The Federal Reserve Bank of New York found that companies...

The Federal Reserve Bank of New York found that companies with 500 or fewer employees in high-income counties, such as Nassau and Suffolk, lagged the rebound seen at companies in lower-income counties. Credit: Charles Eckert

Regions like Long Island, with income above the national average, are recovering more slowly from the pandemic than lower-income regions, according to a study of businesses by New York’s top bank.

The Federal Reserve Bank of New York found that companies with 500 or fewer employees in high-income counties, such as Nassau and Suffolk, reported larger revenue declines last year and lagged the rebound seen at companies in low-income counties.

The disparity is due to differences in COVID-19 safety precautions across the country and how households spend their earnings, said Rajashri Chakrabarti, a senior economist at the New York Fed.

She said residents of high-income counties, which are near cities and experienced severe coronavirus outbreaks, reduced discretionary spending on travel, recreation, entertainment and other items a year ago. They also saved more.

Residents of low-income counties — many of whom lost jobs — still had to spend on necessities but were helped by supplemental unemployment benefits and stimulus checks, she said during a virtual news conference last week.

Consumer spending accounts for about 70% of economic activity in counties regardless of income level.

"The New York metro area was hit much harder than the nation overall. … We’re also seeing a slower recovery," said Giorgio Topa, a vice president in the New York Fed's research and statistics department, responding to a Newsday question.

Topa and Chakrabarti are among five bank economists who authored the study, "COVID-19 and Small Businesses: Uneven Patterns by Race and Income," which is based on business revenue figures from the data processing firm Womply and census data. Information for Long Island and other regions wasn’t released.

"At the beginning of 2020, there were no visible differences between high- and low-income counties when it comes to small-business revenue growth," said New York Fed economist Davide Melcangi. "However, when the pandemic hit [in March 2020] small-business revenues fell for most U.S. counties, but more so for high-income counties."

He continued, "High-income households typically consumed in-person goods and services, which were restricted by the pandemic by social distancing."

When the rebound in business revenue began last summer, Melcangi said, it "was sharper and faster in low-income counties" because "supplementary unemployment benefits and stimulus checks translated into a more rapid recovery in consumption and therefore more business revenue."

He added the revenue recovery in high-income counties lagged that of low-income counties until early this year.

In terms of race, the New York Fed found businesses in majority-minority counties saw larger declines in revenue during the pandemic than businesses in majority-white counties.

"This disparity is consistent with the fact that people in majority-minority counties tend to live in urban areas that have higher income, and hence the pattern of majority-minority counties is similar to that of higher-income counties," the economists wrote in the study.

They also said minority-owned businesses closed in higher numbers a year ago and had difficulty accessing COVID-19 relief programs such as Paycheck Protection Program loans.

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