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In April of 2020, just one month after the novel coronavirus was declared a global pandemic, the unemployment rate in the United States hit a record high of 14.7 percent. Amidst high unemployment, younger generations appear to be impacted more broadly when it comes to income loss.
Now, as people attempt to recover from these financial blows, we look at who was most impacted and how they're moving forward.
When unemployment hit record highs, Gen Z and millennials were most likely to lose income
According to our study on how Americans are dealing with COVID-19-related income loss, most people were hit back in March as the pandemic began to spread across the nation. Just after that first major drop in income and employment, an April 2020 study of financial priorities during COVD-19 found that Generation Z (aged 23 and younger) had been most broadly affected, with 61% reporting a coronavirus-related loss in income.
Millennials (aged 24-39) are a close runner-up, with 57% of them saying they'd lost income because of the pandemic. After that, there's a notable drop in numbers. Less than 50% of Generation X (aged 40-55), 40% of baby boomers (aged 56-74) and 24% of the silent generation (aged 75 and above) reported income loss.
However, that doesn't necessarily mean that younger generations are the most gravely impacted. The same study found that it was millennials and Generation X who were the most worried about money, followed by baby boomers.
Gen Z and the silent generation were the least worried. Only half of Gen Z respondents said they felt somewhat or very worried about money, compared to 65% of Gen X. Part of this is likely due to the fact that much of Gen Z has yet to become financially independent of their parents or take on significant debt, whereas millennials and Gen Xers are more likely to have mortgages and children to worry about.
Low-income people most likely to suffer biggest income blows
The question of who saw the biggest drop in their paycheck -- and who was most likely to lose their entire paycheck -- has more to do with income level than generation. There is some correlation between the two factors, though.
Workers who earn less than $15,000 per year, and workers earning between $8 and $15 per hour, were the most likely to lose all of their income due to COVID-19. Roughly one-third of hourly workers making $15 per hour or less reported losing all of their income, as compared to just 11% of workers making $41 to $45 per hour.
Overall, though, the numbers are still staggering. More than 1 in 4 Americans who reported income loss experienced losing all of their income during the pandemic.
How Americans have dealt with income loss
In the midst of such widespread unemployment and income loss, Americans are turning to a long list of potential solutions to fix their finances.
So far, the majority of Americans are cutting costs. Nearly two out of three of Americans have cut back on expenses due to income loss. The good news is that 20% were able to draw on a savings account to cover income loss. However, that means most people weren't able to rely on an emergency fund of some sort.
Luckily, plenty of those surveyed said they are considering solutions that don't involve debt. Over half report that it's likely they'll get a side job, and 42% say they'll likely file for unemployment. Nearly one-third of Americans say they'll probably solve their financial woes by borrowing money from family and friends, seeking bill-pay relief, or withdrawing money from a non-retirement account.
Unfortunately, a significant portion of Americans had to take on additional debt, with just over a quarter reporting that they'd taken out loans during the pandemic. Going forward, about 1 in 5 said they'll likely take out a personal loan in the next few months, and another 1 in 5 said they'll likely take out some other type of loan. Roughly 1 in 7 said they'd be likely to take out a loan against a home.
This could devastate consumers, who already held record levels of debt before the pandemic. A 2019 generational credit card study done by The Ascent, however, showed that millennials have significantly less credit card debt -- one of the most costly forms of debt -- than older generations. If Gen Z follows suit, this could mean that younger Americans might actually fare better in this pandemic, financially speaking, despite being more likely to lose income.
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