COVID-19 and Indian Country: Early snapshot reveals disproportionate economic exposure and uncertainty

The coronavirus pandemic presents challenges to underfunded tribal health care systems and to tribal economies and labor forces, and it is likely disproportionately affecting Indian Country.

To understand the depth and breadth of the impact of social distancing and other public health measures on Indian Country labor markets and tribal governments, the Center for Indian Country Development (CICD) at the Federal Reserve Bank of Minneapolis conducted a survey of tribes and tribal enterprises. Additionally, the CICD analyzed the most recent American Community Survey (ACS) data, from 2018, to determine the proportion of tribal jobs in industries and occupations that may take the largest hit due to COVID-19.

Unlike other recent economic shocks, COVID-19 is significantly affecting service occupations and industries impacted by social distancing. The data presented in Figure 1 demonstrate that compared to non-Native communities, the share of employment in tribal communities is much more heavily concentrated in the service sector. As the figure illustrates, our calculations from the 2018 ACS indicate that over 30 percent of occupations in some tribal communities are service occupations, which is much higher than the U.S. average of 18 percent. Tribal nations with lower average individual incomes are even more exposed than those with higher incomes. Figure 2 depicts a similar pattern for the percentage of employment in industries likely to be heavily affected by social distancing (the arts, entertainment, recreation, accommodation, food service, and personal care industries) and the relationship with total individual income.

Part of the reason Native American employment is concentrated in these occupations and industries is that tribal enterprises are large employers on reservations, and due to historical and jurisdictional reasons, they are often concentrated in the arts, recreation, and accommodation industries, including gaming. For example, 2019 Indian gaming employment nationwide furnished 787,878 direct or indirect jobs that contributed $34.5 billion in direct or indirect wages, as reported by the National Indian Gaming Association.

Another way Native American employment and communities are more vulnerable to social-distancing policies is that tribal enterprise revenues often fund the operational activities of tribal governments, which are themselves large employers in reservation communities. When tribal enterprise revenues fall, tribal government jobs, services, and basic functions are at risk. These realities imply that Figures 1 and 2 underestimate tribal communities’ economic vulnerability to COVID-19 social-distancing measures.

About our survey

To learn about the measures tribes are taking to prevent the spread of the virus and to understand the immediate and anticipated economic consequences of the pandemic, we targeted our survey to tribal governments and enterprises. It included questions on the specific public health measures taken at the tribal level and anticipated increases in demand for Indian Health Service services. (The survey did not ask questions about the pre-pandemic level of health service preparedness.) We distributed the survey to a list of tribal chairs, which we obtained from the Bureau of Indian Affairs website; the CICD’s private listserv; the followers of the CICD’s Twitter account (@FedIndianCenter); regional tribal organizations; and participants at a public Tribal Leader Town Hall hosted by national Native American organizations. The survey opened on March 23 and closed on March 27.

We received a total of 94 responses, 43 complete and 51 partial. Approximately 46 percent of respondents were tribal governments, 24 percent were tribal enterprises, and 30 percent were neither. Of the 58 respondents who identified their tribe, 19 percent were from Oklahoma, 17 percent from Montana, 12 percent from Minnesota, 8 percent from the Pacific Northwest, over 8 percent from the Southwest, 7 percent from Idaho, 5 percent from Alaska, and 5 percent from Wisconsin. The remainder were from California, Iowa, Massachusetts, Michigan, Nebraska, New York, North Carolina, or North Dakota. Approximately 70 percent of all respondents represented either a tribal enterprise or tribal government as chief, chairman, council member, CEO, executive director, associate director, or other leadership position.

The sizes of the tribal governments and enterprises that responded range from fewer than 100 employees to more than 750. Around 60 percent of tribal enterprises surveyed employ fewer than 100 people, while nearly 40 percent of tribal governments surveyed employ between 250 and 750 people.

Given the survey-distribution methods, as well as the ultimate sample composition, the results of our survey cannot be taken as representative of the experiences of all tribal governments and enterprises. However, the experiences of the tribes included in the data do represent a broad and meaningful cross-section.

What we found

Tribes are imposing social-distancing measures

Over 80 percent of tribes surveyed have declared a state of emergency, some well before the national emergency was declared. All tribes reported taking measures to protect their community members, including switching to remote work arrangements for tribal government and enterprise staff, closing offices and schools, stopping all tourism, and—for some tribes—restricting access to their reservations. While emergency preparedness and response measures vary across tribal governments, one common sentiment is clear: availability of testing kits and personal protective equipment is insufficient to meet short-term demands.

Staffing cuts necessary already, anticipated to get worse

At the time of the survey, both tribal enterprises and governments had already made moderate to significant cuts to their staffing levels. As depicted in Figure 3, over 40 percent of tribal governments and over 20 percent of tribal enterprises had made staffing cuts. To provide some context, a similarly timed survey of businesses in the Ninth Federal Reserve District suggested that just over 30 percent of establishments had made staffing cuts. The comparison suggests that tribal governments and enterprises are at least as exposed to the economic shock as their Ninth District peers.

The respondents to our survey anticipated things would get worse in the short term. Over 60 percent of tribal governments and over 40 percent of tribal enterprises in our survey anticipated the need to make staffing cuts in the next month. One respondent anticipated “cutting 75 percent of tribal government staffing.”

Major consequences and much uncertainty

Consistent with the observed employment changes, tribal governments are expecting major financial consequences, with 63 percent of tribal governments anticipating a large increase in needed revenue. At the same time, as depicted in Figure 4, nearly 60 percent of tribal enterprises are anticipating large declines in the revenues they will be able to transfer to their tribal governments.

That is in line with these enterprises being concentrated in the arts, entertainment, recreation, accommodation, or food service industries. A respondent representing a tribal government noted that “due to lost revenue generated by tribal businesses as a result of closure, the tribe will not have access to its main revenue source to support tribal government operations.”

Figure 5 shows wide diversity in current and anticipated needs across tribal governments and enterprises. While some of the enterprises suggested that as of today they do not require additional funds to maintain operations, over 75 percent of them anticipate needing additional capital in the next month. The tribal governments that responded to our survey almost uniformly reported both immediate and anticipated future capital needs as a direct result of the coronavirus crisis.

As can be seen in the information contained in Figures 3 to 5, tribal leaders are also facing a high degree of uncertainty. Effective and inclusive public policy will be critical to the outcomes for tribal communities. Tribal governments, enterprises, and employees will almost certainly need significant additional federal and state assistance to safeguard their communities and resuscitate their economies.

Looking ahead

The current occupational and industrial structure of Native American employment, and the structure of tribal government funding through tribal enterprises, make Native Americans disproportionately exposed to the economic fallout of the measures taken to prevent the spread of the coronavirus. Furthermore, the impact of COVID-19 and efforts to contain it have widespread consequences beyond those discussed here. For example, its impact on Native community development financial institutions is potentially substantial, as is its impact on individual Native business owners and Native people living in urban centers. The CICD will continue to contribute to public policy discussions and survey tribal communities as relief programming comes online and economic vulnerabilities become clearer.