America’s poor are reaching deep to make ends meet. A new survey from the Pew Research Center finds that 44% of lower-income people say they have dipped into their retirement or other savings since the start of the coronavirus crisis, while only 16% of upper-income people say they have done so.
Overall, a third of Americans say they have turned to savings or retirement accounts to pay the bills since the pandemic broke out in February.
Pew researcher Rakesh Kochhar sees a clear connection between the drawdowns and the higher rates of unemployment and lost wages for Americans who were low-income to begin with.
Just as with so many other aspects of this crisis, the disparity found in Pew’s survey, which polled 13,200 US adults over two weeks in August, falls in large part along racial lines.
The cruel irony, of course, is that the groups most likely to dip into savings to stay afloat are less likely to have savings or retirements to draw from. In an earlier Pew study from April, 53% of white adults said they had rainy day funds, while less than a third of Hispanic, Black, and low-income adults said the same.
Meanwhile, the new Pew survey indicates that half of all US adults who lost a job in the coronavirus crisis continue to be unemployed.
As the pandemic drags on, it’s possible those who have run down their savings will not recover as quickly, because it’s not just income but also the accumulation (or destruction) of wealth that determines financial insecurity.
In looking at net worth—where savings are reflected—the gap between America’s white households and Black and Hispanic households widened during the Great Recession. “[W]e’re seeing something similar where those who are lower income and lower wealth to begin with, they fall further down,” Kochhar says.