Millions of Americans have seen an income loss hit during the coronavirus pandemic. These are the ways they’re dealing with it.
The financial impact of the COVID-19 pandemic has been unprecedented, and since the outbreak began, millions of Americans have lost their jobs and struggled immensely as a result. So what are Americans doing to deal with income loss? The Ascent surveyed roughly 2,000 people in early June to find out, and here's what they learned.
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Income Loss Has Been Substantial
Some people who have lost income in the wake of COVID-19 took a minor hit to their paychecks, but for others, that loss has been significant. Specifically:
- 1% of Americans have lost between 25% and 49% of their income
- 2% have lost between 50% and 74% of their income
- 6% have lost between 75% and 99% of their income
- 7% have lost 100% of their income
Unfortunately, salaried workers earning less than $15,000 a year were the most likely to have lost 100% of their income. The same holds true for hourly workers earning $8 to $15 an hour.
Coping With Income Loss
Jobless folks are taking different steps to compensate for lost income. A good 64.9% have cut back on expenses, while 20.6% have asked for bill-pay relief.
Meanwhile, 24.7% of those who have suffered income loss have gotten a side job to make up for it. Though finding work is difficult in today's economy, there's relatively high demand in the grocery and food delivery arenas.
Savings have also helped Americans get through the COVID-19 crisis, with 19.9% of those struggling with income loss taking a withdrawal from a savings account to tide themselves over. Retirement plans have also been an income source to tap, with 14.4% of wage-loss sufferers going that route. Normally, early retirement plan withdrawals are subject to costly penalties, but thanks to the CARES Act, which was passed earlier this year, those penalties are waived for those who were financially impacted by the pandemic.
Borrowing Money To Stay Afloat
Not everyone has had savings to tap in the course of the pandemic, and so some Americans who have lost income have reverted to borrowing money. A good 46% have taken out a personal loan, while 33.2% have borrowed from a 401(k). And 12.2% have borrowed against their home equity.
Some of those loans have been substantial. For 15.6% of those who borrowed, their loans totaled between $10,000 and $14,999. And 8.6% of loan-takers had to borrow $20,000 or more.
Where Do Americans With Income Loss Go From Here?
Surprisingly, only 47.5% of those surveyed by the Ascent had filed for unemployment. Those who have lost income should consider filing a claim for weekly benefits if their situations don't improve. One misconception about unemployment is that workers need to be completely jobless to qualify, but that's not true. In some cases, a drop in income is enough to be eligible for benefits.
Additionally, those who are grappling with income loss should continue to seek bill-pay relief, whether by deferring rent payments, putting their mortgages into forbearance, or asking loan servicers for leeway. Unfortunately, the COVID-19 pandemic may be with us for a while, so it pays for those who have lost income to get all the help they can.