New Brief Highlights COVID-19’s Disproportionate Impact on Low-Income Communities

By Devin Simpson

Despite the uncertainty surrounding the COVID-19 crisis, one thing is abundantly clear: low-income communities – particularly women, people of color, immigrants, and refugees – have been hit the hardest. A new research brief from Prosperity Now analyzes COVID-19’s disproportionate impact on these communities and offers a path forward.

The brief, “The Unequal Impact of the COVID-19 Crisis on Households’ Financial Stability,” notes that while all Americans will be affected by this pandemic, specific communities will suffer the most. The brief highlights households that are liquid asset poor or have no savings; workers in low-wage jobs or industries; and those in states that do not offer protections for low-wage workers as being more likely to experience extreme financial hardship throughout the COVID-19 pandemic.

The Prosperity Now Scorecard found that more than 45 million U.S. households are liquid asset poor, meaning they do not have enough cash on hand to subsist at the poverty level for three months without income, and the Federal Reserve Board of Governors found that 39 percent of adults don’t have enough cash or savings to cover a $400 emergency. The Scorecard also found that in 2018, 27.6 million people were employed in low-wage occupations, particularly in the service-sector, including restaurant staff, retail salespeople, childcare workers, and housekeepers. Layoffs have been widespread across these occupations throughout the crisis, and many who remain employed are not offered sick or paid family leave, or health care. While these challenges impact all low-wage workers, women, people of color, immigrants, and refugees represent a higher percentage of liquid asset poor households, making them more susceptible to the financial strain of COVID-19.

To ensure these communities have the financial support they need to stay afloat, Prosperity Now recommends providing relief and assistance on debt payments, rent, and family care costs, and establishing strong consumer protections.

One source of help is already on the way: the IRS has begun issuing Economic Impact Payments for single filers earning less than $99,000 and married filers earning less than $198,000. And, to help ensure low-income workers who did not file a 2018 or 2019 tax return receive their payment, the IRS recently launched a “Non-Filer Payment” tool.

Continue to follow us on social media as we highlight the pandemic’s effect on low-income communities around the country and policy responses that offer a path forward.