COVID-19's Impact on U.S. Employment, Savings & Spending (2021)
As the COVID-19 pandemic reaches a full year of changes brought to the U.S. and the world, Joy Wallet surveyed nearly 400 adults, 18 to 65, about the effects of the pandemic on their employment and finances.
- More than 1 in 5 Americans are currently unemployed.
- Almost 65% of people have had to dip into their emergency fund or savings during the pandemic.
- Nearly 50% of people have spent less during the pandemic.
- 25% of consumers don't know their spending habits.
- 63% of Americans have found ways to save money over the last year.
- Over 50% of people have not been able to invest their money into the stock market.
Below are the results from the survey we conducted on the impact COVID had on employment, starting with the distribution of respondents.
Distribution of survey respondents
Questions we asked:
1) Are you still employed or did you lose your job during the pandemic?
In the first few months of the pandemic, 22.2 million jobs were lost when the country went into lockdown to curb the spread of the COVID-19 virus, according to the U.S. Department of Labor. By August, only 42% of those jobs were recovered.
As we approach a full year since those initial lockdowns took place, the U.S. unemployment rate is around 3.5%, after a steady decrease from the 14.7% high reached in April 2020. Still, 19.2% of those have been jobless for 27 weeks or more, again as reported by the Labor Department.
Joy Wallet’s survey showed higher numbers than the national unemployment rate, however. More than 21% of respondents are unemployed. Only 5% of those affected by the pandemic were able to find new jobs.
Even before the pandemic began, living paycheck to paycheck was a reality in America. In a 2019 survey conducted by Bankrate, 3 in 10 working Americans had a side hustle to bring in extra income to help cover the cost of living expenses.
2) Have you dipped into your savings or emergency fund during the pandemic
Savings accounts are one of the first steps in reaching financial freedom, with financial experts recommending having an emergency fund with 3 to 6 months of your financial income set aside to help prevent dipping into other savings vehicles during the time of an economic crisis in your household.
Yet prior to the pandemic, the Federal Reserve Board found that 12% of Americans couldn’t handle a $400 emergency and another 27% would have to borrow or sell something to cover it.
Of those surveyed in Joy Wallet’s review, more than 64% had to dip into their savings in order to get by during the pandemic. Each time they dipped into their savings, they were taking funds from their goals, whether those are retirement-driven, or for big-ticket expenses such as getting married, buying a home, or putting a child through college.
3) Did you spend more or less money during the pandemic than normal?
One benefit of the pandemic is the closure of entertainment facilities, gyms, restaurants, and other facilities coupled with a reduction in travel due to health concerns and state and international border restrictions and quarantines has been a reduction in overall spending. Of the nearly 50% of respondents who spent less during the pandemic, the majority of those felt it was due to less ways to spend their money during the pandemic.
Still, nearly a quarter of those surveyed found themselves spending more during the pandemic. The U.S. Census Bureau found Americans spent $211.5 billion on e-commerce during the second quarter of 2020 – a 31.8% increase over the first quarter. Amazon reported $96 billion in earnings alone in the third quarter of 2020, a 37% revenue increase.
Perhaps surprising is the 25% of respondents unaware of their spending habits at all. Having a budget and being aware of incoming and outgoing finances is key to achieving financial independence.
4) Have you been able to save money during the pandemic?
Savings is an important tool in reaching financial goals and independence. Other savings vehicles outside of an emergency fund include traditional and high-yield savings accounts, money market accounts, and certificates of deposit (CDs), as well as retirement funds such as IRAs and 401(k)s. Over 62% of respondents in our survey have found ways to save money in 2020.
The Bureau of Economic Analysis also found a high U.S. personal savings rate in 2020. Personal savings reached a record high of 32.2% in April but began declining after lockdown restrictions were lifted. By December, personal savings rates were at 13.7%
5) Have you been investing during the pandemic (in stocks, real estate, mutual funds or other vehicles)?
Also valuable to reaching retirement goals faster is investing. The pandemic caused an initial stock market crash in March 2020, with the Dow Jones Industrial Average dropping 6,400 points in a 4-day period alone. By September, however, the Dow closed in on its February 2020 high, bouncing back from the initial downturn.
While the wild ride may have left investors nervous, the split between Joy Wallet participants showed nearly half were still investing in the stock market, mutual funds, real estate and other vehicles at the start of 2021. A wise move as investing is deemed a long-term growth plan.
6) Do you feel the pandemic has permanently altered your financial habits?
Although the pandemic is far from over, over 25% of respondents in our survey feel it has permanently changed their financial habits. It may take a pandemic to force people to reevaluate their finances, and that seems to be the case for a minority of those questioned. Growing an emergency fund, saving more and spending less are not only meant for a pandemic but a good rule of thumb for anyone who wants to take control of their personal finances.
We conducted this survey with representative targeting across all age and gender groups in the United States. The survey started on Feb 9, 2021 and ended on Feb 16, 2021, garnering participation from 395 respondents.