The coronavirus pandemic instantly knocked millions of Americans into hardship — but the recovery is shaping up to be months, if not years, in the making.
A new Bankrate survey finds that half of U.S. households’ incomes took a hit when the novel virus outbreak first catapulted the U.S. economy into the worst recession since the Great Depression. But even after a sharp initial rebound, nine months later more than 2 in 5 (or 42 percent) say their wallets still haven’t fully recovered. Meanwhile, just 1 in 6 (or 17 percent) report that their incomes have returned to normal.
Casting a dark shadow on that picture are soaring virus cases, renewed lockdowns and soon-to-expire federal relief programs in the midst of steep Congressional gridlock.
“Forty-two percent of households say their incomes are still below pre-pandemic levels, speaking to the widespread financial impact that remains,” says Greg McBride, CFA, Bankrate chief financial analyst. “Even as Americans are returning to work, many households are earning less than they were before COVID-19.”
Key takeaways:
- Among the half of U.S. households that took an income hit, 21 percent report being laid off or furloughed and 19 percent report having their hours cut.
- A majority of respondents (51 percent) expect a full recovery to take at least six months or longer, while an additional 6 percent think their income will never recover.
- Highest-wage earners are more than twice as likely (30 percent) to have already made a full recovery than lowest earners (9 percent).
- Overwhelming majority of Americans (85 percent) are worried about their household’s income taking a hit, regardless of whether they felt an impact at the start of the pandemic in March.
Nearly 1 in 5 report being laid off or furloughed or having their hours cut
The coronavirus pandemic caused tremendous financial hardship when it wreaked havoc on the job market, with nationwide restrictions forcing businesses to close and lay off workers en masse — putting as many as 1 in 4 Americans on unemployment benefits at the worst of the crisis.
Bankrate’s survey reflected the job market’s upheaval. Of the half of U.S. households who experienced an income disruption, more than 1 in 5 (or 21 percent) say their wallet took a hit because either they or someone in their household was laid off or furloughed, the most likely of the reasons for experiencing disruptions.
Other causes include having hours cut (19 percent), being unable to operate business as usual (16 percent) or taking a pay cut (10 percent). A marginal 5 percent preferred not to say whether their finances were negatively impacted, while 12 percent said the cause was something else.
Less than half (45 percent) of households report that they didn’t experience an income disruption because of the pandemic.
These findings compare with a similar iteration of Bankrate’s survey, which found in June that 49 percent of U.S. households had experienced an income disruption, with the most likely culprit being a layoff or furlough (20 percent) or a reduction in hours (19 percent).
Younger workers, minorities more likely to feel an income squeeze
The likelihood of experiencing an income disruption varied little among male and female respondents, regions and income groups, according to Bankrate’s poll, suggesting that the financial pain has been widespread. When it comes to age and race, however, that pain has been tougher on some.
About 58 percent of Hispanic and 55 percent of Black households report that their incomes took a hit, compared with 47 percent of white workers. Meanwhile, 63 percent of both Generation Z (those between the ages of 18-23) and millennial households (between the ages of 24-39) report that they were negatively impacted. That compares with just 37 percent of baby boomers, though more than half (54 percent) of Generation X (ages 40-55) households felt a squeeze.
