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How the savings gap widens during the Covid-19 pandemic

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The Covid-19 pandemic exacerbates many of the differences between those with and without in the US

Now, a new survey shows it also makes the savings gap more pronounced between these groups.

Among those earning less than $50,000, 36% say they now have less savings before the pandemic, compared with 13% who say they have more, according to results from the national coalition Funding Our Future and Payment technology company DailyPay.

For those earning $100,000 or more, 41% say they now have more money, compared with 20% having less.

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In fact, 58% of Americans say they are worried about their current financial situation, the poll found. It is most common among young Americans aged 18 to 34, with 71%; lessor, 70%; and those with income below $50,000, accounting for 67%.

The online poll was conducted from November 30 to December 2, coinciding with a time when prices rose due to high inflation. The survey included 2,038 adults aged 18 and over.

The result came as Congress was getting ready to consider a new social spending package called Build Back Better that aims to put more money in the pockets of some Americans.

“The reality is that a lot of people are living with insufficient income or are unemployed and have a situation,” said Shai Akabas, director of economic policy at the Bipartisan Center for Policy, which works with the Funding Our Future coalition. precarious finances.

Women are more likely to have financial difficulties

Nearly half of men – 48% – between the ages of 35 and 44 have now saved more money than they did before the pandemic, the survey found. But only 20% of women in that age group say the same.

Meanwhile, 55% of men in that age group have received a bonus in the past year compared to just 30% among girls.

About 44% of men aged 35 to 44 received a raise compared with 28% of women.

The results speak for a potential bonus and widening gap in addition to the gender pay gap, said Akabas, at a time when many women have difficulty choosing between work and childcare.

Child tax credit helps minorities a lot

When it comes to monthly child tax credit payments of up to $300 per child starting in July, 44% of white benefit recipients said they put the extra money aside for savings. But that number has dropped to 28% for blacks and 24% for Hispanics.

“Particularly for households of color, most are channeling this money into expenses they face every day,” said Akabas.

Another racial discrimination was also revealed when workers were asked if they could benefit from more regular pay. Although 59% of respondents agreed they would benefit, the figure was significantly higher for Black workers, with 74% and Hispanics at 73%, compared with just 51% of respondents. White skin.

Many Americans find themselves on very shaky ground.

Shai Akabas

Director of Economic Policy at the Center for Bipartisan Policy

“There is a really urgent need in many households of color for more liquidity and more short-term resources to pay the bills,” says Akabas.

DailyPay, one of the organizations behind the survey, is working to help employers pay wages early as a benefit to workers.

Could Build Back be of any better help?

Akabas said of the survey results: “A lot of Americans find themselves on very shaky ground.

“That said, from a public policy perspective, there is a need to think about solutions that can help more of those people become financially secure,” he said.

But whether those efforts succeed depends on how they will affect the already fragile US economy.

Individuals and families are likely to get more financial help through the earned income tax credit and the child tax credit when they file their taxes in the spring.

If the Rebuild Better proposal passes, that could send more monthly payments through the child tax credit to many Americans. Meanwhile, retroactively implementing the changes to the state and withholding local taxes would also be a blow to some, Akabas said.

“With all that money pouring into Americans’ pockets in the first quarter of 2022 … it could exacerbate the demand-side inflationary pressures that are happening right now,” Akabas said. .

https://www.cnbc.com/2021/12/15/how-the-savings-gap-widened-during-the-covid-19-pandemic.html How the savings gap widens during the Covid-19 pandemic

Emma James

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