By Matt Loeschman
Twitter: @MattLoeschman

Unemployment statistics in the wake of the global pandemic continue to skyrocket.

Thursday morning, the U.S. Labor Department reported roughly 36 million Americans have now filed for jobless aid in the two months since the coronavirus first forced millions of businesses to close their doors and shrink their workforces.

To that end, a new BankRate report indicates 30 percent of U.S. adults have seen their household income decrease as a direct result of the COVID-19 outbreak.

“The pandemic is deepening the financial hardship for millions of Americans,” Greg McBride of BankRate.com stated in the report. “Nearly one-third of households report lower income since the start of the pandemic, with half of those same households now having more debt and they are three times as likely to have seen their emergency savings also decline.”

Adding to the frustration, jobless workers in some states including Arizona are noting challenges in applying for or receiving benefits. These include freelance, gig and self-employed workers who became newly eligible for jobless aid this year. An additional 842,000 people applied for aid last week through a separate federal program set up for those self-employed and gig workers such as ride share drivers.

The federal government said the national unemployment rate jumped to 14.7 percent in April, the highest rate since the Great Depression in the 1930’s. Employers shed 20.5 million jobs, meaning a decade’s worth of job growth was wiped out in a single month.

Locally, Arizona’s unemployment rate jumped to 15 percent in April, higher than any point during the difficult 2008 recession. Some financial forecasters estimated the state’s true jobless rate pushing 20 percent. May numbers could peak near 30 percent, meaning about 1 million Arizonans out of work.

“It’s been rough,” said Lynn Smith of Glendale. “And the state is having trouble keeping up with all the unemployment claims, making it that much tougher.”

The BankRate study shows how COVID-19 has taken a huge toll on personal finances.

Among the key takeaways from the report:

• Nearly 1 in 5 (19 percent) people have less emergency savings now than before the pandemic.
• Approximately 16 percent have taken on more debt.
• Despite a economic expansion lasting more than 10 yards and record low unemployment prior to the crisis, an additional 24 percent had no emergency savings heading into the pandemic and have not made progress since.
• Of the 3 in 10 whose household incomes have decreased, 36 percent have dipped into emergency savings, more than three times as many as those whose income has increased or stayed the same (11 percent).
• Just 9 percent whose household income decreased have added to their emergency savings, while 26 percent have added to their debt. Only 8 percent of respondents have paid down existing debt during this tough time.

BankRate.com commissioned YouGov PLC to conduct the survey. The total sample size was 2,653 adults and the study took place April 29 to May 1.

Breaking down the numbers by age groups, the study showed millennials age 24-39 were more than twice as likely as those who are older (18 percent vs. 8 percent of those ages 40+) to report an income increase.

Therefore, 24 percent of millennials have more savings now versus 19 percent of Gen Xers age 40-55 and 14 percent of baby boomers age 56-74. Despite some positive income gains, less than half (48 percent) of households with increased income levels have added to their emergency savings. Twelve percent have less and 15 percent still have no savings at all.

Geographically, the pandemic has hit the Northeast the hardest, according to the report.

Approximately 36 percent of Northeasterners having watched their income decrease compared to 31 percent in the West, 29 percent in the Midwest and 28 percent in the South.

People in the Northeast are also more likely to have increased debt, the report states.

Not all the study results were negative.

A total of 58 percent of the nearly 2,700 adults who responded have not seen any change in their household income — 12 percent actually saw it increase. Those in more fortunate circumstances have 19 percemt more emergency savings, 12 percent have less personal debt and 22 percent had no debt before and no debt now.

Despite those positives, Mr. McBride said the coronavirus outbreak will lead to a long-lasting downturn for millions of Americans.

“The financial legacy of this pandemic will be elevated unemployment, reduced household incomes, more debt and even less savings,” Mr. McBride stated.

Matt Loeschman
Managing Editor | West Valley
@MattLoeschman

mloeschman@iniusa.org

Meet Matt

Matt Loeschman has had two separate stints at Independent Newsmedia. He began as a reporter covering Peoria and later Surprise from 2000-2009. In 2017, he returned to Arizona and INI as the news editor of the Daily News-Sun (now the Phoenix Independent). He previously covered the Arizona Rattlers of the Indoor Football League for more than a decade.

Community: During high school football season since 2017, he contributes live postgame radio reports to the AzPreps 365 Friday Night Football Wrapup Show. He supports organizations such as Phoenix Children’s, Boys and Girls Clubs of the Valley and the American Cancer Society.

Education: The University of Texas at Austin majoring in Journalism-News and Public Affairs. 

Random Fact: He can sing and he has been fortunate to meet many famous people during his journalism career including First Lady Hillary Clinton, King of Country Music George Strait and Oscar-winning actor Matthew McConaughey. Attended all 4 home games of the 2001 World Series.

Hobbies: Watching and playing a wide variety of sports, including golf, tennis, pickleball and softball. Playing PlayStation 5, working out, shopping and reading.