Experts have been going back and forth over the likelihood of a countrywide or global recession. With all factors taken into account, the chance that the world will soon be dealing with a recession in the upcoming months is highly likely. The upcoming economic strife will have a serious impact not only on consumer spending but also on base livelihoods. Due to asset price bubbles, soaring inflation and uncertainty in the geopolitical sphere, world economies are in a state of unstable flux.
The world has yet to recover from the effects of the pandemic and as a result, most economies have been left ill-prepared for upcoming challenges. People of color, especially those in the United States are no strangers to struggle. Let’s take a closer look at how the upcoming economic turmoil will impact the POC community.
Recession Coping Skills Amongst The POC Community
Some communities seem to be recession-proof, unfortunately, the POC community is not one of them. People of color may be adept at making do with less, but the upcoming recession will put even these ample skills to the test. In the West and other developed countries, there is an unspoken agreement that the Pandemic is over. This is mainly due to widespread vaccinations and the decline in fatalities due to breakthrough infections. The reality is, however, the economy has been irrevocably damaged due to the pandemic. Simply managing the illness and side effects thereof has no bearing on getting cash into the hands that need it.
There have been declining revenues over the last year in all industries, both in the US and abroad. Many niche markets that were floundering in the best of times have fully collapsed. The amazing thing about the Black and POC community, however, is to make lemonade when the world gives us lemons. Scores of new businesses run by POC have popped up since the start of the pandemic and even more enter the market every day. People are working from home while also maintaining a side hustle to make ends meet. That being said, the hardest times still lie ahead. There are going to be fewer people pumping money into POC communities which will lead to tougher times should the world go into a full-on recession.
Will The Gains of the POC Worker Community Be Lost During A Recession
The pandemic put the brakes on most jobs during the first phase, however, unemployment numbers rebounded rather quickly. In the Black and POC communities, unemployment numbers went down faster than in other areas and entrepreneurship also saw a rise. Once the initial downturn of the pandemic passed, not only did the job market start to stabilize but base earnings soared as companies put forth lucrative incentives to entice workers to remain on the job.
While savings have been up and unemployment down in the POC community, inflation is starting to take its toll. As interest rates rise and basic commodities inflate in price, the gains made by the POC community have faced erosion. People of color have reported that their positions pay as much as 25% more than pre-pandemic rates, but the cost of living has begun to eat up much of those gains. With the recession just around the corner, the hiring spree is seeing a slowdown as the Fed works to soften up the overall labor market. Unfortunately, it is people of color that will bear the main brunt of a slowdown during a recession. What’s worse, due to the general lack of savings and no federal aid to help ease hardships, the impact on the POC community is set to be devastating.
Recession Job Market For POC
At the start of 2020, close to 4 million people of color were either laid off or quit their jobs. That places POC unemployment as high as 16%, but thankfully there was a swift rebound. As of summer 2022, unemployment numbers in the POC community are just under 6%, which is slightly above pre-pandemic numbers. According to data collected by the government employment agency, wages in the POC community have risen faster than ever recorded in history.
The job market following the onset of the pandemic was especially kind to black and people of color, however, a recession market won’t be. In fact, based on historical data from past recessions, POC, ethnic minorities, the undereducated, and those with criminal records will be the first to get laid off. While these groups are usually among the first to lose their jobs during a recession, they are also the ones that have a hard time finding new employment during the post-recession recovery. There is no reason to believe that the looming recession will stray from historical norms. The only caveat may be that those POC who have learned remote work skills and those who have started their own businesses may be immune.
Interest Rates, Inflation, and POC
The Fed’s most powerful tool to fight inflation is by increasing interest rates. Unfortunately, during a recession, increasing rates trigger unemployment. The POC community as a whole tends to be the first in line for suffering when there are rate hikes and job cuts. Due to these factors, Black people and other POC spend less money on non-essentials in order to survive. Employers also are less likely to invest their resources into hiring new staff or unskilled staff, which further puts pressure on both the economy and the POC community. Of course, every part of the population is affected during a recession, but POC is disproportionately affected in a negative way. In fact, there is no policy option that currently exists that won’t harm at least a large portion of the population during a recession. Be it rising inflation or higher percentages of unemployment, the POC community is the one affected the most.
Progressive Economies Need The POC Worker
According to most progressive economists, POC workers should not be the main target in the war against inflation. Raising interest rates is no longer an end-all solution to slow or stop the coming recession. Instead of targeting the symptoms, it is critical that the government starts to treat the disease. Cutting spending on foreign wars or supporting foreign governments will be much more effective than raising interest rates. Regardless, as a community knowing the troubles ahead is the best way to create a contingency plan for the upcoming year. The Narrative Matters to people from all walks of life and all age ranges. We work closely with content creators and publishers to seek out important ideas and topics that our readers find important.
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