The Solution Your DEI (Diversity, Equity, and Inclusion) Strategy is Missing

Davida Rivens, E4E Relief

Right now, in the U.S., a billion-dollar disaster occurs every 18 days. Few parts of the country are spared: 90% of counties in the U.S. suffered a weather disaster over the past decade. That leaves many individuals vulnerable to hurricanes, tornadoes, floods and more.

But, while disasters are becoming a near-universal challenge, affecting individuals across the country with increasing frequency, 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 a disaster and how employers can help.

The Unequal Impact of Disaster

There is no shortage of real-life examples of disaster inequity, including recently when Hurricane Ian struck Florida’s Gulf Coast in the fall of 2022. 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 an average of $1,200. Instead, they stayed and suffered the consequences. Nearly a week after the storm hit, they were still without power, had lost thousands of dollars in food, and the extent of the damage they suffered was staggering.

In addition to the hard costs of evacuation – gas, hotel accommodations, and food – there are income losses to consider. 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. In addition, some businesses remain closed in the aftermath of a weather event due to lost power, damage, or other reasons. No work means no income for the families that need it most.

And for those who experience property damage, 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. In the case of Hurricane Ian, only 18.5% of homes in the counties where residents were told to evacuate had coverage through the National Flood Insurance Program. The rest were forced to find a way forward on their own.

Research shows us this isn’t just an issue between the “haves” and “have nots.” Race and ethnicity play a role here. And, as a recent study from Rice University and the University of Pittsburgh shows, disasters don’t just impact the immediate financial outlook of 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, 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.” Homeownership plays a key role in the widening wealth gap: After a disaster strikes, insurance companies pay out claims to homeowners, and fewer renters are likely to take out renters’ insurance because the monthly costs add to an already tight budget.

The increase in wealth inequality is compounded by other issues. A study by the Urban Institute found that people living in communities of color that were hit by medium-sized disasters experienced an average 31-point decline in their credit score, in part due to pursuing loans or other lines of credit to afford increased disaster-related expenses. Individuals living in majority White communities, on the other hand, experienced a 4-point decline.

Why Does Financial Well-being Matter?

Financial well-being is defined as a state of financial security and financial freedom of choice, both now and in the future, and it’s a critical part of our overall well-being. Gallup identifies it as one of five core elements that play a role in personal wellbeing, alongside a career, social wellness, physical health, and a sense of community. Trouble in any one of those areas jeopardizes our health and wellness, and for many individuals, that trouble lies in financial well-being.

Right now, 63% of Americans are living paycheck to paycheck. According to the American Psychological Association’s annual Stress in America survey, money-related stress is at an all-time high, and 88% of employees agree inflation and rising costs of living have notably increased their financial anxiety in the past year. In addition, 57% say they are unable to afford a $1000 emergency expense.

Financial instability leaves many individuals vulnerable to disasters and hardships that are affecting communities with increasing frequency. It also has a significant impact on businesses as research repeatedly shows a direct correlation between employee stress and lower rates of engagement, productivity, and retention. In fact, disengaged employees cost companies between $450 and $550 billion every year. The annual cost of lost productivity is $322 billion. And voluntary turnover costs companies $1 trillion every year.