Equitable access to resources matters

Disasters don’t discriminate, and yet their impact is not equal.??

People of color and those who are economically disadvantaged suffer disproportionate impacts of extreme weather events, and as companies look to support employees in need with an eye toward diversity, equity and inclusion, it’s important to understand how these populations experience disaster and how you can help.??

The unequal impact of disaster?

There is no shortage of real-life examples of disaster inequity, including most recently, when Hurricane Ian struck Florida’s Gulf Coast. In Dunbar, a historically Black community in Fort Myers with a growing Hispanic and Latino community, roughly a quarter of the population lives below the poverty line. Many residents there lacked the financial resources to prepare for the storm as it approached, let alone to evacuate, which costs households an average of $1,200. After all, a recent survey showed a $1,000 emergency expense would be too much for more than 50% of Americans.??

In addition to the hard costs of evacuation – gas, hotel accommodations and food – there are income losses to consider, as well. For hourly workers for whom remote work isn’t an option, taking time off to evacuate can have a serious impact on their families. They must choose between financial and physical safety. As experts recently told ABC News: “For low- and middle-income households, the costs of evacuation can force individuals to put themselves in harm's way, go into credit card debt or rely on support from family members and charity.”?

And then there’s the cost of rebuilding or relocating, which can be particularly significant as housing prices and inflation continue to rise and as many in the communities hit hardest by recent storms lack the insurance coverage they need to make a full recovery. Only 18.5% of homes in the counties where residents were told to evacuate had coverage through the National Flood Insurance Program.?

Research shows us this isn’t just an issue between the “haves” and “have nots.” Race and ethnicity play a role here, and, as recent research from Rice University and the University of Pittsburgh shows, disasters don’t just impact the immediate financial outlook for families of color. There are long-term wealth effects to consider, as well.??

For the study, researchers followed nearly 3,500 families across the U.S. from 1999 to 2013 and looked at how disasters affected personal wealth over time. The results were striking: Blacks living in counties with at least $10 billion in damage lost an estimated $27,000, for instance, while Whites living in counties with similar levels of damage gained nearly $126,000.??

“Whites accumulate more wealth after natural disasters while residents of color accumulate less," one researcher said. "What this means is wealth inequality is increasing in counties that are hit by more disasters."?

The rocky road to financial recovery??

Facing disaster-related expenses, employees in financial hardship have few places to turn.??

One option for immediate expense coverage is a payday loan, which charges high interest rates for small personal loans. While these loans can provide immediate relief, they come with a significant cost. A 2015 study by the Pew Charitable Trusts found that 12 million Americans take out payday loans each year and spend $9 billion on loan fees. The interest rates on these loans are significantly higher than credit card rates: Debt.org says they effectively range from a 300% to 500% annual percentage rate (APR).??

If an individual can’t afford the emergency expense, the chances are near certain they can’t afford the extra cost of high interest, which is part of the cycle that keeps economically disadvantaged groups in a state of financial strain.??

In addition, many (but not all) major companies give employees the option to take a hardship withdrawal from their 401ks, which alleviates the 10% penalty that would typically apply to a withdrawal. There are, however, drawbacks to this option: First, employees are not allowed to repay any money withdrawn back into the plan. Employees also must provide documentation to their company as evidence of the hardship need, which can violate personal privacy. Furthermore, some hardships don’t qualify under IRS rules, such as burial expenses or prevention of eviction or foreclosure.??

There is, however, another option, if companies decide to act and support their employees in the wake of disaster: employee relief grants.??

Employee relief grants are a form of financial relief in which companies offer charitable grants to employees during times of disaster and hardship. These direct cash grants can help cover the cost of evacuation or repairs. There is no interest, and there is no hit to long-term savings. They are, essentially, a lifeline to employees in need, and when done right, they protect the privacy of employees and ensure equitable access across the employee population.??

At E4E Relief, we have built our employee relief programs around a commitment to equity. When employees apply for grants, we don’t solicit demographic information, which allows all employees equal access to life-saving financial relief. Companies can deliver support where it’s needed most and help bring an end to cycles of poverty and disadvantage.??

Disasters create opportunities to rebuild better and stronger than before. This is as true for our infrastructure as it is for our people. Companies can facilitate this process, by offering their employees financial support when they need it most.??