Kofi Assabil, a member of the class of 2020 from University of Colorado Boulder, knows the grim job market all too well. Assabil started his job search in January 2020, months prior to his graduation. But when the pandemic reached the United States and everything went remote, he started to worry. “I realized that things were going to be harder. I was going on LinkedIn and Indeed…calling a few connections every two weeks to see if they had any opportunities,” but “even with internships, it was tough.” Along with several of his roommates, Assabil opted to wait out the labor market crunch in graduate school instead.

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The most recent estimates from Georgetown University indicate that approximately 70 percent of college students work part or full-time during their studies, suggesting 30 percent of new grads — up to 1.2 million recent college students — may be ineligible for unemployment once they graduate, unless they have proof of a rescinded job offer.

As a result, this generation of college graduates is struggling to find work. Coupled with a lack of government support and mounting student debt, personal financial conditions are proving difficult for many. According to the most recent data, among the 69 percent of college students that took out loans in 2019, the average debt upon graduation was $29,900, although numbers are higher for students of color. While Congress placed a temporary moratorium on payments for federal loans, there is still $137 billion in outstanding private student loan debt that is unaffected by the moratorium. Those bills are coming due, whether recent grads are ready for them or not. For the 22 percent of college undergraduates who are also parents, the financial burden is only heightened by the need to care for dependents.

The combination of insufficient economic opportunity and inaccessible unemployment benefits could have serious long-term implications. Elaine Weiss, an analyst from the National Academy of Social Insurance, believes that this will push new college graduates into lower paying jobs, since they cannot afford to wait for an offer that provides a higher wage.

According to a UCLA study, individuals who graduate college during a recession can expect between 10 to 20 percent lower lifetime earnings compared with their peers. According to the Federal Reserve, 40.3 percent of recent college graduates are underemployed. Further, this effect has become more amplified over time, as successive graduating classes experience higher and higher post-college unemployment rates.

One potential solution for new grads is a jobseekers’ allowance that could support them while they look for work. The allowance, which could partially replace foregone wages, would allow recipients to support themselves while they continue to look for work. Australia has a similar program dedicated specifically to providing financial assistance to youth and student job seekers with monthly benefit levels ranging from $1,153 to $1,924, depending on financial and family circumstances. While it’s no windfall, a benefit of that size would help cover a large portion of living expenses for many Americans. Other countries, such as Sweden, provide $1,101 per month, while also providing public child care and a child allowance for any families with children under the age of 16.

The results of these stronger unemployment programs have been well documented. One study from Georgetown University found that during the Great Recession, the enhanced unemployment insurance increased workers’ wages by 2.6 percent, with greater benefits for women, people of color, and people with lower educational attainment. This suggests that unemployment insurance programs help facilitate the job search process, allowing workers more time to find a job aligned with their skills.

With another college class soon to graduate into a still-weak labor market, the imperative of stronger unemployment insurance only becomes more important. While the passage of the American Rescue Plan is welcome news for the American economy, the bill failed to include unemployment protections specifically targeted at recent college graduates. The U.S. should take note of the work done by other nations to provide adequate financial stability for recent graduates as they enter the labor market. History tells us that the failure to do so will have lifelong impacts for college graduates.

Placerville resident and Rural County Representatives of California (RCRC) CFO and COO Lisa McCargar understands this problem all too well. Her organization advocates for broadband access, water rights, and other infrastructure resources on behalf of thirty-seven rural California counties. Now, facing the COVID-19 pandemic, the importance of RCRC’s work has never been more apparent to McCargar. With nearly all of the businesses on Placerville’s Main Street closed, she worries rural communities may not have equal access to federal government aid programs that have been touted as crucial to propping up small businesses.

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Although Congress allocated more than $650 billion to lend to small businesses through the Paycheck Protection Program (PPP) that is being administered by the Small Business Administration (SBA), accessing an approved lending institution in communities like Placerville is easier said than done. Only 31 percent of the community banks chartered since 1986 remain in the rural financial sector. This has led to a significant challenge in accessing financial services, especially now. “Everyone was flocking to Citi and Bank of America to the point that they couldn’t handle it. It ended up that you needed to be a customer with an outstanding loan or at least an account,” McCargar noted.

Steve Frisch, CEO of the Sierra Business Council, is dealing with the same problem. His group, which advocates for the business community in the mountain region of California, has helped more than 500 small businesses apply for the loan program. Despite their assistance, he estimates that only 10 percent received funding. “If you already had a strong relationship with a bank and your bank was approved to lend, then you got funded. If not, you were out of luck,” Frisch said. This is partly the result of inadequate funding to smaller community banks, who despite providing capital to nearly 1.5 million small businesses in 2018, received 16 percent of second-round PPP funding.

In addition, the quick roll out of the program was a major learning curve for smaller lending institutions. Banks “got the guidelines at 3:00 p.m. and the program opened at 10:00 a.m. the next morning,” Frisch noted. This isn’t to say community banks weren’t able to process any applications. However, community banks reported that the system locked up because of the mass uploads by larger lending institutions. As a result, they had to manually enter applicant information, a process which is reported to take up to an hour.

It is worth noting that businesses owned by historically underrepresented ethnicities have been particularly impacted by these barriers. “COVID-19 exacerbated all pre-existing inequalities” Tara Lynn Gray, the CEO of the Fresno Black Chamber of Commerce said. Her group, which provides technical support to business owners of color, has helped 40 businesses through one-on-one sessions and nearly 330 businesses through webinars. “Not one business got funded in the first round, while seven got funded in the second round” she said.

Research from the Center for Responsible Lending backs this up. Their recently released report notes that banks tend to lend to larger businesses with greater payrolls. Even though businesses owned by people of color employ 7.2 million individuals, the report estimates that 95 percent of Black-owned businesses, 91 percent of Latino-owned businesses, 91 percent of Hawaiian- or Pacific Islander-owned businesses, and 75 percent of Asian American-owned businesses may stand little chance of receiving a loan because of these access issues.

Aside from the difficulty of getting a loan, no one knows how long funding will be available. To date, $669 billion has been allocated to SBA loans. That’s 19.11 percent of last year’s federal tax revenue. And with an estimated 70 percent of all small businesses applying for the program, there aren’t nearly enough funds to go around. Data from COVID Loan Tracker suggests that denial rates are as high as 90 percent, but the denial rate is likely higher in rural communities where there are fewer eligible banking institutions. McCargar and Frisch both noted that there was a lack of capital in these communities, even before the crisis. Many business owners have little more than their homes — or if they are lucky, personal savings — to rely on.

This sort of liquidity crisis has significant implications. During the last downturn and subsequent recovery, regions that had greater access to capital were able to reduce the number of layoffs and in turn, preserve the skill of their labor force. Areas that lacked access to financial resources experienced severe wage atrophy and decreased output.

Not surprisingly, it tended to be rural areas that were hardest hit by this  capital disparity. The results are still obvious today. California’s three most rural counties, Alpine, Mariposa, and Trinity, have seen far slower income growth since the Great Recession began, compared to the state’s three most urban counties of Alameda, Orange, and San Francisco. Nationwide, there are 0.2 percent fewer jobs in non-metropolitan areas since 2007, and labor force participation is over 7 points lower than in metropolitan areas.

The last decade’s decline is largely the result of decades worth of underinvestment in any concerted rural economic development strategy. Now, COVID-19 is stress testing the deteriorating financial and economic infrastructure of these communities. Already, they have lost 14 percent of bank branches in the past ten years, 43 percent more than their urban counterparts. Last year, 1 in 4 rural small businesses cited capital access as one of the biggest barriers to successfully running their business. With so many communities yet to recover from the Great Recession, the shock of COVID-19 only hurts that much more.

While the government’s efforts to prop up small business are a step forward from the last recovery efforts, there still needs to be a conscious attempt to address rural-centric financial issues. Not only did communities like Placerville have less capital going into the COVID-19 pandemic, they now face additional barriers to accessing the government programs intended to help them. No plan to help America can work without supporting financial services to our rural neighbors.