The Economic Toll of COVID-19 on SaverLife Members
The Beginning: Panic
The early days of the pandemic created a state of panic and confusion for SaverLife members. Shelter-in-place rules, which impacted a quarter of Americans, were implemented swiftly and brought devastating consequences. These guidelines caused a significant change in consumer spending as people stocked up on food and decreased spending elsewhere.
What’s buried in the data about increased grocery spending is how much more families who receive SNAP benefits spent on groceries. The assistance, which is intended to subsidize a family’s spending on food, was not raised in response to increased food spending and rising food costs with shelter-in-place restrictions and the loss of school-provided meals, leaving thousands of members in the lurch.
The federal government's third COVID-19 response package, the CARES Act, was quickly implemented to provide immediate relief through stimulus payments and heightened unemployment insurance, but didn’t help to ease the panic for all members. While stimulus payments and increased unemployment benefits provided immediate relief, confusing eligibility requirements led many members to think they didn’t qualify. This was made worse by the fact that some members had to take action on the IRS website to receive their payment.
However, if there was ever a “good” time for economic chaos, March or April would be that time, as many low-income families received tax refunds and Earned Income Tax Credits just before COVID-19 arrived. In a normal year, these often-sizeable windfalls are when people catch up on utility bills, pay down debt, and bolster savings. In the short term, this meant that many members were able to save stimulus payments in anticipation of future financial obligations.
Middle: Relaxing of Shelter-in-Place and Optimism for Summer
By Memorial Day, many states relaxed shelter-in-place restrictions, giving members hope for a return to normalcy and leading to increased spending on restaurants and transportation.
When surveyed in late June, members expressed hope for the fall—they told us they expected to be more “financially satisfied” by Labor Day.
While optimism is a powerful coping mechanism, the real picture was more bleak: Unemployment remained high for SaverLife members, and underemployment, a statistic that rarely gets adequate attention, remained prevalent. Fifty-four percent of members were still saving money (a remarkable feat), but more and more people were taking money out of savings, and in increasing amounts.
Middle… again: Confusion and Increasing Concern
Hope and optimism were quickly quelled by a resurgence of the virus, causing many states to once again close businesses. By the end of July, the supplemental unemployment insurance that was keeping many families afloat ended. While much was made in the media about people “making more money on unemployment”, we found that largely untrue for members, and a difficult message to swallow when many families were struggling to make ends meet.
While SaverLife members had a cushion to weather a sudden decrease in income, many were facing a financial cliff.
And this is especially true of the new reality parents—including the 84% of SaverLife With many education systems forced to open virtually due to continued outbreaks of the virus, parents had to scramble to balance work and the loss of the childcare and food that the school system provided.
For members, virtual learning means more expenses and for many, less income. For many members, working at home is not an option. The expectation that parents will also oversee their children's remote education means they may not be able to continue working at pre-pandemic levels. More and more families are suffering the loss of unemployment benefits while figuring out how to create their own safety nets.
Conclusion
It seems remarkable that March—the start of shelter-in-place and the economic fallout from COVID-19—was just six months ago. As a nation, these past six months have been unprecedentedly difficult, and these difficulties have been more pronounced for SaverLife members—families living closer to the poverty line, relying on the social safety net, and now, often unsure of what tomorrow brings and how they will feed their families.
We continue to be blown away by the resiliency of our members. They prepared as best they could for prolonged economic turmoil, but there is only so much they can do alone. The uncertainty about economic recovery, high unemployment rates, and remote schooling add additional pressure to peoples' finances.
We urge policymakers, philanthropy, business leaders, nonprofits and our communities to come together to truly understand the ongoing economic fallout from this pandemic and the need for a cohesive and urgent response. This is not a passing problem for our members. The thin safety net they had in early 2020 has been completely eradicated by the pandemic, and the impacts will be long lasting. One thing we are certain of is that our mission to create prosperity for working families through meaningful and systemic change has never been more important.
Thank you to MetLife Foundation for their support of this research.
