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A spending boom, but for whom? Lower-income Americans feel left behind

A spending boom, but for whom? Lower-income Americans feel left behind


A spending boom, but for whom? Lower-income Americans feel left behind

Chelsea Catlin is late paying her rent again this month. She is two months behind and hoped her tax refund would help, but it hasn’t arrived, even though she filed her return in early April. Although she found a job in March after a long spell of  unemployment, she worries about how she’ll make ends meet. She struggles even as others begin to rebuild their lives on the back of an economy rebounding from the coronavirus pandemic.Catlin, who works for a background screening  company, has nothing left in her savings after being jobless for six months.Two AmericasThis series examines the widening economic inequalities across the U.S. caused by the pandemic.She makes $15 an hour, $1 less than what she earned before the pandemic. She’s looking for a second job as a receptionist, hostess or cashier to keep a roof over her head and pay her medical bills.Permanent jobs rise: Employers sweeten pay, benefits for gig workers amid labor shortagesChelsea Catlin, 29, of Nashville, Tenn., says she’s looking for a second job.Chelsea CatlinCatlin has lupus, a chronic autoimmune disorder that can cause pain and inflammation in any part of the body. Both of her hips were replaced after the steroids she took broke down her bones. “I can’t afford to have just one job,” says Catlin, 29, who lives in Nashville, Tennessee.“As much as I’d like to see the world go back to how it was pre-pandemic, I don’t think it’s going to,” she says. “If it does, it’s going to take years and years of work to get back to where we were.”The coronavirus pandemic has exacerbated economic inequality in the USA and amplified wealth disparities for lower-income Americans when it comes to saving and retirement planning, according to a survey from money manager TIAA. Though Americans have an appetite to do more,  those with lower incomes are the least likely to participate in a spending boom once the pandemic is over, the survey found. Women of color bear the brunt of COVID job lossesCOVID job losses have hit women of color the hardest. But USA Today’s Charisse Jones says there’s hope of recovery.USA TODAYMore than half of U.S. adults say their household finances changed significantly because of the pandemic, according to TIAA. Nearly one-third (29%) say they are worse off financially. As restrictions lift, Americans overwhelmingly want to make up for “lost time,” but those who have suffered financially since last year are more likely to say they have “no idea” how they will pay for their plans, the data shows. “People want to see their family and friends. They will start traveling more and eating out, but costs are going up,” says Shelly-Ann Eweka, director of financial planning strategy at TIAA. “Now there’s a whole set of people on lower incomes who don’t know how they’re going to resume their lives.”Hiring picked up steam in May as employers added 559,000 jobs. The unemployment rate fell sharply from 6.1% to 5.8%, the Labor Department said Friday.The USA has recovered 14.7 million, or 65%, of the 22.4 million jobs lost last spring, leaving the nation 7.6 million jobs below its pre-pandemic level.The Black unemployment rate fell in May but was the highest among racial groups at 9.1%.Another issue Americans face is the expiration of federal rent moratoriums and student loan relief this summer, along with an extra boost to unemployment that some states have ended. “That relief wasn’t relieving them of their debt or liabilities of payment, it just delayed it,” Eweka says. “If they were fortunate to have employment but took a financial hit, they still have to worry about how to get by.”Nearly 40% of households making less than $50,000 a year say they are worse off financially because of the pandemic, compared with 15% of households making more than $100,000 a year. New weekly unemployment claims, a proxy for layoffs, are an indicator of the health of a state’s economy.JL Gutierrez/Getty ImagesAsked how they plan to spend the coronavirus aid checks the government sent to most Americans, more than one-half of adults who are worse off financially since the pandemic say they would use the money to cover daily expenses, such as buying groceries or paying bills.More than one-third say they would invest their stimulus payment in a savings or retirement account, though those who are financially better off (37%) are more likely to do so than those worse off (28%).“There are two different realities that people live in right now,” Eweka says. “There’s a need for some Americans to be able to manage their day-to-day expenses and be grateful to have that stimulus money to help buy groceries and pay bills, whereas those who make more money and still received those funds have the ability to either invest or shore up their emergency savings.”Those making less than $50,000 are more likely to be unsure whether they will save or spend more money. Some Americans who were temporarily unemployed have been able to pad their savings thanks to stimulus checks.Most Americans (nearly 75% who are better off and nearly 70% who are worse off) say they have placed greater importance on creating an emergency savings account. Brie Johnson, 29, used her stimulus checks to pad her savings and pay off debt.Brie JohnsonBrie Johnson, 29, is one of them. When the pandemic hit, the family she worked for as a nanny in New York City left for their country home.The family still paid her for six months but had to furlough her as the pandemic dragged on.Johnson, who lives in Atlanta, was unemployed for two months and found a nanny position with another family. Johnson, who makes more than $50,000 a year, received two of the three rounds of stimulus checks the government sent out, which she used to pay off her credit card debt, bolster her savings and go on vacation in Florida. Those making more than $50,000 per year are more likely to plan a vacation, shop at locally owned stores, dine in at restaurants and work from home than those making less than $50,000 per year. “I feel a lot more financially secure,” Johnson says. “Once the pandemic hit, I really took having an emergency fund and paying off debt pretty seriously. I feel like I’m in a much better financial position overall.”×Know someone who feels left behind financially? Share this storyThose who have taken a financial hit during COVID-19 worry the downward trend will continue: 57% expect nothing will change or their finances will get worse over the next year, the TIAA survey found. Sixty-one percent of those who say they are financially better off since the start of the pandemic expect their household finances to improve in the next year.Some who saw their income drop last year are starting to work again.Leann Knotts, an illusionist escape artist, was elated over the weekend as she packed for her first gig in more than a year at a fair in Mississippi.Her business came to a standstill during the pandemic. Knotts, who lives in Washington, Pennsylvania, with her husband and two kids, wasn’t sure whether they’d be able to pay off their house or retire early after a staggering income loss last year. Leann Knotts and her husband, Josh, own Extreme Illusions and Escapes, touring the country with illusionist acts.Provided by Leann KnottsShe owns two businesses, one with her husband called Extreme Illusions and Escapes, which tours the country with illusionist acts. The second one, co-owned by her mother, is called Extreme Talent Showcase, which produces talent competitions for youth.  She and her husband typically bring in $150,000 to $200,000 a year, but in 2020, their tax return was negative $9,000, she says.This year, about 80% of the contacts for her escape business are scheduled to be back while her talent business has seen one-quarter of its contracts return. “This is really an exciting time. No one knew if the silver lining was ever going to come,” says Knotts, 39. Russ Talbot, 55, owns a live event company in Huntington Beach, Calif.Russ TalbotOf those surveyed, adults ages 45 to 64 are much more likely to say they are worse off because of the pandemic than those under 45. Nearly 40% of people 45 to 64 say they are worse off financially this year compared with last year, and about one-quarter of those under age 45 say they are worse off because of COVID-19.Russ Talbot, 55, has owned his live events company for more than 25 years. His business was greatly affected once the pandemic shut down corporate events.  Talbot, who lives in Huntington Beach, California, had looked forward to early retirement, but he’s unsure that will happen after losing 80% of his income in 2020.Even as the economy begins to reopen, some clients are leery of large indoor events such as weddings, conventions and business meetings, he says. “I’ve learned not to be too optimistic because I’ve been smacked down so many times in the past 14 months,” says Talbot, whose larger clients have begun booking events in September.“There is light at the end of the tunnel,” he says. 

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