Pandemic Paves Longer Road to Recovery for Lower Earners

Findings from the Capital One Insights Center suggest that recovery has been especially difficult for lower earning individuals


Capital One recently launched the Capital One Insights Center, and its first release, Capital One Marketplace Index: The Road to Recovery. Since spring 2020, the Capital One Insights Center has conducted studies every four to eight weeks with a nationally representative group of U.S. respondents (based on income level, race, gender and geographic region), covering a range of topics from job loss, to how they used government stimulus, to their outlook on economic recovery. The study release divides respondents into three income groups to better understand the impacts: low-income earners making less than $25,000 in household income annually; low-to-high middle income earners (hereinafter referred to as “middle-income earners”); and high-income earners making $100,000 or more. The analysis also includes a selection of data points related to race and gender. To account for potential correlation between demographics and income, those data points all focus on consumers with household income less than $50,000. This story in particular reflects the hardship that low-earners faced during the COVID-19 pandemic.

More than a year and a half since the onset of the COVID-19 pandemic, the financial and unemployment hardships brought on during this unprecedented time still weigh heavily on many Americans. 

Findings from Capital One’s Marketplace Index: The Road to Recovery, the first study released from the recently launched Capital One Insights Center, show that lower earners (those earning less than $25,000) are experiencing a heightened level of financial distress. As of August 2021, lower earners felt less secure in their jobs (55%) than they did early in the pandemic (61%). 

Unemployment Hardship Hits Low-Income Earners Harder

At peak unemployment during the COVID-19 pandemic, 14 million Americans had lost their jobs since March 2020—the highest unemployment rate in the U.S. since the Great Depression.

According to data from the Capital One Insights Center, 32 percent of lower earners reported that their family incomes had disappeared or decreased in April 2020. 

As of August 2021, nearly one quarter of lower earners were still actively looking for work in — the highest share among all income groups. Only one percent of those individuals reported that they were not looking for work because they were covered by unemployment assistance and four percent of those people were not looking for jobs due to health concerns. 

Those dramatic losses reached slightly deeper into the Hispanic/Latinx population, whose overrepresentation in jobs shuttered by the pandemic, like retail and restaurants, put them at higher risk for job and income loss. 

Early in the pandemic, among Hispanic/Latinx Americans earning less than $50,000, 26 percent said they had lost all or “a lot” of their family incomes. 

For white Americans, 23 percent reported that same lost income, as did 14 percent of Black Americans. 

By August 2021, reported income losses began to teeter out for Hispanic/Latinx (21%) and white Americans (17%), while income losses for Black Americans ticked up (19%). 

Additionally, nearly half of lower-earning women were working fewer hours or had stopped working entirely.

Overall, 40 percent of lower earners in dual-earning households reported that one earner had lost a job—nearly three times the rate of higher earners (those earning more than $100,000). 

According to Alejandra Montoyo-Boyer, Director of Policy at Prosperity Now, creating a workforce that better supports individuals from all backgrounds begins by building a more effective workforce infrastructure and inclusive ecosystem.

“We need to make sure that we’re not leaving out people who lost their jobs during the pandemic and now need to find new avenues” Montoyo-Boyer says. “That includes ensuring that current workers have improved pathways to careers by being properly equipped with resources to access retraining and upskilling and to learn about what types of different jobs are out there."

Underemployment Persists

Underemployment—working less than preferred or for less money than before the pandemic—was also widespread and significantly worse among lower income earners than higher earners. Additionally, four out of 10 lower-earning individuals reported being underemployed at some point during the pandemic. They were also largely pessimistic about the return of jobs as 46 percent thought it would be more than three months until they were fully employed. 

The Federal Reserve’s 2021 annual survey found that at the onset of the pandemic in April 2020, 86 percent of laid off workers expected to return to their jobs. But as of late 2020, fewer than 25 percent had done so and 40 percent no longer expected to return. Half of those workers were not working anywhere else either. 

Government Aid Helped, But Financial Woes Continue 

The ongoing strain of job uncertainty, unemployment and diminishing outlooks left many lower earners feeling less confident about their financial well-being—and for lower earners, that confidence had not yet fully returned as of August 2021. 

Data from the Capital One Insights Center shows that 44 percent of lower earners are not confident in their current financial health. More than one quarter of lower earners don’t see their financial health improving in the next six months either. 

In fact, lower earners were the only income group to not see any improvement in their sense of financial health. For comparison, as of August 2021, only five percent of higher earners did not feel financially healthy. 

This was especially true for lower-earning women, who were more likely than men to report feeling financially unhealthy in August 2021 than in the early months of the pandemic. 

Among women earning $50,000 or less, 39 percent reported feeling financially unhealthy—up from 31 percent in April 2020.

On the other hand, men in the same income bracket trended in a positive direction, as male respondents were less likely to feel financially unhealthy in August 2021 (29%) than they were in April 2020 (42%). 

One source of strain is the worry of looming bills. Among lower earners, 47 percent have been worried since the onset of the pandemic about not being able to pay their bills. Roughly the same percentage of those individuals still report that same sentiment as of August 2021—which is double the amount of higher earners.

Many lower income earners were depleting their savings to stay afloat. As of August 2021, four in 10 of lower earners reported that they have “much less” or “somewhat less” savings now than before the pandemic. In contrast, 90 percent of higher earners said they had more or the same amount in savings as they did prior to the pandemic.

Additionally, lower earners were approximately four times less likely than higher earners to have enough savings to last a month if they ran into financial difficulties and only 57 percent of lower earners had a financial cushion for emergencies.

Among lower earners receiving support in June 2021, 91 percent received stimulus payments, 24 percent received forbearance and 10 percent received unemployment insurance. Despite that pandemic-specific help, 68 percent of lower earners still relied on government safety nets to make ends meet, including sharp increases in food stamps, Medicaid and affordable housing. 

Fortunately, stimulus money and expanded unemployment were a lifeline for many. Lower earners widely used stimulus checks to cover their bills (58%), boost savings (43%) or pay down debt (28%). For unemployment payments, seven in 10 used their checks to pay bills, while 24 percent put it into savings and 29 percent paid down debt. 

Capital One’s Commitment to Supporting Low-income Individuals

At the onset of the COVID-19 pandemic, Capital One announced a $50 million commitment of new and existing funds to support nonprofit partners who serve local communities. As part of that initiative, we expanded, accelerated and repurposed relief grants to local partners who focused on food and hunger aid, assistance to small business owners and support for low-income individuals. 

During fall 2020, we launched the Capital One Impact Initiative, a $200 million, multi-year commitment to close gaps in equity and opportunity by focusing on key areas such as racial equity, small business support, workforce development and financial well-being. 

The launch of the Capital One Insights Center marks the next step in the Capital One Impact Initiative. Those efforts build upon our core mission to change banking for good. The Insights Center is purposeful in its research and represents a transformation in delivering innovative insights to help advance equity and inclusion. As a nascent platform for data and dialogue, the Center strives to help changemakers create an inclusive society where everyone has the opportunity to thrive and prosper.


Read the Capital One Insight Center’s inaugural whitepaper: Capital One Marketplace Index: The Road to Recovery.

CLAIM: The Capital One Marketplace Index: Road to Recovery is one of the longest running surveys on the social and economic effects of COVID-19 by a private enterprise to date (beginning April 2020 to present; running continuously every six weeks).

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