Board of Governors of the Federal Reserve System

Financial Repercussions from COVID-19

For many families, financial circumstances in 2020 look very different than they did in late 2019 when the SHED was fielded. In order to gain further information about these changing circumstances, the Federal Reserve Board fielded a supplemental survey in April 2020. From the start of March through early April 2020, 19 percent of adults reported losing a job, being furloughed, or having their hours reduced. Among those experiencing these employment disruptions, over one-third expected to have difficulty with their bills in April. Yet, for those not experiencing an employment disruption, financial outcomes at the time of the supplemental survey were largely similar to those observed in the fourth quarter of 2019.

Employment and Work from Home

Thirteen percent of adults, representing 20 percent 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 (figure 39).⁵⁰ These job losses were most severe among workers with lower incomes. Thirty-nine percent of people working in February with a household income below $40,000 reported a job loss in March. Another 6 percent of all adults had their hours reduced or took unpaid leave. Taken together, 19 percent 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. Seven percent of adults reported that they increased their hours worked or worked overtime. Four percent of adults, including 8 percent of those who experienced a job loss, took on a side job to supplement their income. Some people who lost jobs may also have started other full-time employment or already had second jobs.

Many people who lost a job remained connected to their employer and expected to return to the same job eventually. Nine in 10 people who lost a job said that their employer indicated that they would return to their job at some point. In general, however, people were not told specifically when to expect to return to work. Seventy-seven percent said that their employer told them to expect to return, but did not give them a return date. A smaller 14 percent were given a specific return date or had already returned to work. It is difficult to predict, however, how long layoffs will ultimately last.

Many of those who were still working worked from home. More than half of workers (53 percent) did
at least some work from home in the last week of March, and 41 percent did all their work from home. For comparison, in October 2019, 7 percent of people working for someone else usually worked from home (see the "Employment" section of this report).

Workers with higher levels of education, particularly bachelor's degrees, were more likely to work from home. Sixty-three percent of workers with at least a bachelor's degree worked entirely from home. Among workers with a high school degree or less, 20 percent worked entirely from home, as did 27 percent of workers who have completed some college or an associate degree (figure 40).

Some people also said that childcare, family obligations, or health concerns contributed to them working less in March. Including those taking paid leave or who had their hours reduced but who were not laid off, 9 percent of adults worked fewer hours in March. Among this group, 21 percent said they worked fewer hours because of family responsibilities or childcare. Seventeen percent said that illness or health limitations had contributed to their reduction in hours. Nevertheless, 47 percent of those working fewer hours said it was due to fewer hours offered by their employer.

Effects on Family Finances

For the majority of adults, income, ability to pay current bills, and their approach to covering a hypothetical $400 unexpected expense appear to be generally stable during the initial period of the COVID-19 pandemic. Yet among those who experienced employment losses, financial well-being is substantially lower.

Consistent with the employment declines in March, many people experienced declines in their incomes. Overall, 23 percent of adults said their income in March was lower than in February, while 5 percent said their income increased and the rest indicated it was about the same (figure 41). Among those who lost a job or had their hours reduced, 70 percent reported that their income declined. Most people who did not report a job loss or reduced hours said that their income was about the same, although 12 percent said their month-to-month income declined between February and March.

A loss of income can affect people's ability to pay regular monthly bills. Eighty-one percent of adults said they could pay all the current month's bills in full in April, which was essentially unchanged from the fourth quarter of 2019 (table 32). Yet, the survey found far greater rates of difficulty among those experiencing employment disruptions. Sixty-four percent 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 percent of those without an employment disruption.⁵¹

Table 32. Financial resiliency measures (by year and employment disruptions since March 1)

Similarly, for adults overall in April, the share who reported they would pay an unexpected $400 emergency expense entirely using cash, savings, or a credit card paid off at the next statement was essentially unchanged from the fall of 2019. Yet those who experienced the loss of a job or work hours were less likely to report they would pay an unexpected $400 expense in these ways.

In addition to the economic effects from the broader employment disruptions related to COVID-19,
individuals may experience additional financial challenges if they, or someone close to them, gets sick. Workers who lack paid leave are more likely to face financial hardships or deplete financial resources if they become sick with coronavirus symptoms. Fifty-three percent of employed adults, including those who are self-employed, indicated that could take two or more weeks of paid leave if they got sick with coronavirus symptoms (figure 42). Nonetheless, one-fifth of employed adults reported that they could not take any time off without a reduction in income under these circumstances. On average, those with more education had more leave available. Sixty-four percent of adults with a bachelor's degree or more said that they had at least two weeks of leave, while 42 percent of adults with a high school degree or less said that they could take off at least two weeks without a reduction in income.

Financial circumstances can also affect decisions to seek medical care. Most adults (81 percent) said they would try to contact a doctor if they were to get sick with coronavirus symptoms, although a small share (4 percent) indicated that concerns about cost would deter them (figure 43). Those who experienced a job loss or reduced hours were more likely not to contact a doctor because of costs (8 percent), relative to those who had not (3 percent). However, this is well below the share who reported in the fall that they skipped any medical care due to an inability to pay (see the "Dealing with Unexpected Expenses" section of this report). This lower rate of expecting to skip medical care for COVID-19 likely reflects its serious nature.

Results from the supplemental survey reflect financial conditions at the beginning of April 2020 and indicate the nature of families' experiences of financial conditions at that time. However, the financial repercussions from COVID-19 continue to evolve, and the Federal Reserve Board will continue to monitor the financial conditions of households.

 

References

 

 50. Respondents were asked about employment events between March 1 and when they took the survey. The survey was in the field from April 3 through April 6. Subsequent references in this section to events in March include the beginning of April prior to the respondent taking the survey; 1,030 adults responded to the supplemental survey, and results were weighted to be nationally representative. Additional details can be found in the "Description of the Survey" section of this report. Return to text

 51. The April supplement was conducted after the passage of the Families First Coronavirus Response Act and the CARES Act, which provided financial relief to many families and expanded the availability of paid leave for some workers who contract COVID-19. However, the survey was conducted before most benefits were received, so it is unclear how many respondents considered these new policies when responding to the survey. Return to text