In that sense, the U.S. disaster relief system works a lot like the economy as a whole: ruthlessly advancing the interests of the better-off, while leaving poorer people trapped in decaying homes and neighborhoods. Today, the two federal agencies that played the biggest roles after Harvey, FEMA and the Small Business Administration, find themselves tasked with containing the ever broader economic fallout from the COVID-19 crisis. As the coronavirus threatens every single city in the nation, the lessons of Harvey’s aftermath provide a warning: When it comes to offering real assistance, these tangled government bureaucracies often fail to offer help to lower-income people when they need it most.
The U.S. disaster relief system works a lot like the economy as a whole: ruthlessly advancing the interests of the better-off, while leaving poorer people trapped in decaying homes.
Hurricane Harvey provided a rare look at how American disaster relief actually works
Homeowners like Brown living in lower-income Houston neighborhoods, were far less lucky. A variety of rules put these families at a disadvantage, a primary reason so many are still grappling with the hurricane’s effects today. Because of climate change, the severity of hurricanes will only get worse over time. So for the flood-prone Gulf Coast, the negative effects of the American disaster relief system on poor homeowners and renters will in all likelihood only get worse too.Overall, only 27 percent of the people who registered their homes with FEMA after Hurricane Harvey received assistance. For those who were approved, it normally wasn’t enough—on average, just $7,295.Poorer families who were flooded but supposedly lived outside the floodplain—and subsequently were less likely to be required to have flood insurance—were hit particularly hard financially, especially those who lived in lower-income but predominantly owner-occupied neighborhoods like Brown’s. For these families, Hurricane Harvey led to a 15 percent increase in the share of their debt that was past due, and a 30 percent increase in their likelihood of declaring bankruptcy.The pain from the lack of aid was compounded by how financial institutions now saw them. On average, flooded mortgage-holders in poorer neighborhoods outside the floodplain experienced a 24-point drop in their credit scores. By comparison, flooded mortgage-holders in wealthier neighborhoods outside the floodplain experienced just a 4-point drop in their credit scores—not a statistically significant change—and mortgage-holders inside the floodplain saw effectively no change to their credit scores, regardless of their financial status before the hurricane.
“We think redlining happened many years ago, but those laws still matter today. You have to recognize that people were pushed into these neighborhoods unjustly to begin with.”
Why poorer, blacker neighborhoods get less help
Small Business Administration loans: a handout or a burden?
The twist that taking out an SBA loan makes you ineligible for grants is rarely explained to potential borrowers, and often comes as a surprise. FEMA told VICE they encourage all applicants who may be qualified for SBA loans to apply, in part, because other sources of disaster relief money aren’t usually available as quickly. A 2018 law signed by President Trump provided a partial fix to this problem, allowing for SBA loan recipients to remain eligible for other forms of disaster relief, but only if states apply for and receive a waiver.
SBA loans provide the government with an avenue to say it’s helping out, without actually having to spend any money.
Gallagher and her coauthors’ research adds to a growing mountain of evidence that our disaster relief policies absorb much of the cost of disasters for wealthier families, while leaving poorer and minority communities on their own to muck their ways out. Gallagher’s research shows that natural disasters create enduring financial setbacks for low-income families. As climate change increases the severity of floods and hurricanes, their research shows that poorer families in coastal states will be the ones hit with the brunt of the cost.In January of this year, Brown finally moved back home and slept in her own bed for the first time in two years. After years of sleeping in other people’s houses, she was able to rebuild the home with money and help from West Street Recovery, the organization that Miles and Adams helped form.Brown knows that Houston will flood again, and is angry that elected officials haven’t done more to protect communities like her own from the next disaster. "They're sitting on the money, not trying to help nothing,” she said. “I just don’t want people to forget about us.”As a teenager, Brown had skipped school to march in downtown Houston, protesting Jim Crow and voter suppression. After Harvey, Brown was fed up with Houston’s response to the hurricane and co-founded Northeast Action Collective to fight for policies that would make her community more resilient, like more quickly cleaning out municipal drains after heavy rainfalls and creating more green spaces to absorb water.“My mom used to say I was a rebel without a cause,” Brown said. “But now I have a lot of causes: climate, my neighbors, my community. I'm back at it."
"I would have been better off not getting the SBA loan and going through the bank."
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