Pandemic Thins Out Savings Of Unemployed Americans

Oct 16, 2020
Originally published on October 16, 2020 1:59 pm
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When the coronavirus pandemic hit this spring, government relief payments provided a kind of life raft, keeping millions of people who had been thrown out of work afloat. New research shows just how successful that life raft was, and it also offers a warning - the life raft is losing air just as a fresh wave of infections is washing over the country. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: More than six months into the pandemic recession, Kate McAfee is still looking for work. She was laid off from her job as a chemist outside Cleveland back in April.

KATE MCAFEE: I'm still unemployed. I have now exhausted my 26 weeks of unemployment here in Ohio and now have moved on to the additional 13 weeks of extended benefits from the federal government.

HORSLEY: Millions of Americans are in a similar situation. The Denver coffee shop where Terrah Burton used to work tried to reopen during the summer. But with little traffic from vacant offices nearby, it quickly closed its doors again. Burton notes the sign says temporarily.

TERRAH BURTON: I hang on to that word, temporarily (laughter). That's been the hardest part. To see so much slipping through our fingers in this community is hard.

HORSLEY: Throughout the spring and early summer, Burton and her partner were OK financially, thanks in part to the extra $600 a week in jobless benefits that Congress OK'd back in March. Burton recalls her surprise when she got that first unemployment check. It was almost twice what she had been making at the coffee shop.

BURTON: We were able to put a little bit extra in savings and pay off a couple of low bills because, you know, our going out budget was zero, our going to the bar budget - zero.

HORSLEY: Researchers at the University of Chicago and the JPMorgan Chase Institute have been studying the finances of some 80,000 unemployed workers and found many managed to sock away some extra money between March and July. Their family savings roughly doubled during this period, while the government was spending freely to cushion the downturn. But the picture changed abruptly once the extra $600 a week ran out at the end of July. McAfee, the Cleveland chemist, saw her jobless benefits cut by more than half, putting a strain on her husband and their two kids.

MCAFEE: We're slowly eating away at our savings that we have from the good times of earlier this year, and it's getting challenging now.

HORSLEY: Fiona Greig of the JPMorgan Chase Institute says jobless families burned through about two-thirds of their new savings in August alone, leaving little financial cushion for the fall and winter, even as talks here in Washington over a new round of relief payments have stalled.

FIONA GREIG: The cushion has worn thin, and we haven't yet regained all the jobs that we lost. And so it really depends what happens in the job market. This is a critical time for jobless workers.

HORSLEY: Job growth has slowed in each of the last three months. And with layoffs continuing, almost 1.3 million people filed new claims for unemployment last week. Jobless workers are spending less now than they were early in the summer, and their spending is likely to fall further as their newfound savings are exhausted. Kelly Griffin, an IT worker in Massachusetts, saw her income drop by about two-thirds once the supplemental benefit ran out.

KELLY GRIFFIN: It was hard. You don't go out to eat. You don't spend things unnecessarily. And I kind of scrimped and saved and kind of started to panic. Like, am I ever going to get a job again?

HORSLEY: Back in Cleveland, McAfee knows that feeling. She's been trying to earn some extra money sewing face masks, but she'd much rather be back in a regular job.

MCAFEE: It is not a situation that I would wish on anybody, to constantly be stuck in this with no foreseeable end to it. Like, I don't know when I'm going to get a job again. Hopefully it will be soon, but until then, it's just constant stress for everybody.

HORSLEY: The Senate is expected to consider a stripped down relief package on Monday, but hopes for new federal help before the election are slim. Scott Horsley, NPR News, Washington.

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