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ARRA and The Economic Crisis: One Year Later

ARRA and The Economic Crisis: One Year Later
2010EmploymentFair Credit/Fair Housing

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Facing an escalating economic crisis, newly inaugurated President Obama signed the historic American Recovery and Reinvestment Act (commonly referred to as “the stimulus”) on February 17th 2009.1 The $787 billion stimulus bill was designed to create and preserve jobs, spur economic growth, and be administered with a particular focus on transparency and accountability. The stimulus bill made explicit reference to “assist those most impacted” by the recession. Has ARRA provided relief to our hardest‐hit communities? Has ARRA worked to promote greater racial and socioeconomic equity in our nation? One year into the implementation of ARRA we find mixed results, and offer critical lessons learned from the ARRA experience. In addition, we provide specific recommendations for achieving the goals of the Recovery Act, generating jobs and broadening prosperity, and reducing our racial and economic divide.

An Uneven Economic Crisis

The brunt of unemployment, layoffs, social service and education budget cuts, foreclosures, and bankruptcies has been borne by groups already marginalized by the mainstream economy. In particular, the racial impacts of the recession and housing crisis have been extreme. One in five children were living in poverty in 2008, and poverty rates for children of color are climbing above 40% in some states.2 While one in ten workers are unemployed nationally, one in six Black workers and one in eight Latino workers are unemployed.3 Nearly half of all subprime loans went to African American and Latino borrowers, even though many qualified for prime loans. African American and Latino homeowners are expected to lose $164 ‐ $213 billion in assets due to the housing crisis.4 While much of our analysis focuses on race, it is important to note that other factors, such as geography and gender, impacted the way in which the recession burdened already vulnerable communities. The impact of the recession on children has already been severe and will potentially be long‐lasting. The percentage of children in poverty is likely to peak at 21% in 2010. Neighborhoods and communities are also being reshaped by the detrimental impacts of the housing crisis and recession.