Upskilling and Resigning is a Luxury Most BIPOC Workers Don’t Have

According to Insider, BIPOC employees aren’t benefiting as much from the “Great Resignation” as they should be — and that’s only going to increase the wealth disparity in America.

During the pandemic, many skilled workers undertook what is now dubbed the “Great Resignation,” quitting lower-paid jobs for jobs with better salaries, flexibility, and fulfillment.

But there are many reasons why people of color are being excluded from the Great Resignation. And they are issues that we will need to address if we want to counter economic equality.

White Households Have 5x the Wealth of Black Households

In 2019, the average saving account balance for a white household was $8,100. The average balance for a Black household was $1,500. For the Hispanic and Latine populations, it was only slightly higher.

Many people of color simply don’t have the economic backing to quit their jobs and find better ones, even if they are well-qualified for a better working environment. They don’t have the cushion to risk the jobs they currently have — and they don’t have the time to go job hunting.

COVID-19’s Impact on Minority Business Owners

It’s not just that BIPOC employees can’t quit their jobs. Many BIPOC business owners have been forced to look for work.

During COVID-19, 22% of all small businesses failed. But 41% of Black businesses failed during that time and 32% of Latine businesses. 26% of Asian businesses failed and only 17% of white businesses.

In part, this is because minority businesses are more likely to be in areas such as restaurants, salons, and services, whereas white businesses are more likely to be in real estate, finance, and technology.

But it’s also because aid was distributed unevenly — and has always been distributed unevenly. It’s a simple truth that it’s more difficult for BIPOC businesses to acquire funding.

Why BIPOC Business Are More Likely to Fail

Businesses most often fail due to cash flow issues. Unfortunately, BIPOC business owners don’t have the backing that other business owners often do — and that’s because of a biased, often predatory, lending system.

Consider two businesses during the height of the pandemic: a Salon and a Restaurant. Both businesses are shut down for 3 months.

The Black-owned Salon has $10,000 in the bank and $5,000 a month in non-flexible operating expenses. It cannot get lending or financing, which has been historically denied to BIPOC owners. It closes within three months, even though all other months have been profitable.

The white-owned Restaurant has $10,000 in the bank and $10,000 a month in non-flexible operating expenses. It is able to get lending and financing. It spreads the $30,000 it needs into a 5-year loan at 5% interest, which it will pay back as a monthly payment of $566. It survives — even though it’s been losing money, slowly, for years.

The Black-owned Salon had to come up with $15,000 upfront to save their business. The white-owned Restaurant only had to come up with $566. And that’s entirely separate from their ability to survive in the economy; that’s structured, financial discrimination.

But it’s not all the bank’s fault, because of course, the bank is lending based on risk. BIPOC business owners tend to have less equity to begin with, precisely because of systemic discrimination. The only way that banks can safely and evenly loan is if there are specific initiatives designed to improve minority access to funding.

How Race Affects “Moving Back Home”

In addition to failed businesses, many minority workers simply found it more difficult to make it through the pandemic. Consequently, they need to cling to what jobs they have.

Homeownership rates for individuals aged 18 to 34 are 41.6% for white homeowners, 18.% for Black homeowners, and 30.4% for Hispanic homeowners.

But what’s more interesting and impactful is why that is. Wealth and housing are both generational. White millennials are more likely to have parents who own their own homes and who have housing stability.

Even when people of color are able to purchase their own homes, it’s often in areas that don’t appreciate value as quickly. Thus, they aren’t building the same type of generational wealth.

In short, “moving back home” while trying to figure out a messy job situation just isn’t as accessible for many people of color. They may not have a family home to move back to.

Minority Business Owners and Employees Need Greater Access to Wealth

Ultimately, it’s mostly a problem of access and lending. If, during the COVID-19 pandemic, business owners had found it easier to get funding, their businesses would not have shut down. If minority employees had found it easier to build wealth — or even borrow it — they could nowspend their time upskilling or improving their careers.

Poverty is difficult to escape from. Minorities are more likely to live in poverty and consequently don’t have the time, money, and resources they need to build a better financial future.

Long after the COVID-19 pandemic is over, its economic consequences will remain.

Minority businesses, particularly Black businesses, have undergone massive losses during the pandemic. Meanwhile, many established, large white businesses were able to benefit from PPP, EIDL, and RRF loans. And while non-minority employees have been able to upskill and acquire better positions... BIPOC employees have not.

Thus, we are on the precipice of what could be an incredibly disastrous economic restructuring — a restructuring that only leaves more people behind.

It only makes sense that lenders would hesitate to lend out to people who have cash flow issues or a lack of equity. But it’s also a systemic problem more than a personal one, and it has to be countered with intentionality. If we don’t, we run the risk of an ever-broadening chasm between race and class.