Financial conditions changed dramatically for people who experienced job loss or reduced hours during March 2020 as the spread of COVID-19 intensified in the United States, according to a report issued Thursday by the Federal Reserve.
The Fed’s annual Survey of Household Economics and Decisionmaking (SHED), conducted initially in October, was supplemented with a new, additional and limited survey in April to obtain updated information in the midst of closures and stay-at-home orders. While the October results found financial circumstances were generally positive for most adults, the April survey found that had dramatically changed.
“In April 2020, fewer adults reported that they were at least doing okay financially than had been the case 6 months earlier,” the Fed said in the report. “The April supplemental survey showed that 72% of adults were either ‘doing okay’ financially (43%) or ‘living comfortably’ (29%). This is down from the 75% of adults who were at least doing okay financially and the 36% who were living comfortably in the fall of 2019.”
According to Fed Gov. Michelle Bowman, “the survey data show that early in the public health crisis, a larger fraction of Americans were facing financial hardship than in the fall of 2019.”
The survey results, the Fed said, show that the declines in self-reported financial well-being were concentrated among those who lost a job or had their work hours cut. “Among adults not experiencing a job loss or reduction in hours, 76% were at least okay financially in April, which is similar to the overall share of adults who reported being at least okay financially in the fall,” the Fed said.
Among those who experienced a job loss or hours reduction, however, 51% indicated that they were doing at least okay financially in April, whereas 48% were “finding it difficult to get by” or were “just getting by,” the Fed said.
“Thirteen percent of adults, representing 20% of people who had been working in February, reported that they lost a job or were furloughed in March or the beginning of April 2020,” the report states. “Another 6% of all adults saw their hours reduced or took unpaid leave.”
The Fed said that, taken together, 19% of all adults reported either losing a job or experiencing a reduction in work hours in March. “Despite these widespread employment losses, some people took on new or additional employment in March,” the Fed reported. “Seven percent of adults reported that they increased their hours worked or worked overtime.”
Most of those – 9 in 10 of those who were furloughed or lost a job – expect to return to their jobs, the Fed said. The agency said those workers said that their employers indicated to them that they would return to their jobs at some point.
But generally, people were not told specifically when to expect to return to work, the Fed reported. More than three in four (77%) said their employers told them to expect to return but did not give them a return date.
Further, the Fed said, the survey found that, consistent with the employment declines in March, many people experienced income declines. The agency said that 23% of all adults and 70% of those who lost a job or had their hours reduced said their income in March was lower than in February.
Along those lines:
- Eighty-one percent of adults said they could pay all the current month’s bills in full in April, compared to 84% in the fourth quarter of 2019.
- However, among those experiencing employment disruptions, the survey found far greater rates of difficulty: 64% of adults who reported a job loss or reduction in hours expected to be able to pay all their bills in full in April, compared to 85% of those without an employment disruption.