Racial and Ethnic Differences in Pandemic Unemployment Benefits

Was the expansion of unemployment benefits during the COVID-19 pandemic unevenly distributed by race and ethnicity? Besides providing a source of income during a recession, unemployment benefits have a positive effect on public health. Research has shown that workers receiving unemployment benefits had better self-reported health, higher rates of health insurance, and greater food and housing security than those who did not. They were also more likely to use health services.

As labor economists interested in the differential economic impacts of the pandemic, we set out to analyze who received these expanded unemployment benefits. The expansion of unemployment benefits by the CARES Act did mitigate the economic and health effects of the pandemic, but Black and Hispanic workers were less likely to receive this social safety net than non-Hispanic White workers.

Using data from the U.S. Census Household Pulse Survey (HPS), we examined racial and ethnic differences in who received unemployment benefits during the pandemic. The HPS was designed to capture the real-time effects of the pandemic across a wide spectrum of social issues. The HPS data allowed us to identify workers who were directly displaced from their jobs by the pandemic. We analyzed over 1.3 million HPS interviews from the first stage of the pandemic when the disruptions to the labor market were the most severe, covering the period from June 11, 2020 to December 22, 2020.

We found that Black, Hispanic, and “Other” workers were more likely to be among the unemployed who did not receive unemployment insurance.  Although Black workers were 12% of all employed workers, they were a larger share (17%) of workers without unemployment insurance displaced by the pandemic. “Other” workers, who did not self-identify as Black, Hispanic, or White, were 3.9% of employed workers but were 4.9% of COVID unemployed without unemployment benefits.  Hispanic workers were even more affected.  Hispanic workers were 16% of  employed workers, but were 24% of all displaced workers without unemployment compensation. By comparison, non-Hispanic White workers comprised 62% of the employed, but 48% of displaced workers without unemployment insurance. Even after we controlled for differences in other demographics and education, we found that racial and ethnic differences persisted.

Although the CARES Act increased unemployment benefits, eligibility, and the duration of payments, this expansion reinforced long-standing racial and ethnic disparities.

Our results have important implications for developing public policy. Although the CARES Act increased unemployment benefits, eligibility, and the duration of payments, this expansion reinforced long-standing racial and ethnic disparities. In addition to augmenting unemployment benefits, policies need to provide better community outreach to minority and low-income communities as well as language and other assistance programs to explain unemployment eligibility and enrollment.

Past studies have shown that younger workers, Black workers, and Hispanic workers are more likely to leave the labor force when unemployed during a recession. In the current period, we have yet to see the labor force recover to pre-pandemic levels. Policies to keep workers employed or engaged in looking for work would help to mitigate economic income and employment inequities by race and ethnicity in the aftermath of the pandemic.  In the future, short-run  policy responses to a pandemic induced recession, include not only expanded unemployment benefits, but also increased family assistance payments, and job search assistance. Over the longer run, programs could be developed to better preserve jobs and small businesses, provide job skill development, and expand social services for lower-income and minority workers who have been heavily impacted but underserved by traditional social welfare programs.

The HPS data did not allow analysis of the critical question of why workers did not receive unemployment insurance. Potential reasons include difficulty in accessing unemployment applications, lack of knowledge, language barriers, immigration status, differences in local administration of benefits, and discrimination.

Future research is necessary to determine specific reasons different ethnic/racial groups have difficulty accessing these critical benefits.

Authors’ note: Don Mar, Paul Ong, Tom Larson, and James Peoples were classmates at UC Berkeley, specializing in labor economics. During the pandemic, we believed that it was important to research the differing racial and ethnic effects of COVID-19. We agreed to jointly write the results of our research and release the research in a timely manner to public policy makers. 

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