Tiffany Carlock had just gotten engaged before the 2008 recession, but couldn’t afford the wedding until her parents got involved. Even then, she and her husband had to spend the next few years stressing out trying to make ends meet. During the crisis period, the 26-year-old Afro-Latina from Maryland had no equity in her home, very little savings, growing student loans and mounting credit card debt.
The couple lived paycheck to paycheck and couldn’t afford to lose their jobs in the health insurance business, but with rising gas prices, just getting to work became unaffordable.
“Employers weren’t giving pay raises or bonuses because most of the staff were laid off,” she said. “My neighbours’ homes were being put up for sale left and right, and many were foreclosed and sat on the market for a long time, including my neighbor next door.”
Stories like Tiffany’s were common in 2008, and economists are now warning that the United States is to another recession in the coming year. While financial crises affect everyone, black, indigenous and people of color, immigrants and low-income families have always faced dire consequences.
A July 2009 study showed that Latinx and black people lost more jobs and took longer to find a job compared to whites. Latinx workers were also overrepresented in occupations with the highest unemployment rates. Researchers call this theLast hired, first firedphenomenon, where BIPOCs are more easily laid off to cut costs and less likely to find new jobs when the economy improves.
In addition to experiencing increased inequality during the recession, research shows that marginalized groups continue to face problems years after the crisis has ended.
Brandon S., a 19-year-old from Texas, was just 6 years old when the 2008 recession hit. Brandon couldn’t understand what was happening when their father lost his job and their mother worked overtime to support the financial burden.
“Why don’t we have cable? Why can’t I get this toy I want? they asked.
Things haven’t improved much for them even now, more than a decade after the recession. With the COVID-19 pandemic, rising inflation, unaffordable rent prices, company stocks falland rising gas prices causing new financial problems, the prediction of another recession worries people like Brandon.
Even though the lockdown orders have been lifted in most areasmany people are still out of work. Growing health problems due to new COVID-19 variants, rapidly increasing the cost of living, and increased financial pressure to recoup losses incurred during the pandemic are some of the factors slowing the economy’s return to “normal”. While some of the older generations have gone through several crises, things could be worse now, experts say.
“At the time, we never had the threat of nuclear war with the war between Russia and Ukraine looming over our heads,” said Keisha Blair, the author of “Expanded and Updated Holistic Wealth,” the founder of Institute on holistic wealthand host of theHolistic Wealth Podcast.” “It all feels like fast 7.0 earthquakes shocking the economy all at once. We didn’t have to worry about unknown variants knocking on our doors.”
Research has shown that during every financial crisis, BIPOC, LGBTQ+ people, low-income households and immigrants suffer the most, during and after the problematic period. A American Civil Study of the Union of Liberties compared the reduced wealth between white and black communities due to the recession. The researchers found that black households will have 40% less wealth by 2031 than they would without the Great Recession, while white household wealth will be 31% lower. Economists say this disparity will be accentuated with another recession.
“As a group, black consumers have lower incomes, less money saved, and fewer assets like stock portfolios and retirement accounts, making it difficult to bounce back from a loss,” said Blair.
Wells Fargo, the nation’s third largest commercial bank, refused more than half of mortgage refinancing requests it came from black consumers in 2020, while about a quarter of white applicants were rejected. Add to that the gender and racial pay gap, and things get tougher. Black women just do 64 cents for every dollar earned by a non-Latin white man, compared to the 83 cents on average for all women. Black women also wear most American students ready debtare however Less paid for obtaining a baccalaureate or a higher diploma.
“If higher interest rates push the economy into a recession, it makes it harder for people on the fringes of the economy to survive,” Blair said.
While the thought of another financial crisis is frightening to those who barely survived 2008, economists, money managers and people who found a way out of the last recession are speaking out on how best to prepare. One of the most important tips: start preparing early.
“There will be so many things out of our control during a recession, but it’s important to focus on what you can control,” said Pamela Capalad, certified financial planner and founder and CEO of Brunch & Budget. “It’s also crucial to start preparing now, when you’re not financially and emotionally distressed, so you can build the reserves (both emotional and financial) to deal with issues that escalate during a crisis. .”
Arielle, a 40-year-old from North Carolina who had to delay getting her doctorate when the 2008 recession hit and whose husband had to become a permanent stay-at-home dad after losing his job, recommends cutting costs everywhere where you can. During tough financial times, his family shared a car, bought children’s clothes at consignment sales, and grew their own herbs and vegetables.
“It’s always good to have an emergency cash reserve because you never know what can happen,” she said.
Along with having emergency funds on hand, experts recommend trying to pay off as much debt as possible before the recession hits, because having debt during a crisis will drain your money faster than you can. handle it, leaving you little to spend on emergencies. .
At a societal level, some experts believe that access to universal health care, robust public transportation, walkable cities, and affordable multi-unit housing rather than luxury apartments may be more effective than small families saving a few hundred dollars for a rainy day fund. .
Many assistance programs exist for marginalized communities, but a severe lack of awareness and accessibility means these programs never reach those they are meant to help.
“Making social services easier for BIPOC to access will go a long way,” Capalad said. “Allowing people to access food stamps, Medicaid, and rent assistance, and giving them guidance on how to apply for these services would be a big help.”