Find the latest episode of "The Uncertain Hour" here. Listen
COVID-19

Many lack a financial backstop amid pandemic

Kimberly Adams May 5, 2020
Heard on:
HTML EMBED:
COPY
People pass by the stock exchange in New York. Marketplace-Edison poll data shows that many Americans can't handle an unexpected $250 expense. Spencer Platt/Getty Images
COVID-19

Many lack a financial backstop amid pandemic

Kimberly Adams May 5, 2020
Heard on:
People pass by the stock exchange in New York. Marketplace-Edison poll data shows that many Americans can't handle an unexpected $250 expense. Spencer Platt/Getty Images
HTML EMBED:
COPY

One piece of data that jumps out in the latest Marketplace-Edison Research Poll is a measure of just how precarious many people’s finances are.

We asked people how difficult it would be for them to pay an unexpected expense of $1,000. Almost 60% of those polled said they would have a hard time swinging it.

But this time we added another part to the question: what about an unexpected expense of $250? More than 40% said they would struggle to manage that.

One person who responded to our survey was 66-year-old Thomas Benton in St. Louis. He’s a district manager for a fast-food restaurant, and in the midst of the pandemic his hours went from about 50 a week to 30.

“My financial outlook now is very bleak,” Benton said. He definitely couldn’t pay an unexpected expense of $1,000, and probably not $250 either, he said.

“I couldn’t even get $300 this morning. It’s kinda rough,” Benton said. 

He needed that $300 for rent this month. Normally, he might call friends and family to help in an emergency, but they’re in the same boat.

Sarah Sattelmeyer, project director at Pew Charitable Trusts, said even in normal times, many people would struggle to absorb a big, unexpected expense.

“More families are out of work, or living paycheck to paycheck, or are doing work and child care,” she said. “Even small, unexpected expenses can really throw a wrench in families’ balance sheets.”

For a lot of people, COVID-19 is the unexpected expense, with sudden job losses highlighting just how unstable financial stability can be.

“Not only do they not have savings, but they don’t even have income,” said Lissa Johnson, associate director of the Center for Social Development at Washington University. “They don’t have the income even to replenish any savings that they did have.”

In our poll, certain demographic groups seem much more cushioned against this economic shock than others. Twenty-seven percent of white respondents said an unexpected $250 expense would be difficult to cover, compared to 50% of Hispanics and 59% of African Americans, like Thomas Benton.

“Now, I got to use when I get paid next week — I got to get caught up, but this week, it’s kind of hectic,” Benton said.

It’s the kind of situation that creates economic anxiety at any time, and even more during a pandemic.

COVID-19 Economy FAQs

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

Read More

Collapse

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.