A larger share of adults in the United States reported being worse off financially in 2020 than in previous years, the Federal Reserve said on Monday, while those who entered the coronavirus pandemic on less secure financial footing finished the year on even shakier economic ground.
The Fed’s report on The Economic Well-Being of U.S. Households in 2020 found that nearly a quarter of US adults reported being worse off financially than the year before – the highest share since the survey began in 2014.
And not all groups felt that pain equally as the pandemic exacerbated longer-festering inequalities, particularly by race and education level.
“A clear pattern from the survey is that financial challenges in 2020 were uneven, and frequently left those who entered the year with fewer resources further behind,” said the report.
For example, the gap between adults with at least a bachelor’s degree who reported doing OK financially last year and adults with less than a high school education was 44 percentage points – a full ten percentage points higher than 2019.
Less than two-thirds of African-American and Latino adults said they were doing OK financially last year, compared to 80 percent of white adults and 84 percent of Asians. And the difference in financial wellbeing between white adults and Black and Latino adults has grown by four percentage points since 2017.
More well-educated Americans were more likely to be among those who saw their incomes and bank balances rise last year, while those with less than a high school education were more likely to be counted with those who reported falling incomes and bank balances.
Employment status also factored heavily. People who kept their jobs during the pandemic tended to have stable or improving finances last year, while those who suffered layoffs or an extended bout of unemployment – a group which skews towards Americans who already had fewer financial resources prior to the pandemic – saw their financial wellbeing deteriorate in 2020.
Among workers who were laid off, some 45 percent were either unable to pay their bills last November or would have struggled to had they been hit with an unforeseen $400 expense. The share of Americans falling into that category was “substantially higher” among African-American and Latino workers, as well as those with a high school degree or less, said the report.
“Even as the economy has improved, we can certainly see that some are still struggling, especially those who lost their jobs and those with less education, many of whom fell further behind,” said Federal Reserve Board Governor Michelle W Bowman in a press release on the Fed’s website.
Increased childcare demands arising from remote schooling and daycare centre closures had a direct impact on Americans’ fortunes.
Some 22 percent of parents reported they were either not working or working less because of COVID-19 disruptions – a group more likely to include African-American, Latino and single mothers as well as mothers with low incomes.
In a possible harbinger of more disparities on the horizon, some 59 percent of parents with kids in grades K-12 said their children were not learning as much through remote schooling as they would had they been attending class in person.
The report draws on the Federal Reserve Board’s eighth annual Survey of Household Economics and Decisionmaking (SHED) that surveyed 11,000 adults during November last year – some eight months into the pandemic.