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Notes from the Field

An Uncommon Crisis: COVID-19 and its Disproportionate Impacts on Vulnerable Communities

When we asked community partners how COVID-19’s disruptions are impacting low- and moderate income families and neighborhoods and traditionally underserved communities, they heard this: the virus is impacting the already vulnerable disproportionately, and in a way that accentuates existing disparities.

The views expressed in this report are those of the author(s) and are not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System.

Surely you’ve read or seen the plethora of articles and news shows about the COVID-19 pandemic. At times the information has been inconsistent, sometimes discordant, and can leave you wondering what (and who) to believe. To gather real-time data, we at the Cleveland Fed rely on our stakeholders, including the members of our Community Advisory Council. We are continually reaching out to learn how COVID-19’s disruptions are impacting low-income families and neighborhoods, people of color, and traditionally underserved communities. What we are hearing is this: the virus is impacting the already vulnerable disproportionately, and in a way that accentuates existing disparities. The impacts are many, including the following.

The digital divide is growing. Ohio’s governor issued a shelter-in-place order on March 23. Currently, restrictions stand, but some sectors have been permitted to return to work; others remain at home. I am fortunate to have a computer, internet connectivity, and a job that permits me to work from home, but many low-wage workers—the servers and cooks at restaurants, the stylists in beauty salons and barber shops, and many cleaning company crews—don’t have the option to work from home and have become unemployed. Schoolwork has been shifted to online, and these virtual classrooms only widen the digital divide; students in households that lack access to computers and broadband connections will be left behind. Some school districts are providing students with laptops to address this, and some are looking at renting internet hotspots to be used by students who lack internet connectivity.

Economic development is stalled in both urban and rural areas. Small businesses have shut their doors temporarily because of the crisis, and many are not digitally connected and set up to do online business. Lost revenue may never be regained, and many businesses may have a hard time reopening because of lack of capital, capacity, and technical assistance. Small businesses are a major source of employment, with many serving as neighborhood anchors—if they fail to reopen, communities will have to grapple with how to reuse these vacant commercial spaces, which in turn may stall the momentum for neighborhood development. Larger-scale economic development is affected, too. In eastern Kentucky, for example, a large company that planned to relocate has delayed its move. This translates into delayed employment prospects in an area that sorely needs jobs.

Healthcare and social service providers are strained. Providing services to vulnerable and isolated populations while keeping staff safe is a challenge, as are budget strains during a time when demand for services is high. Many service-providing organizations rely on philanthropy, and a downturn in investments because of market conditions will negatively impact donations for at least a few years. Medical facilities are facing significant financial impact as they lose revenue because of cancelled doctor visits and elective surgeries. And some are challenged with what’s involved with treating virus patients. Even with the federal stimulus package, hospital systems will be left with losses that could impact their education and research programs.

The homeless and unbanked face some of the toughest challenges. With no residence, it is impossible for the homeless to shelter in place, challenging to practice social distancing, and difficult to maintain frequent hand washing or obtain hand sanitizer. And though stimulus checks have been distributed since April, the homeless have no way of receiving them. The IRS has developed a webpage and tools designed to help federal tax nonfilers register for Economic Impact Payments, but with bank lobbies closed, the unbanked cannot enter the financial mainstream and utilize them.

The Federal Reserve System has taken significant steps to support the economy during this crisis, and it is paying very close attention to the pandemic’s impacts on low- and moderate- income communities. Check out this infographic on what the Federal Reserve is doing to keep the nation’s economy healthy and other information on COVID-19’s impact on the Fourth District.