While most Americans believed they were doing “OK” financially at the end of last year (about 75%), nearly one in four said they were worse off compared to a year earlier as a result of the financial impact of the coronavirus crisis, according to a Federal Reserve report issued Monday.
The Fed said its 2020 Survey of Household Economics and Decisionmaking (SHED), which examines the economic well-being and financial lives of U.S. adults and their families, found that a larger share of adults were worse off in 2020 than in previous years of the survey.
More specifically, the Fed said its survey found that, last year, less than two-thirds of Black and Hispanic adults were doing at least OK financially, compared with 80% of White adults and 84% of Asian adults. The gap in financial well-being between White adults and Black and Hispanic adults grew by 4 percentage points since 2017, the Fed said.
Additionally, people who were laid off from their jobs, and then faced an extended period of unemployment, saw a deterioration of their financial circumstances, the Fed said. “Layoffs during the pandemic were concentrated among workers with fewer financial resources, which further exacerbated pre-existing disparities in their financial well-being,” the Fed’s report on the survey stated. “Those who were laid off during the pandemic typically had a relatively small financial cushion to begin with, as less than two-thirds of those who were laid off said they were doing at least okay financially in late 2019, before experiencing job loss.”
For the converse, those who kept their jobs during the pandemic generally had stable or improving finances in 2020, the Fed said.
The pandemic also affected the ability of parents to keep working while their children, home-bound as schools shut down, needed care, the report found. Black, Hispanic, and single mothers, as well as mothers with low incomes, were more likely not to be working or to be working less due to the disruption of closed schools. Overall, the Fed stated, 22% of all parents were either not working (9%) or were working less (13%) because of disruptions. The 9% of parents who were not working translates into nearly 2% points fewer adults who were working overall.