Poor Americans hit hardest by job losses amid lockdowns

Households entered the coronavirus shutdown in precarious economic positions that have only worsened as workers are furloughed by the millions, and the challenges are especially acute for the poorest Americans, according to a new Federal Reserve survey released Thursday.

Many Americans came into the ongoing nationwide lockdown with limited savings, despite gains made over the course of a record-long economic expansion. At the end of 2019, 3 in 10 adults said they could not cover three months’ worth of expenses with savings or borrowing in the case of a job loss, “indicating that they were not prepared for the current financial challenges,” the Fed report said.

One in five people who were working in February reported that they lost a job or were furloughed in March or the beginning of April, the data showed, and that pain was highly concentrated among low earners. Fully 39% of former workers living in a household earning $40,000 or less lost work, compared to 13% in those making more than $100,000, a Fed official said.

The U.S. economy began slowing in March as state and local governments instituted stay-at-home orders to tame the coronavirus’s rapid spread. That has likely caused the steepest growth decline in the U.S.’ postwar history. Consumer spending has plummeted as stores and restaurants closed, and mass layoffs have become a feature of everyday life. Nearly 3 million people filed for unemployment benefits last week, pushing the twomonth tally over 36 million.

Lawmakers have responded with $2 trillion in relief spending, expanding unemployment insurance and forgivable loans to small business. But most families would not have gotten relief checks by the time the Fed survey was fielded in early April. Policymakers and economic experts increasingly worry that it will prove insufficient to stem the damage as the timeline for reopening and the path back for consumer spending remain uncertain.

The Fed’s report included both a large annual survey fielded in October 2019 and a roughly 1,000-person supplement conducted April 3-6, and it showed just how intense — and disparate — the economic fallout has been.

While about 53% of those with jobs worked from home at the end of March, that was a highly educated group. More than 60% of workers with at least a bachelor’s degree worked completely from home, versus 20% of those with a high school degree or less.

Among those who had lost hours or jobs amid the pandemic, 48% were “finding it difficult to get by” or “just getting by,” according to the survey. Just 64% of those who had taken an employment hit believed that they would be able to pay their bills in April, compared to 85% of those without a work disruption.

Those challenges came as a large swath of Americans took pay cuts. About 23% of all adults, and 70% of those who had lost their jobs or had their hours reduced, said their income was lower in March than in February.