Latinx Community Struggles Against Covid-19 Recession

To get by Chelsea Lugo was working two jobs pre-COVID, one at a movie theatre and the other at a retail store. Both businesses are permanently closed as they were unable to survive the shutdown. Unlike Lugo, her father has been able to keep his event photography business alive with financial assistance.

“My mom is really great at bookkeeping, Lugo said in a phone interview with Luz Collective. “If we didn’t have those kinds of records kept, like if it was just at a hobby level, we wouldn’t have been able to get [small business loans and grants].”

Like Chelsea and her family, Latinxs hold employment in many sectors that are taking a financial hit during this recession like leisure and hospitality; manufacturing; wholesale and retail; and transportation and utilities. COVID-19 is encouraging people to stay home and social distance, causing many businesses to temporarily shut down, lay-off employees, adjust their business model, or permanently close their doors. The loss of income makes purchasing power more focused on consumer needs.

“The economic power of Hispanics is undeniable,” small business owner, Luciana Gómez said, in a phone interview with Luz Collective. “Hispanics play a huge role in this country from a numbers perspective to money.”

The coronavirus-created recession is causing many to wonder how Latinx wealth will recover, especially with immigrant workers left out of the coronavirus stimulus package.

“A lot of people that work with my dad are also furloughed,” recently unemployed South by Southwest staffer, Valeria Gonzalez said in a phone interview with Luz Collective. “It’s a restaurant, they’re struggling with opening hours and capacity and a lot of the workers are [undocumented]…technically they don’t qualify for unemployment.”

It’s important for many employees to also have stability. Especially now, employees need stability. For an economy to repair itself money must be distributed to consumers to spend on businesses that employ workers who will turn back into consumers. However, this cycle becomes damaged when there aren’t jobs to be held.

“Undocumented people who work are paying taxes, in many cases, paying rent, and consuming,” American Society of Hispanic Economists President, Mónica García-Pérez said in a phone interview with Luz Collective. “If they’re losing jobs, they’re going to stop paying rent, car payment, credit card payments, whatever services and goods they would normally consume.”

Although immigrant consumers and workers are keeping currency in rotation, Latinx unemployment numbers are skewed. García-Pérez believes the numbers we have may be underestimating the actual unemployment rate because of categorized information plus surveyors and the government failing to reach out to representatives of immigrant Latinxs for

accurate information.

“Normally they’re under certain degrees that are not counted in unemployment like freelance or working in non-traditional work situations,” García-Pérez said. “Immigrants are not going to benefit from any extension of unemployment insurance because most immigrants do not work with a corresponding W2 or with a company that is paying taxes, even if they’re paying taxes.”

Foreign-born Latinxs have a lower unemployment rate than U.S.-born Latinxs, according to Pew Research Center. Essential employees have been called back to work as child-care workers, factory workers, custodial staff, restaurant staff, all while being more exposed to coronavirus. Many believe this allowance of employment is contributing to the spread of COVID-19 among the Latinxs, causing the virus to disproportionately affect the Latinx community.

“Immigrants are more versatile and dynamic in finding different types of jobs, opportunity, and adjusting to it,” García-Pérez said. “If immigrants have the opportunity, they are also taking the risk in taking the jobs that are more exposed to the virus, but they don’t have the resources they would need in case they get infected like testing. And their stories aren’t being told because their numbers aren’t being shown.”

Latinxs are the largest ethnic population in the United States, making up 18.5% of the population. Like others in the United States, Latinxs have lost jobs while others continue to be employed and/or keep their business afloat.

Latinx wealth has been on the rise since the 2007 economic recession. Last September, Latinx

unemployment was at a record low of 3.9%. However, last month Latinx unemployment is recorded at 14.5%.

This recession has an added layer of caution surrounding it with many hoping to minimize the spread of the virus and get back to work. However, some businesses have been able to encourage social distancing while keeping their doors open for business through the Paycheck Protection Program (PPP) loan.

Nathalie Huerta was able to put the PPP loan towards her fitness-business, the Queer Gym in Oakland, California. Having to close the brick and mortar, she was able to successfully move it online. With the increase in clientele, she doesn’t see the benefit of going back to the way business was, pre-COVID.

“A lot of it was leaning into the situation like, ‘Enough complaining what do we do right now?’” Huerta said in a phone interview with Luz Collective. “That showed up in different ways whether through seeking information, creating and getting innovative with what we had, and how we can deliver it to our members.”

Gómez’s Café Victoria in Dallas, Texas, has been able to use the PPP loan to keep her coffee business’ brick and mortar open and partner with a neighboring business to create care packages for delivery. However, she isn’t afraid to reach into her pocketbook to help fund her business. Gómez also owns a marketing consulting agency, so her coffee shop isn’t solely dependent on the income of the business itself when in tough times. Gómez prefers to avoid loans because she feels foreign-born Latinxs have a different approach to finances.

“There are Hispanic business owners that don’t have good credit or very high-interest rates,” Gómez said. “Unfortunately [a loan] is not an option when the solution becomes the problem.So that’s probably why a lot of people are closing their businesses.”

Like many multilingual Latinxs, Gómez feels financial literacy can help Latinx employment, business, and wealth by the government improving English to Spanish translations on important documents.

“[Non-native English speakers] could have an interpreter for financial literacy when they go to the bank or interact with somebody in the government,” Gomez said. “A lot of times [loans] have to do with their citizenship status, so it’s important that whatever type of loan they get they want to make sure they’re not going to get in trouble.”

On average, a Latinx family has only 14.6% of the wealth of a white family, according to americanprogress.org. In recent years, foreign-born Latinxs are catching up in wealth to U.S.-born Latinxs, but a gap still exists. Layoffs have caused some like Gonzalez to move back into her parent’s home in Austin, Texas. García-Pérez says job loss is causing a drastic increase in housing insecurity among the Latinx population.

“At the private level Hispanics are facing evictions at a large rate because they may be losing their job or the hours they were able to work in the past or even losing one job when they used to work two jobs,” says García-Pérez.

Lugo is looking for more job security and plans to go back to school to complete her bachelor’s degree. Being recently unemployed, she is having a difficult time paying for school. Many are facing similar obstacles while unable to find childcare, like Elsa Jordan.

Jordan was able to go back to work at a salon for two weeks, after the shutdown, until she was fired because they could no longer afford her employment. She is now having trouble finding a job as her son’s preschool is no longer in business.

“When [the government is] passing things or thinking of things to better [Latinx] lives, engage with us, talk to us, see what we’re struggling with,” Jordan said in a phone interview with Luz Collective. “I feel that would help tremendously if they were talking to the community and not worried about making life comfortable for everybody.”