Research demonstrates that receiving unemployment insurance decreases mental health problems. But researchers have also found racial and ethnic disparities in unemployment insurance receipt resulting from differences in work history and location. We examined a population disproportionately affected by job loss and unemployment insurance exclusions, using a survey of service workers from a single city who were parents of young children and who overwhelmingly had eligible work histories. During the COVID-19 pandemic, workers not identifying as White non-Hispanic in our sample were more likely to get laid off than White workers. Among those who were laid off, these workers and White workers experienced similar increases in material and mental health difficulties and similar gains when they received unemployment insurance. However, these workers were less likely than White workers to receive unemployment insurance at all. These results indicate that unemployment insurance has unrealized potential to reduce material and health disparities. Policies should be implemented to make this coverage more effective and equitable through increased access.