No one knows how the COVID-19 pandemic will end, but soon after the virus arrived in the US, it became clear that this was not just a once-in-a-lifetime public health crisis, but an economic one too. And for Americans already living with financial uncertainty, their challenges would get much worse. Months on, the pandemic has devastated people’s financial lives and left an indelible imprint on the US financial landscape: more than 50 million have now applied for unemployment benefits, tens of thousands of small businesses have closed permanently, and more recently, tens of millions have lost access to weekly $600 supplemental unemployment benefits.
At Commonwealth, we began tracking the virus’ impact on financial security early because we knew that households living on low to moderate incomes (LMI), and particularly Black, Latinx and women-led households, would be disproportionately impacted. To that end, we doubled down on our research efforts to understand the specific challenges faced by people living on LMI right now. We wanted to know: who are the people behind the macro-economic numbers and how have their financial lives changed in this time of extreme volatility? How do their stories contribute to the larger narrative about the economic impact of COVID-19?
Commonwealth’s Financial Resilience Project: COVID Stories, Rapid Insights closely tracks the financial lives of households living on LMI over the course of several months. This project follows households in near real-time to gain rapid insights on how people living on lower incomes are navigating the crisis.
Critical to gathering these insights is talking to households as they live through the ups and downs of the crisis. These discussions will allow us to identify what tools and strategies are supporting financial resilience now, what actions institutions can take to reinforce these, and what system designs will enable financial resilience in future economic crises.
The Study
Although volatility has always been part of the financial lives of households living on LMI, the current moment presents new challenges—it is more widespread with no known end date. As a result, households’ typical volatility management strategies may no longer work.
Starting in mid-June, we began regularly interviewing a broad array of 56 households from 24 states across the continental US. All live on LMI, with a median annual income of $50,500. We specifically chose a diverse sample so we can look through the lens of race, gender of respondent, traditional employment versus gig or contract work, and household composition (with and without children).
We speak with these households every other week to better understand how people are earning money, paying bills, using emergency savings, and managing debt. In particular, we want to examine the central role of savings—both what had been accumulated before the crisis as well as the opportunities to save during the crisis. By talking to them over the course of several months, we can listen and understand how people are managing both over time and week to week. This is particularly important given the fluid situation because families can experience significant change in short periods of time.
We are testing a new and innovative tech-enabled methodology for gathering and analyzing these interviews to enable us to capture and share insights from more people in near-real time.
Building Financial Resilience Through and Beyond COVID
Over the next few months, we will share how these households are surviving through the COVID economic crisis. Their stories will inform a series of briefs with actionable insights—we recently published the first of this series—published on a regular basis. This research, and the stories that inform them, serve to inspire novel and useful solutions that employers, financial institutions, community groups, fintechs, and the public sector can implement to support those most impacted by this crisis to build financial resilience now and beyond COVID.
Check out our Financial Resilience Project landing page to learn more. Sign up for our newsletter to get notified about these stories and insights, along with other Commonwealth research. Check out our Financial Resilience Project landing page to learn more.