By Jonnelle Marte and Howard Schneider
(Reuters) -The coronavirus pandemic had a more devastating impact on Americans with lower levels of education and those least equipped financially to handle such a blow, according to a report released on Monday by the Federal Reserve.
The financial chasm between adults with a bachelor’s degree and those with less than a high school degree widened during the pandemic, which caused job losses that disproportionately affected low-wage workers, according to the U.S. central bank’s annual Survey of Household Economics and Decisionmaking.
“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,” Fed Board Governor Michelle Bowman said in a statement.
Some 89% of adults with at least a bachelor’s degree said they were doing at least “okay” financially, compared to 45% of those with less than a high school degree, according to the survey, which was conducted in November 2020. That gap increased to 44 percentage points in 2020 from 34 percentage points in 2019.
The divide also played out along racial lines, although to a lesser extent. Less than two-thirds of Black and Hispanic adults said they were doing at least “okay” financially in 2020, compared with 80% of white adults and 84% of Asian adults. The gap between white adults and Black and Hispanic adults has grown by 4 percentage points since 2017.
The overall share of adults who said they were worse off financially when compared to a year earlier rose to nearly 25% at the end of 2020. That was up from 14% in 2019 and the highest level since the question was added to the survey in 2014.
But despite that increase, most Americans believed they were still at least doing “okay” financially. Some 75% of adults said they were living comfortably or doing “okay” financially in November, a share that fluctuated throughout the year but ended at the same level as in 2019.
Americans’ financial pain was eased but not erased by federal aid distributed during the crisis, including direct cash payments and enhanced unemployment benefits offered through the $2.3 trillion CARES Act relief package passed in March 2020.
While the financial well-being of households improved last summer after some of the support was issued, some measures had worsened again by November.
For example, 64% of households said they could cover a hypothetical $400 emergency expense using cash, savings or a credit card that they could pay off in full in November. That was a drop from July, when about 70% said they could afford such an expense, but was in line with pre-pandemic trends.
That decline is consistent with the trend in which families have spent down the additional savings accumulated from relief programs, the Fed said in the report. The study did not capture the effects of additional government assistance after the survey was conducted, including up to $2,000 in direct payments issued to most households and the extension of pandemic unemployment benefits.
The survey also found that some parents became unable to work during the pandemic because of disruptions to child care and in-person schooling. Some 9% of parents said they were not working and 13% were working less because of such disruptions as of November. That amounted to a decline of roughly 2 percentage points in the share of adults who were working overall.