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Financial Divide Widens During Pandemic

Financial Divide Widens During Pandemic

Last updated 12th Apr 2022

The Financial Health Network, the nation’s authority on financial health, today released new Financial Health Pulse survey data documenting the continued divide between financially vulnerable and financially healthy Americans. The survey, fielded January 11-18, found that 17.5 million people considered financially vulnerable experienced a decline in their financial situation since the pandemic began, with many concerned about their ability to afford basic necessities, including food, healthcare, and housing. This is the first set of survey data in partnership with the Citi Foundation, which is supporting the Financial Health Pulse for the next three years as part of its Action for Racial Equity commitment.

“The data is troubling, showing that millions of Americans are continuing to struggle financially with massive implications for their health and wellbeing,” said Jennifer Tescher, president and CEO of the Financial Health Network. “This current survey highlights the financial cliff facing at-risk households. Without additional stimulus and relief measures, inequality will only continue, especially for lower-income Americans and people of color.”

Half of those considered financially vulnerable have experienced a decline in their financial situation since the pandemic began, compared to just 19 per cent of those considered financially coping and six per cent considered financially healthy. Lower-income households have seen the most dramatic declines in their financial situation this last year with those making under $30,000 more than twice as likely to say their financial situation has worsened as households with incomes above $60,000. As the pandemic rages on, individuals are increasingly facing tradeoffs in order to afford basic needs like healthcare. One in ten Americans said someone in their household stopped taking a medication or took less than directed because they could not afford it, a near 40 per cent increase since September 2020. Additionally, 13 per cent reported someone in their household forewent necessary healthcare due to cost.

The pandemic continues to have disproportionate effects on Black and Latinx communities, with these respondents more likely to have significant concern around food security and housing. Nearly a quarter of Black (23 per cent) and 22 per cent of Latinx respondents reported worry that their food would run out, compared to only 12 per cent of White and 15 per cent of Asian American respondents. Black and Latinx respondents were more likely to have visited a food bank than their White and Asian American peers. Fear of eviction in the next three months is also more common among Black (16 per cent) and Latinx (12 per cent) respondents than White (six per cent) and Asian American (eight per cent) respondents.

“The devastating economic consequences of the COVID-19 pandemic have brought to the forefront the fact that many Americans are struggling financially, especially people and communities of color,” said Brandee McHale, head of Citi Community Investing and Development and president of the Citi Foundation. “As recovery efforts continue to take shape, providing reliable, timely and actionable data to inform solutions is imperative. That’s why the Citi Foundation has committed to supporting the Financial Health Pulse over the next three years as part of our work to advance racial equity and help close the racial wealth gap.”

Further survey findings underscore significant financial struggles in households where someone lost a job during the pandemic, with 45 per cent reporting a worse financial situation than a year ago (compared to only 14 per cent of people who did not lose jobs). Among those who reported a job loss, respondents listed several coping strategies, including spending down savings, carrying a balance on their credit cards, and borrowing money.

  • 59 per cent reported spending down their savings to make ends meet (compared with 23 per cent of people who did not lose their jobs).
  • 55 per cent reported carrying a balance on their credit cards (compared with 33 per cent of people who did not lose their jobs).
  • 29 per cent borrowed money from friends and family (compared with 10 per cent of people who did not lose their jobs). 

This data signals that further relief efforts and policies are necessary to lift all populations equally. Ample opportunities remain for policymakers, employers and businesses to create solutions that can improve financial health, especially for those struggling the most.

Jennifer Tescher
Jennifer Tescher

2021 is the fourth year that the Financial Health Network has measured the financial health of people living in the U.S., with the annual Trends Reports showing overall financial health as an economic indicator that tells a more nuanced story compared to other aggregate economic indicators such as market and unemployment numbers. Pulse data utilizes the FinHealth Score® measurement framework. The annual Trends Report is scheduled for fall 2021, with other findings pulling from regular, rigorous, and disaggregated data that shed light on the current state of people’s financial lives scheduled to be released in 2021. Partners interested in working with our team around research opportunities can find more information here.

For additional findings or more information regarding the Financial Health Pulse, please visit finhealthnetwork.org/pulse.

Staff Writer

Staff Writer