimony before the House Financial Services Committee: 

The downturn has not fallen equally on all Americans; those least able to bear the burden have been the most affected. The rise in joblessness has been especially severe for lower-wage workers, for women, and for African-Americans and Hispanics. This reversal of economic fortune has upended many lives and created great uncertainty about the future (Powell, 2020).

As COVID-19 started to spread across the world and within the United States in the beginning of 2020, the U.S. economy had recovered to the extent that the total of job losses in the Great Recession had been reversed, and unemployment was at record lows along with wide scale access to social safety benefits like unemployment insurance (Unidos 2020). In fact, many workers were confident that if they lost their jobs, Unemployment Insurance and social safety net programs would mitigate the disruption to their day-to-day lives before they sought subsequent employment (Unidos 2020). The impact of COVID has been detrimental to economic  recovery, but even more so on those communities that have not shared in the broader economic recovery over the last 10 years. This warrants a broad and expansive federal government response to ensure the economy recovers and that Americans are provided much- needed support to weather the pandemic. 

III. A History of Inequality 

The patchwork safety net and balkanized economic policy programs supporting large portions of Black and Latinx communities is, as it has historically been, unstable and unreliable (Unidos 2020). The aftermath of the Great Society era of the 1930s produced core supports, including housing assistance, job training, Medicaid, and the Food Stamp program (SNAP’s predecessor). But these programs were exclusionary for people of color. So-called “alien restrictions” excluded undocumented immigrants, who are primarily Latinx, and their often lawfully present spouses and children, from vital economic, health and nutritional supports (Unidos 2020). In 1935, the Social Security Act built the foundation of the nation’s safety net and retirement plans. Yet, at the outset, the Social Security Act of 1935 excluded almost a third of all American workers from coverage, including farmworkers and domestic workers (Asante-Muhammad 2017). The majority of workers in these sectors were people of color, especially Black Americans (Asante-Muhammad 2017). According to some estimates, this exclusion cost a cumulative loss of benefits totaling approximately $143 billion (in 2016 dollars) (Asante-Muhammad 2017). The economic devastation carried forward by the lack of retirement savings, and its corresponding growth and transfer to the next generation, provides an explanation for such a stark gap in retirement readiness and a growing wealth gap. 

The cumulative result of dozens of such policy decisions over the last century has shaped a fundamentally unequal society, where Latinx and Black Americans were simultaneously more susceptible to the coronavirus and resulting economic disruptions at the onset of the pandemic, and had a far less comprehensive safety net to rely on (Unidos 2020). Communities of color suffered far greater economic negative impacts compared to White workers, based on economic vulnerabilities resulting from a history of racism and discrimination (Gould 2020). Despite the unprecedented nature of COVID on the world’s health and economies, the exacerbation of historic and ongoing social and economic injustices has disproportionality harmed Black Americans. According to research by the Economic Policy Institute: 

Persistent racial disparities in health status, access to health care, wealth, employment, wages, housing, income, and poverty all contribute to greater susceptibility to the virus—both economically and physically. Black workers and their families were economically insecure before the pandemic tore through the United States. The pandemic and related job losses have been especially devastating for black households because they have historically suffered from higher unemployment rates, lower wages, lower incomes, and much less savings to fall back on, as well as significantly higher poverty rates than their White counterparts. This prior insecurity has magnified the current economic damage to these workers and their families (Gould 2020). 

A. Health and Wealth 

Early in his 2nd term, in a 2014 speech outlining his priorities, President Barack Obama proclaimed that inequality “is the defining challenge of our time,” (Shapiro 2017, 13). Economic inequality was a defining theme of the 2016 Presidential election and continues to be a central concern in current media and political debates (Lauter 2015; Long 2016; Ingraham 2015). Growing wealth inequality has resulted in solidified poverty, with “[t]he wealthiest 1 percent own[ing] 42 percent of all wealth in 2012 and [taking] in 18 percent of all income” (Shapiro 2017, 13). This is tremendously relevant because wealth stabilizes income volatility and bouts of unemployment for middle and low-income wage earners. Ultimately, wealth is “a fundamental pillar of economic security, and without it [...] hard-won gains are easily lost.” (Shapiro 2017).  A recent OECD study found that while the top 10% of income earners in the United States receive almost 30% of the nation’s income, the wealthiest 10% own an astounding 76% of the country’s wealth (Asante-Muhammad 2017).

This translates into a racial wealth divide where the median net worth of African American and Latinx families stands at just $11,000 and $14,000, respectively (Asante-Muhammad 2017). This is a small fraction of White family’s wealth – a median worth of $134,000 (Asante-Muhammad 2017). When consumer durable goods such as automobiles, electronics and furniture are subtracted, median wealth plummets to $1,700 for African American families, and $2,000 for Latinx families, compared to $116,800 for White households (Asante-Muhammad 2017). This troubling trend will have significant macroeconomic effects as the U.S. moves to a majority non-White population (Frey 2018). An example of this impact that will also increase over time is African American and Latinx median wealth decreasing over the past 30 years, while White wealth slowly increased over the same period  (Asante-Muhammad 2017). This resulted in the overall median wealth of Americans decreasing from $78,000 in 1983 to $64,000 in 2013 (Asante-Muhammad 2017). These trends started before the financial crash of 2008. 

The Great Recession exacerbated this trend of stagnation, and disproportionately impacted households of color (Asante-Muhammad 2017). For Black and Latinx, the Great Recession erased the economic progress made over the past three decades in their entirety (Asante-Muhammad  2017).  Even before the COVID pandemic, based on 2019 trends, it would take 228 years for the average Black family to reach the level of wealth White families own today. For the average Latinx family, matching the wealth of White families would take 84 years (Asante-Muhammad 2017, 5). Ultimately, trends projected average African American household wealth was on the path to hit zero by 2053, followed by a similar bottoming out of Latinx median wealth twenty years later – well after the country has become a majority non-White nation (Asante-Muhammad 2017, 5). Conversely, over the same period of time, White wealth would rise to $137,000 by 2053 and $147,000 by 2073. This can partially be explained by not only the loss of wealth (subtracting durable consumer goods), but also that income gains for Whites and African Americans manifest in very different ways when it comes to wealth accumulation. According to research, every $1 increase in average income over a 25-year period translated into $5.19 of wealth for White households but translated to only $0.69 of wealth for African Americans over the same time period (Shapiro 2017, 18). This has been attributed to discrimination in hiring or promotions, training, and access to benefits that have made it much harder to African Americans to build assets (Shapiro 2017, 107). Without adequate savings for retirement and a pathway to homeownership, what results is a lack of wealth to sustain individuals through fluctuations of expenses, and families are left solely relying on income to meet daily expenses and costs. A closer look at income trends and data provides a further step in capturing the obstacles millions of Americans face. 

Without wealth, and unable to withstand minimal economic shocks, millions of Americans have worked harder and fell farther behind in personal savings, economic advancement and financial stability (Stiglitz 2016, 74-82). As expenses have ballooned, hourly wages for most American workers have only increased, on average, a paltry 0.1 percent per year since 1980, and median family income has decreased by 7 percent from 2000 to 2013 (Stiglitz 2016, 170). One of the most disturbing consequences of this stagnated growth is that an estimated 2.8 million people worked full-time but still did not earn enough to be over the poverty line (Stiglitz 2016, 170) These trends have to be addressed with the understanding that economic inequality is the result of policy choices and priorities, and that “[...] markets do not exist in a vacuum; it is government that structures markets and sets the rules and regulations under which they operate. Rules and institutions are the backdrop of the economy, and the way we set the rules, and keep them up to date and enforce them have consequences for everyone” (Stiglitz 2016, 23).

B. Retirement Insecurity 

Before the COVID-19 pandemic, less than two-fifths of adults felt that they were on track to retire with adequate savings, and one fourth had no retirement savings at all (Stiglitz 2016). For African Americans, this lack of savings and the historical lack of access to retirement plans has its roots in discriminatory policies implemented by the federal government. The resulting retirement readiness gap that resulted from this exclusion accounts for part of the reason why Social Security is central to millions of Americans’ financial well-being. Social Security provides nearly three quarters of the income that sustains older individuals of all races (Shapiro 2017, 155). Over one in five couples, and almost half of single seniors, rely on Social Security for the majority (90%) of their incomes, with almost a third of single African American seniors relying entirely on Social Security for their income (Shapiro 2017, 115). Similarly, 37.3% of Latinx seniors get all of their income from Social Security (Shapiro 2017, 116). 

C. Housing Insecurities 

A central contributor to retirement savings is homeownership, which continues to be the way that most middle-class families build wealth and secure a stable financial future (Stegman 2018). Disparities in homeownership rates account for a large portion of the racial wealth divide (Asante-Muhammad 2017). Over many generations, White families have benefited from access to wealth that has been denied to their African American counterparts. Between 1994 and 2017, White homeownership rates increased to 76%, while the homeownership rate for African Americans was at 49% (Asante-Muhammad 2017, 8). Since 2006, the homeownership rate has declined gradually for everyone, but losses have been larger for households of color. The homeownership rate among African American households fell from 48% in 2005 to below 42% in late 2016, while the Latinx homeownership rate declined from 50% to 46% during the same time period (Asante-Muhammad 2017). Meanwhile, White homeownership dropped from 76% to 72% (Asante-Muhammad 2017). Turning again to recent history, the gap in homeownership rates can, at least in part, be explained by federally sanctioned housing discrimination carried out by the federal government. Between 1934 and 1968, the Federal Housing Administration (FHA), among other public and private sector actors explicitly shut out communities of color from access to subsidies for home purchases – known as redlining (Rothstein 2017; Cohen 2016; Stegman et al. 2016; FHA Report). During the first 35 years of the FHA, only 2% of those receiving government-backed mortgages were people of color (Asante-Muhammad 2017). In cities like Chicago, where redlining was widespread, this discrimination stripped more than $500 million of wealth (about $3 billion in 2017 dollars) from families of color over a 30-year period (Asante-Muhammad 2017, 15). As a result of redlining, homeownership disparities became one of the largest drivers of the racial wealth gap, because most people hold their net wealth in the form of home equity (Asante-Muhammad 2017, 15); Shapiro 2017, 45). Recent investigative reporting has shown that communities still live in the legacy of redlining, and that widespread discrimination is still prevalent in the current financial marketplace (Glantz 2018). Homeownership disparities are a main driver of the overall wealth gap. 

D. Student Loan Debt 

Unfortunately, even with documented increases in lifetime earnings for those with college degrees, students of color still face numerous obstacles, including over-burdensome student loan debt and limited job prospects because of degrees from unscrupulous institutions. Generally, economic well-being rises with higher levels of educational attainment, and the majority of adults who completed a postsecondary degree think their college degree was worth it (Federal Reserve 2018). However, the benefits of education are less apparent among adults who did not complete a post-secondary degree or attended for-profit schools (Federal Reserve 2018). Two-thirds of individuals who completed a bachelor’s degree felt that their investment paid off, but less than one-third who started a bachelor’s degree but did not finish felt the same way (Federal Reserve 2018). In fact, more than half of those adults who attended a for-profit institution say that they would attend a different school if they had a chance to choose again (Federal Reserve 2020). Even when students graduate they face an uphill battle to save for retirement. 

Student loans continue to present a growing impediment to financial success and long term wealth growth (Scott-Clayton 2018). In 2017, more than half of college students under age 30 took on some type of debt to pay for their tuition (Federal Reserve 2018). Generally, most borrowers are current on the repayment of their loans. However, those who attended for-profit institutions without receiving a degree are more likely to default or fall behind (Federal Reserve 2018). Almost 25% of borrowers who attended for-profit schools are behind on their payments, compared to less than one-tenth of adults who attended public or private not-for-profit schools (Federal Reserve 2018). Research from the Center for Responsible Lending has found that “students of color enroll more frequently in for-profit colleges than other students, graduate at lower rates, and are left with more debt. Some schools have been accused of deliberately targeting students of color for enrollment in their predatory programs” (Center for Responsible Learning 2019). This not only compromises student success during matriculation, but also forecloses on a future of gainful employment, increased wages and retirement readiness. The burdensome debt that many students of color end up taking on by enrolling in for-profit schools is usually the first step in a chain reaction that leads to limited job prospects, stagnant income and wealth, and few pathways to homeownership, resulting in an extremely vulnerable position when planning for retirement. 

E. Volatility and Economic Security

Lack of wealth is particularly disastrous for vulnerable Americans because financial strain stems from both inadequate income AND financial volatility. Research has shown that the growth of income over a life cycle is not a smooth upward glide but a series of spikes and dips (Murduch 2017, 9). This volatility is a fundamental challenge when matching cash flows with expenses (Murduch 2017, 12). Volatility and income swings can be calculated by taking the difference in income between the highest month and the lowest month as a percentage of average household income. The average swing for a poorer household was as high as 126%. In other words, if average monthly income was $1,000, poor families saw at least one month with an income around $1,730 and one month with income of only $470 (Murduch 2017, 28). According to the same research, among households earning less than $25,000 for the year, almost 20 percent experienced extreme income volatility (Murduch 2017, 35). Family income instability increased faster than inequality over the last few decades, topping out at 30% (Murduch 2017, 10-11). This partially explains why nearly 40% of American families would resort to selling assets or taking short-term loans to obtain $400 quickly (Murduch 2017, 72).

Individuals without access to affordable and wealth building credit cannot simply save and borrow as necessary to smooth dips and spikes. Predatory lending ensnares families already in emergency situations (Murduch 2017, 45). This dynamic is particularly important when considering traditional narratives of consumer choice in a financial literacy context. Emerging studies in behavioral economics demonstrate that “even in life’s most important decisions, [people’s choices] are influenced in ways that would not be anticipated in a standard economic framework” (Thaler 2009, 37). With inadequate retirement savings, limited access to homeownership, decreasing wealth, and volatile incomes, communities of color have traditionally looked to higher education as the pathway to economic prosperity that will lead to a future of financial security. Current inequities in student debt are impairing the economic mobility of students of color, trapping them in a cycle of financial stagnation that in turn drives the growing wealth gap.

IV. Policy Solutions: COVID Relief and Beyond - How to Approach Equity in Policy Reactions?

There is an urgent need to create policies that address vulnerable Americans’ emaciated savings, lack of housing stability, education debt and minimal financial resilience. These intentional policies require more in-depth and inclusive metrics to ensure macroeconomic and broad-based measures of a resurging economy do not obscure the stagnant recovery of vulnerable populations – a trend that began after the Great Recession. Critical readings of the quantitative data by various stakeholders driving COVID-19 policy responses require rethinking definitions of economic progress to accurately measure the full impact of COVID-19 on the economy – in particular incorporating economic inequality in measures of economic growth. 

2020 Coronavirus (COVID-19) Legislation:

Families First Coronavirus Response Act (P.L. 116-127)

Coronavirus Aid, Relief , and Economic Security Act (P.L. 116-136)

The Families First Coronavirus Response Act (P.L. 116-127) was approved by the House of Representatives on March 14, 2020 and the Senate on March 18, 2020, and President Trump signed the bill into law March 18, 2020. The Coronavirus Aid, Relief, and Economic Security Act was passed by the Senate on March 25, 2020 and the House of Representatives on March 27, 2020. The President signed the bill into law on March 27, 2020. The sections discussed below are the tax provisions meant to provide liquidity and direct resources to medical professionals, first responders, individuals, industries, and small businesses impacted by COVID-19. I have highlighted a few provisions that can be expanded not only for longevity, but also for rethinking how provisions can address the inequities discussed above and repair the financial decimation that millions of American faces in addition to the health crisis. This discussion is not a comprehensive consideration of the various tax implications on individuals, but rather serves as the foundation of inclusive policy considerations.  

A. Recovery rebate credits

• Recovery rebate credits for 2020 will be advanced as immediate cash payments of up to $1,200 for individual plus $500 for a qualifying child (phasing out for high income individuals).

Income tax credits usually reduce an individual’s tax liability. Credits are generally claimed on the tax return for the year they arise. There are a few credits that, when they exceed tax liability, are refunded to the taxpayer, amounting in essence to a payment to an individual even though no tax is owed. In the 2020 COVID-19 legislation, the IRS made advance credit refunds via CARES act payments during 2020, with eligibility criteria determined using 2018 or 2019 tax information. It also phased out for high income taxpayers. The income stratification as a basis to determine eligibility makes for an efficient manner of deploying targeted resources for poverty afflicted and LMI Americans (Beltran 2017). This provides a working tax structure that is nimble but targeted in providing direct resources.

B. Exclusion from Income for Student Loans for Student Loan Payments by Employers

• Certain payments made by an employer on a qualified student loan of an employee before January 1, 2021 are excluded from employee’s gross income. 

Employee benefits provided under an employer’s benefits plan, to the extent the benefit does not exceed $5,250 for the tax year, are excluded from an employee’s income. This section, in tandem with any proposed student debt relief proposals, would create a much needed employer benefit option as employers diversify and expand their recruiting pipelines as the recovery takes hold. This is especially important considering the discussion above on student debt, and the outsized obstacles debt creates for students of color. Increasing the term and capped exclusion amount would provide significant resources for debt-burdened students, while also driving mass adoption of this benefit in the marketplace. 

C. Coronavirus-related distributions from a retirement plan 

• The 10 percent additional tax under Code Sec. 72(t) is waived for any qualified coronavirus-related distributions from a retirement plan. Eligible individuals who take such distributions can include them in gross income over a three-year span and have three years to repay the amount.

• The thresholds limit on loans from an employer-sponsored retirement plan for a qualified individual affected by the coronavirus is increased to the lesser of $100,000 or 100 percent of the present value (but not less than $10,000) of the plan participant’s benefits under the plan.

These provisions provide much needed money for individuals facing cash shortfalls for day-to-day expenses, especially rent, food, or childcare. Yet, given the above discussion on retirement readiness and the lack of access to retirement plans for low and moderate income working class Americans, many are left out of these expedient benefits. Policies to provide access to retirement plans, even post COVID-19, in tandem with these types of provisions will not force cash strapped households to make a choice between liquid savings and planning for retirement. 

D. Sick Leave and family leave

• Eligible self-employed individuals may receive a refundable credit for qualified sick leave or family leave equivalent amount if they cannot work due to coronavirus (COVID-19). The sick leave credit is available if the individual is quarantined, has been advised to self-quarantine, has coronavirus symptoms and is seeking a medical diagnosis, or is caring for someone with coronavirus or for a child whose school or care facility is closed or whose care provider is unavailable.

These policies are particularly crucial for employment continuity when individuals find themselves unable to work due to COVID-19 infection. Yet, populations that do not have access to these programs due to employment classification, access to employers offering such a benefit, or awareness of their rights to request sick leave, are at risk of being left out. According to the Center for American Progress,“ [o]ne issue that has been front and center during the current crisis is the lack of meaningful, comprehensive paid family and medical leave and paid sick leave policies to support workers and public health…The absence of national paid leave policies left workers and the public unprepared for the pandemic. Without paid sick days, for example, workers are more likely to go to work when they have a contagious illness, risking public health” (Boesch 2020). The advent of COVID-19 requires rigorous enforcement of paid sick leave by state and federal agencies and regulators, but also elevates the policy need for expansion of access to paid sick leave. 

E. Effects on Businesses 

• Net operating losses – net operating losses (NOLs) arising in tax years beginning in 2018, 2019 and 2020 have a five-year carryback period and an unlimited carry forward period.  The provision limiting an NOLS deduction to 80 percent of taxable income does not apply to NOLs arising in these years. 

• Excess business losses – The limitation on the deduction of excess businesses losses for noncorporate taxpayers will not apply for tax years beginning in 2018, 2019 and 2020. The deduction limitation will apply for tax years beginning after December 31, 2020.

• Discharged loans – Cancelled debt is excluded from income for certain Small Business Administration (SBA) loans used for payroll costs and other specified expenses. 

Support for small business has been a central pillar of the legislations economic response, with the most notable program the Paycheck Protection Program (PPP).  Loans from the PPP, through the Small Business Administration, help small businesses pay for payroll costs, mortgages, rent and utilities during the COVID-19 crisis. The program provides for deferred repayment, as well as forgivable mortgage or rent obligations, to the extent they are used for payroll. In addition, the amount forgiven is excluded from gross income of the eligible recipient and is not considered cancellation of debt income for federal income tax purposes. 

A comprehensive consideration of the PPP is beyond the scope of this article, yet the critical importance of small business’ growth should be central to policy considerations, whether it be through forgivable PPP loans, or ensuring that one of the most successful ways for communities of color access economic mobility and generational wealth building is prioritized. Small business creation is not only a central driver of economic growth, but an essential component of economic prosperity for communities of color (Rizzo 2017). The PPP is a testament to the central importance of small businesses  to the economic property of all Americans, as well as their vulnerability to economic shocks at the scale of COVID-19. 

V. Conclusion

As policy makers implement further responses to address COVID-19’s economic devastation, it will be key to incorporate quantifiable measurements of economic insecurity, income and wealth inequality, and various aspects of horizontal inequality (i.e., household distribution of income based on gender). Omitting marginalized experiences and narratives when developing policy perpetuates injustice. But, by addressing these expanded notions of economic equality in the context of a recovery, policy responses can address the immediate detrimental impacts of COVID-19, while also building a foundation of economic security for the entire country by addressing historical discrimination and economic inequity. The idea of a rigidly defined “level playing field”, especially when designing policies to provide essential economic relief, by definition excludes the realities of systemic historical disenfranchisement; and, in the age of data-driven research, economic theories that do not reflect evolving research still dominate the policy narrative of many proposals for reform. 

The current economic picture leading up to the COVID-19 pandemic is unequivocally a tale of two countries. When considering the empirical reality facing communities of color, immigrant communities and rural residents across the nation, as they plan and rebuild their financial future, there are stark inequities when it comes to accessing opportunities to access financial products that build wealth, provide affordable credit, and construct a pathway to homeownership. The complex interconnectedness of history, race, discrimination, and emerging research in economics all require a fundamental reassessment of the underlying narrative of equitable policy reform in the wake of COVID-19.