USA TODAY International Edition
Pandemic pain deepens racial wealth divide
In a world of sound bites, economist Lisa Cook provides a great deal of substance on troubling issues such as how systemic racism contributes to wealth inequality, how the pandemic has deepened racial and gender gaps, and how misallocating talent holds back U. S. economic growth.
And she’s built quite a fan base, including 28,000 followers on Twitter. News that she will serve on Presidentelect Joe Biden’s transition team even was celebrated in an article in Teen Vogue, written by a woman she has mentored.
“Dr. Cook’s appointment serves as confirmation to every Black girl, including me, that it’s not a mistake to choose economics and related fields,” wrote Anna Gifty Opoku- Agyeman, a co- founder of The Sadie Collective, a nonprofit addressing the “pipeline and pathway problem for Black women in economics, finance, and policy.”
The Sadie Collective honors the first Black woman to earn a Ph. D in economics in the United States: Sadie Tanner Mossell Alexander who was awarded her doctorate in June 1921 from the University of Pennsylvania.
Cook and Opoku- Agyeman co- authored a frequently shared opinion piece in the New York Times, published in September 2019, that bluntly outlined how Black women experienced discrimination in the economics field, how some white students have difficulty seeing a Black woman as an expert, and how economics is “neither a welcoming nor a supportive profession” for women and particularly Black women.
Cook is a “damn good economist,” Opoku- Agyeman told me in a phone interview, as well as a Black woman who speaks with conviction, but is welcoming to those trying to break into the field.
“She understands deeply what racial inequality historically has done to this country,” Opoku- Agyeman said.
Economic pain to linger
The disproportionate economic pain and higher COVID- 19 risks for Black families reflect past discrimination and likely will to contribute to the wealth gap in years to come.
“Everything that we’ve seen laid bare by the pandemic has had a long history, whether it’s health inequality, wealth inequality, income inequality, policing inequality,” Cook told me when we talked earlier this summer.
Many Black households, she told me then, don’t have enough savings or wealth to carry them through the massive job losses and economic fallout as
sociated with the lengthy pandemic.
Cook, a professor at Michigan State University, will work as a volunteer on the Biden transition team that is reviewing the Federal Reserve, banking and securities regulators.
The job began after the election and the work continues until Jan. 20, Inauguration Day. Leaders on the team with ties to Michigan include Robert Gordon, director of the Michigan Department of Health and Human Services; Barb McQuade, currently a professor at the University of Michigan Law School; Michael Barr, a public policy dean at the University of Michigan, and Betsey Stevenson, a public policy and economics professor at the University of Michigan.
Cook’s longtime friend Trevon Logan, professor of economics at Ohio State University, describes Cook as a forward- thinking, innovative and openminded scholar whose research inspires non- economists, as well as economists, when outlining how racial discrimination has an impact on the broader economy and how we all pay a price for that.
Examining historical connections
Her research has taken a deep dive into painful historical connections, many that people might not consider, that contribute to racial wealth gaps.
Logan for example, worked as a coauthor with Cook to examine the relationship between racial segregation and Southern lynching, from 1882 to 1930. Another author on the project was John Parman, an associate professor of economics at the College of William and Mary in Williamsburg, Virginia.
Among the data, the report noted: “Lynching is used as an aggressive response to economic frustration; a vent for labor market competition with Blacks.”
Their research, Logan said, inspired another scholar, Jhacova Williams, to study the patterns that exist between historical lynching and the contemporary voting behavior of Black people in that area. Lower Black voter participation rates existed decades later in counties that had higher numbers of lynchings years before.
Mental health and wealth gaps
I had a chance to catch up by phone with Cook in mid- December to talk more about the economy and the pandemic. Many CEOs and economists remain hopeful that next year’s economic outlook will be healthy now that a vaccine has rolled out and could be offered on a widespread level later next year. Many continue to be hopeful that a stimulus plan will be reached in Washington to boost economic growth.
Given the depth of the economic fallout relating to the pandemic, I asked Cook whether any problems triggered during by the coronavirus will have staying power beyond 2020 and 2021. What pain might we still be feeling a few years from now?
Cook pointed to a few trouble spots: mental illness; women in the workforce; education; and small businesses, particularly those owned by Blacks and other minorities.
“As a macro economist, I typically don’t talk about mental illness and about the impact ( the pandemic) is going to have on people,” Cook told me.
But she’s been raising that point since spring and has grown increasingly concerned about the potential for rising domestic violence and child abuse.
People underwent the severe stress of losing jobs, seeing loved ones die, dealing with isolation and coping with constant fear associated with trying to avoid contracting COVID- 19.
The pandemic overall has been a real shock to the system, she said. The next six months or so also will be stressful as we continue to be away from our normal routines. People haven’t been able to go to the gym, head into the office or do many of the things they’d normally do.
“We have to admit that this was a shock that wouldn’t allow for us to have the same kind of productivity, the same kind of life, the same kind of outlets we had before,” Cook said.
The ‘ she- cession’
Women also have been harder hit economically than men because women often are working at companies that faced deeper layoffs or cuts in hours, including restaurants, tourism and entertainment.
Many young women are being forced to make tough decisions about work when they’re unable to cover the cost of child care or find child care now that schools have been closed. Children are staying home to avoid the virus and learn remotely, but someone has to stay home with them. Typically, women are the ones taking on that job too.
“This is a she- cession,” Cook said. “They are paying an additional premium during this pandemic. They’re having to organize more affairs at home. They’re dropping out of the labor force.
“This is going to have a deep impact not only on the women but also society. We’re losing a certain part of the labor force and that’s an immediate loss.”
Many years of progress for women in the workplace have been reversed in the pandemic. As for children, especially those in lower- income urban or rural communities, she said many will face setbacks in their education after being on chaotic schedules, not getting the type of learning they deserve. The aftermath could be felt “five years, 10 years, a generation,” Cook said.
“This might be like the Flint water crisis for small kids,” she said. “In Flint, if you had the money to move, you moved.”
Similarly, the most vulnerable people will be hurt far more dramatically after pandemic.
“Black families don’t have wealth as a cushion. We had a significant loss of family wealth in the aftermath of the 2008- 2009 recession.” Lisa Cook Economist
Safety net failed small business
When it comes to small business, many won’t survive because they couldn’t get money through a safety net created during the pandemic called the Paycheck Protection Program. And many already had a smaller cushion to make it through the government shutdowns in 2020.
“Among small businesses,” Cook said, “I am just fearful that some of the most innovative firms, who are the youngest firms, didn’t have a relationship with a bank and therefore didn’t get PPP funds.
“Black and Latino businesses will have vanished permanently and disproportionately because they had little access to PPP.
“Because of the lending discrimination they often faced, they were in worse shape at the beginning of the pandemic.”
And the business owner isn’t the only one impacted if a store or restaurant is boarded up.
“Sometimes, businesses are really pillars of the community, like churches or mosques or religious places of worship,” Cook said. “This could have a really large effect on communities that are heavily dependent on small businesses.”
The coronavirus already has killed one in 800 Black Americans, and the loss of lives will be mourned for many years.
“Many of our elders will be gone. Older Black men seem to be dying at higher rates than most other people,” Cook said.
She blames some of the loss of life on occupational segregation, where many Black Americans worked in jobs in home health care, restaurants, grocery stores, manufacturing and other industries where they couldn’t be on Zoom or work from home.
The economic impact of a death in the family can be severe.
“Black families don’t have wealth as a cushion,” she said. “We had a significant loss of family wealth in the aftermath of the 2008- 2009 recession.”
More than a decade ago, many families faced foreclosures after being hurt by predatory mortgage lending practices that put them in high- cost subprime loans when they qualified for mortgages with lower interest rates. Some haven’t recovered from those losses. Now, some people could face an even harder time recovering than 2008- 09, she said, especially since many did not have a strong financial cushion. She also expressed concerns about the possibility of more evictions in the months ahead and spiking foreclosures, noting that mortgage and forbearance assistance must be a considered as part of public policy.
“People didn’t choose to be in this situation,” Cook said. “They didn’t choose to not have a job or not be able to pay their rent. They were doing fine before.
“People have wound up in this situation through no fault of their own, and they really need help out of it.”