The Trump-initiated shutdown over the border wall will likely cost Americans hundreds of millions, if not billions, of dollars. Before the last proposed shutdown in December 2017, Standard & Poor’s estimated a shutdown would lose the U.S. economy about $6.5 billion per week and the 16-day shutdown in 2013 reduced gross domestic product (GDP) by about $24 billion. Given our economy’s current volatility, we can expect this shutdown to sock us even harder.
These economic costs take a severe toll on everyday people. Today, some 380,000 American families have a member sitting at home without a paycheck. At a time when around 80 percent of Americans live paycheck to paycheck, in large part because the cost of living continues to rise at rates outstripping increases in worker pay, that’s hundreds of thousands of family crises waiting to happen. It means families may not have sufficient money for rent or mortgages, groceries, transportation or school supplies, among other needs.
The federal government distributed sample letters for furloughed workers to send to landlords, banks and other financial institutions like student loan agencies, as they seek leniency for late or partial payments. Many will weather this income loss by using credit cards and other loans with high interest rates, which can lead families into a financial downward spiral.
Black communities, many of which are still recovering from the Great Recession, stand to be among the hardest hit―again. African-Americans are more likely than other racial or ethnic groups to work for the federal government: They constitute 18 percent of federal workers and 13 percent of the population. Furthermore, Black-owned businesses disproportionately rely upon government contracts, though they remain underrepresented among federal contractors. And Black Americans, due to their disproportionate levels of poverty stemming from centuries of exclusion from the most rewarding jobs and underinvestment in their communities, are in greater need of federal support, even when the economy is booming.
“African-Americans are more likely than other racial or ethnic groups to work for the federal government: They constitute 18 percent of federal workers and 13 percent of the population.”
Because they experience considerable labor market discrimination, African-Americans have long relied upon the public sector—federal, state and local government—for steady employment in “good jobs.” Government civil service work is an essential pillar in the foundation of the Black middle class, so furloughs stand to harm Black people significantly. This kind of racially disparate impact of government policy has a long history.
For generations, the federal government has invested more directly in the White middle class than in the Black middle class. The mid-19th century Homestead Acts gave White Americans access to western lands, many of which were expropriated from Native American tribes, for minimal or no cost. The Social Security Act of 1935 provided unemployment insurance and old-age pensions. And the Servicemen’s Readjustment Act of 1944 (commonly known as the GI Bill) offered returning World War II soldiers education benefits and low-interest mortgages. In each of these cases, the federal government either explicitly excluded Black people or failed to intervene when racist state or private industry practices were carried out.
Even the much-lauded New Deal was a site of racial discrimination by the federal government. The Federal Housing Administration erected barriers preventing Black Americans from taking out home loans—where most of Americans’ familial wealth is located. From the 1930s to the early 1960s, 98 percent of all home loans went to White families. The federal government insured loans in White neighborhoods, making loans more financially viable for banks. Consequently, these neighborhoods grew in wealth and businesses flocked to them, reinforcing these communities’ wealth accumulation. Decades of investment in White communities, and disinvestment in Black communities, is why the average Black family has $1700 in wealth, while the average white family has $116,000. That means many White families have savings allowing them to ride out hard times, like a federal government furlough. But most Black families do not.
“Many White families have savings allowing them to ride out hard times, like a federal government furlough. But most Black families do not.”
Then there’s the fact that Black people who are struggling to afford a government shutdown are more likely to live around other people who are struggling financially. Fifty years after major efforts toward integration, our communities remain stubbornly racially segregated. The post-civil rights era integration achievements of the 1970s and 1980s have stagnated, and in many metropolitan areas eroded, even as Black Americans have become a majority suburban population. Today more than half of the Black population would need to move to attain full integration. This means the furlough will not only disproportionately affect Black families, but it will also be concentrated in Black communities. Racial segregation, itself the consequence of racist policies and practices, will only compound the negative effects Black Americans will likely experience.
Due to the concentration of Black households affected by the furlough, majority-Black counties should brace themselves for acute harms. County workers, like teachers and police officers, won’t be furloughed, but they are at risk if the recession is protracted and the county’s revenue declines because furloughed federal workers reduce their economic activity and perhaps even experience downward economic mobility as they become unable to pay for household expenses.
During the Great Recession, in the predominantly African-American Prince George’s County, in Maryland, right next to Washington, D.C., teachers and parents lamented that their schools were in disrepair and that teacher turnover was increasing in the face of frozen wages. Church pastors said there was more demand for the food in their pantries. But as the foreclosure crisis slashed county tax revenue, the county government and nonprofits could scarcely keep pace with resident demand. The Black middle class, unlike the White middle class, already tends to live in communities with more poverty. When the Black middle class is distressed, Black communities’ already fragile stability is further undermined.
Most furloughed workers will likely eventually receive backpay for the time they were forced not to work. But backpay can’t make up for certain damages, such as ruined credit, increased interest rates on mortgages because of late-payments, or eviction for not paying rent. Black people with less wealth and concentrated in majority-Black communities, will endure these hardships more than other Americans.
Throughout U.S. history, Black America has experienced combinations of discrimination, exploitation and federal government neglect. With the current furlough, Black people are experiencing collateral damage from President Trump’s willingness to close swaths of the government unless he receives funding for a wall along the U.S. southern border. His decision affects all Americans who rely on government’s regular order, but Black people are particularly vulnerable. These hardships represent a continuation of centuries-long trends. And for many Black families and the communities they call home, these effects could be devastating.
Angela Simms is a doctoral candidate at the University of Pennsylvania. This fall she will be an assistant professor of sociology at Barnard College. Shamus Khan is professor and chair of sociology at Columbia University.