COVID-19: A deep economic crisis in Indian Country

In late March, the Federal Reserve Bank of Minneapolis’ Center for Indian Country Development (CICD) conducted a survey of tribal leaders that indicated the economic impact of the COVID-19 pandemic was immediate and severe, and that tribes may be disproportionately vulnerable to the economic fallout of social-distancing measures. One month later, we conducted a follow-up CICD survey focused on employment losses, changes in revenue projections, and current unmet capital needs. The follow-up survey also allowed tribal leaders to share any comments they believed were important for informing federal policy during this time.

More on the follow-up survey

The second survey had similar questions to the late-March survey and targeted leadership representing tribal governments, tribal enterprises, and other tribal organizations.¹ The survey opened on April 21, 2020, and closed on April 27, 2020, before the anticipated disbursement of tribal set-aside Coronavirus Relief Funds from the U.S. Department of the Treasury. We distributed the survey to a list of tribal chairs from the Bureau of Indian Affairs’ tribal leaders directory, sent it to the CICD listserv, and posted it on Twitter. The survey was also advertised by the Harvard Project on Native American Economic Development. We received 92 responses—40 from tribal governments, 26 from tribal enterprises, and an additional 26 from tribal-led organizations. Among the tribal governments and tribal enterprises that responded, the sizes of their operations varied significantly. The average numbers of employees the two groups reported were 407 and 553, respectively, while the largest employee numbers they reported were 2,000 and over 4,000, respectively. This article focuses on the results for tribal governments and enterprises but we supplement our analysis with data from the other tribal organization respondents.

Job cuts are severe

The data depicted in Figure 1 confirm that over 50 percent of all tribal government and enterprise respondents had laid off or furloughed employees at the time of the survey. Our first survey approximately one month earlier found that only 40 percent of tribal governments and 20 percent of tribal enterprises reported having to make staffing cuts. While the questions, and therefore responses, to the two surveys are not strictly comparable, the findings may indicate significant increases in the employment consequences of COVID-19.² Consequences are severe for some tribal enterprises: over 30 percent of enterprises reported they had to lay off or furlough 80 to 100 percent of their workforce at the time of the survey—with gaming-related enterprises among the hardest hit. Other tribal organizations reported a smaller but still substantial share of staff reductions: roughly 35 percent of them reported at least some staff cuts or furloughs at the time of the survey.

Revenues are dwindling as costs increase

In Figure 2, we see that due to the pandemic, nearly 30 percent of tribal enterprises had no revenue at the time of the survey and over 30 percent anticipated generating no revenue in the next month. In addition, well over 80 percent of tribal enterprises and governments had experienced revenue losses and were anticipating continued losses. Complicating tribal governments’ economic outlook further, these significant revenue losses were occurring at the same time that 90 percent of tribal government respondents reported experiencing an increase in their costs of operation.

Unmet capital needs are substantial

Of the tribal governments that responded to the survey, all but one reported having current unmet capital needs due to COVID-19. The median current unmet capital need among tribal government respondents was $1.75 million, with over 25 percent claiming current unmet needs of over $9 million at the time of the survey. Among the tribal enterprises that responded, 75 percent reported currently having unmet capital needs, with over 25 percent claiming current unmet needs well over $1 million. Only one tribal enterprise respondent said its current capital needs had recently been met through the U.S. Small Business Administration’s Payroll Protection Program. One tribal organization, a loan fund, reported that current unmet capital needs for their clients surpassed $15 million.

Textual analysis reveals broad concerns

We received extensive comments from 31 tribal government respondents, 21 tribal enterprises, and 21 other tribal organizations, and we reviewed them to determine main themes and code them into categories. While comments from tribal enterprises concentrated heavily around the need to close their doors, concerns about revenue, and implications for employment, tribal governments expressed a broad set of concerns. Figure 3 presents the share of tribal government respondents whose comments fell within the five most common categories of concern:

1. Structural barriers to accessing financing;
2. Access to food, utilities, and supplies;
3. The well-being of families and elders;
4. Access to federal funding; and
5. Tribal enterprise closures.

The most common concerns governments expressed in the top category—structural barriers to accessing financing—related specifically to their lack of tax revenue for funding government services and operations, their inability to access private forms of capital, or their reliance on tribal enterprises to fund services. Nearly 40 percent of tribal governments also expressed concerns over their members’ access to food, basic utilities, and supplies such as personal protective equipment. Many also expressed explicit concern for elders or the families in their community. Nearly 40 percent of tribal government respondents expressed concerns related to accessing federal funds provided in the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act.

Endnotes

1 Based on the comments and data provided by these other tribal organizations, we believe this group is largely made up of Native community development financial institutions; other financial institutions; and national, urban, and regional organizations that serve Native people, often in the area of tribal health.

2 Note that the previous survey did not ask about furloughed employees explicitly, so this difference in framing may have generated the observed differences in responses.