Originally published at capitalone.com. Capital One Financial ranked No. 28 on The DiversityInc Top 50 Companies for Diversity list in 2021.
On Sept. 28, a nationally representative, ongoing study of more than 6,000 Americans was published, highlighting how consumers are thinking, feeling and believe they are behaving in reaction to the financial impact of COVID-19. The study serves as the first release from Capital One’s newly launched Insights Center.
Since April 2020, the Capital One Insights Center has conducted surveys every four to eight weeks with a nationally representative group of U.S. consumers. Results highlight the uneven recovery as it relates to financial health and well-being, consumer sentiment and outlook, employment, and impact of government stimulus and public assistance programs on those most affected.
Americans’ Road to Recovery
The results suggest that the current reality for most Americans is heavily divided: a robust recovery for higher-income earners (who earn more than $100,000 annually), a less secure footing for those in the middle, and significant financial stress for the lower earners. The findings also reflect the consumer’s current economic outlook, with survey responses captured as recently as August 2021 (Wave 14 of the study).
According to Margaret Donnell, Managing Vice President, Consumer Intelligence – Corporate Strategy, and the Index’s principal investigator, “by understanding the impact of the pandemic on the full country – with an additional lens into the differentiated effects on underrepresented groups – the goal of the Marketplace Index is to ultimately provide actionable insights to decision-makers in the design of resilient recovery efforts.”
Key study findings include:
- Lower-income earners experienced a disproportionate degree of financial distress. While income and job losses were sharp across all income groups, recovery has been significantly slower for lower earners.
- Income loss among Americans was widespread in spring 2020; 32%-36% of all Americans reported their incomes had disappeared or decreased. Yet a year later, while lower earners had seen relatively little improvement, the share of middle and higher earners reporting income loss had been cut in half.
- Unlike middle and higher earners, lower earners felt slightly less secure in their job by August 2021 (55%) than they did early in the pandemic (61%).
- For the lower earners, eviction and other financial worries continue to mount: one-fourth of the lower earners missed a payment or paid their rent late in August 2021, and 13% were worried about getting evicted despite government eviction moratoriums.
- By August 2021, 40% of lower earners in dual-earning households reported that one earner had lost a job–nearly three times the rate of the higher earners. Only 14% of households earning more than $100,000 annually had lost an earner.
- Many middle earners are still struggling: While middle earners fared better than lower earners, they were not without stress and hardship. A small group was clearly struggling.
- Approximately one in five had more debt in spring 2021 than before the pandemic, and they were still struggling to pay bills by August 2021. The higher earners ($100,000 or more), on the other hand, were able to save money and reported few hardships, though worries about student loans and medical bills were growing as of August 2021.
- Underemployment was widespread, particularly among Hispanic/Latinx & Black workers. Americans were working, but many were underemployed, particularly Hispanic/Latinx and Black workers, whose overrepresentation in jobs shuttered by the pandemic, like retail and restaurants, put them at higher risk.
- Black and Hispanic/Latinx workers were 12 percentage points more likely than White workers (46% vs. 34%) to report being underemployed at some point during the pandemic.
- Lack of childcare has stymied many, particularly lower-income women. As schools and childcare centers shuttered, parents struggled to juggle new caregiving demands.
- In August 2021, 50% of lower earners and 30% of middle earners were still either cutting back hours or had stopped working altogether because they had children at home and presumably lacked outside childcare. Only 18% of those earning more than $100,000 had done so.
- Nearly half (48%) of women earning $50,000 or less had to cut back or stop working compared to just one-third of men earning $50,000 or less.
- Sentiment around financial health varies meaningfully by income and gender.
- While rates of feeling “financially unhealthy” dropped in half for higher earners from the early months of the pandemic to now (August 2021), lower earner’s sentiment remains unchanged, with 44% reporting feeling financially unhealthy now vs. 42% early in the pandemic.
- Women’s sense of financial health has also been deteriorating more over time compared to men’s financial health. Among those earning $50,000 or less, 39% reported feeling financially unhealthy—up from 31% in April 2020 compared to August 2021. On the other hand, men earning the same annually trended in a positive direction: in August 2021, 29% reported feeling financially unhealthy, compared to 42% in April 2020, a 13 point improvement compared to women’s 8 point decline.
- But optimism about their household’s ability to save is growing:
- Approximately 30% of respondents expect to save more over the next three months compared to just 12% who think they will save less.
- While this trend is stronger for higher earners, 26% of lower earners expect to increase their savings in the next three months compared to 19% who expect it to decrease.
Additional findings can be found here in the Capital One Marketplace Index: Road to Recovery research paper.
Launching the Capital One Insights Center
Building on our commitment to advance socioeconomic mobility, this fall Capital One launched the first phase of the Capital One Insights Center. The Capital One Marketplace Index: Road to Recovery is the first published study from the Center. Combining the best of Capital One research and partnerships, the Center will produce insights to help advance equity and inclusion.
The Center strives to help changemakers create an inclusive society, build thriving communities and develop financial tools that enrich lives. In the coming months and years, we expect the Center to draw on Capital One’s deep market expertise, and legacy of revolutionizing the credit system through the application of data, information and technology.
“Capital One is a mission-led company that was founded on the belief that no one should be locked out of the financial system,” says Andy Navarrete, Executive Vice President, Head of External Affairs at Capital One. “The launch of the Capital One Insights Center builds on our Impact Initiative which launched in fall 2020 as an initial $200 million, five-year commitment to support growth in underserved communities. The Center draws on our deep analytical expertise to serve as a nascent platform for data and dialogue, convening thought leaders and changemakers to close gaps in equity and opportunity.”
To learn more about the Capital One Marketplace Index: Road to Recovery and Insights Center click here.