Overall Financial Well-Being in 2020
The financial well-being of U.S. adults has fluctuated since the onset of the COVID-19 pandemic, initially declining as of April, and rebounding by July. By the fourth quarter of 2020, the share of adults who were doing at least okay financially was unchanged relative to 2019 and remained significantly above that seen when the survey began in 2013.3
That said, not all groups have fared similarly since 2019, and persistent disparities in well-being across education, race/ethnicity, and neighborhoods remained. Moreover, looking at the trajectory of financial well-being reveals that nearly one-fourth of adults were worse off financially than 12 months earlier, the highest share since the survey began collecting this information in 2014. This increase occurred broadly across segments of the population, and likely reflects financial distress resulting from the pandemic.
Current Financial Situation
At the end of 2020, three-fourths of adults were doing at least okay financially, meaning they reported either "doing okay" financially (40 percent) or "living comfortably" (35 percent). The rest reported either "just getting by" (18 percent) or "finding it difficult to get by" (7 percent). The 75 percent of adults doing at least okay financially in 2020 matched the rates in recent years and remained well above the 62 percent doing at least this well in 2013 (figure 1).
Although the share of adults doing at least okay has remained unchanged in recent years, results from supplemental surveys conducted in April 2020 and July 2020 reveal fluctuation in well-being within the past year.4 The share of adults doing at least okay fell from 75 percent in October 2019 to 72 percent in April 2020, and then rose to 77 percent in July.
As noted in previous reports, the decline in well-being from October 2019 to April 2020 was concentrated among those who were laid off or had their work hours cut. The subsequent increase in well-being seen in July is consistent with some interpretations that many aspects of government stimulus measures, such as increased unemployment insurance benefits and direct Economic Impact Payments (also known as stimulus payments), appear to have blunted the negative financial effects of the pandemic for many families.5 The share doing at least okay financially fell from its high in July back to 75 percent in November 2020, which may reflect the July expiration of the extra $600 per week in unemployment insurance benefits and additional time passing since the CARES Act stimulus payments were received.6
Even as the aggregate share of adults who were doing at least okay remained unchanged in 2020, some families fared relatively well during the pandemic while others experienced substantial financial setbacks. As discussed in box 1, people who kept their jobs, and especially those who were able to work from home, generally entered the year in a relatively strong financial position and saw further financial improvements in 2020. Conversely, the pandemic disproportionately affected workers who had limited financial resources before the pandemic and for these individuals it resulted in further financial setbacks.
In addition to the different trends in overall well-being based on employment circumstances, differences across education groups remained substantial and in some cases grew markedly. Adults with at least a bachelor's degree were significantly more likely to be doing at least okay financially (89 percent) than those with less than a high school degree (45 percent). This gap increased from 34 percentage points in 2019 to 44 percentage points in 2020, reflecting the sharp decline in well-being for those with less than a high school degree (figure 2). Moreover, looking over the past five years shows a steady and sizable increase in well-being among those with at least a bachelor's degree (an increase of 9 percentage points in the share doing at least okay from 2015 to 2020), while adults with less than a high school degree have not experienced any lasting gains in well-being.
Differences in financial well-being across racial and ethnic groups were larger than the differences seen in 2019. Nearly two-thirds of Black and Hispanic adults were doing at least okay financially, compared with 80 percent of White adults and 84 percent of Asian adults.7 The difference in the share of White adults doing at least okay financially compared with Black and Hispanic adults has grown by 4 percentage points since 2017. This growth reflects the steady increase in financial well-being for White adults, and the slight decline in financial well-being for Black and Hispanic adults in recent years (figure 3).
Financial well-being also varied by sexual orientation and gender identity. In 2020, 68 percent of adults identifying as LGBTQ+ were doing at least okay financially, compared with 75 percent of the overall population.8 Moreover, an even lower 61 percent of LGBTQ+ adults identifying as transgender or nonbinary, or as having a sexual orientation other than gay, lesbian, or bisexual, were doing at least okay financially.
Although there are many potential reasons for gaps in financial well-being by race and ethnicity, sexual orientation, and gender identity, one contributing factor may be discrimination. More than one-fifth of Black adults and nearly one-fifth of adults identifying as LGBTQ+ reported that they experienced discrimination or unfair treatment in the past year because of their race, ethnicity, age, religion, disability status, sexual orientation, gender, or gender identity.9 Among the overall adult population, 10 percent of adults reported that they experienced discrimination for one of these reasons.10
Moreover, Black adults and LGBTQ+ adults were much more likely to report that they experienced employment or workplace discrimination than the overall population: 9 percent of Black adults and 8 percent of LGBTQ+ adults said they experienced employment discrimination, compared with 4 percent of the overall population. (See box 2 for more detail on discrimination, particularly with respect to race and ethnicity).
Other dimensions across which financial well-being differed include income, marital status, and neighborhood income (table 1). Fifty-two percent of adults with family income less than $25,000 were doing at least okay financially, compared with 95 percent of adults with income greater than $100,000. Married individuals were generally more likely to be doing at least okay financially than unmarried individuals. People living in low- or moderate-income (LMI) communities also had lower levels of well-being than those living in middle- or upper-income communities. Additionally, those living in metro areas were faring better than those in non-metro communities.11
Table 1. Share of adults doing at least okay financially (by demographic characteristics)
|Characteristic||2020||1-year change||5-year change|
|Less than $25,000||52||0||10|
|$100,000 or more||95||0||11|
|Living with a partner||65||2||-1|
|Place of residence|
|Low or moderate income||62||-2||n/a|
|Middle or upper income||80||0||n/a|
Note: Among all adults. Low- or moderate-income neighborhoods are defined here as those census tracts with a median household income less than 80 percent of the national median income. Here and in subsequent tables and figures, percentages may not sum to 100 due to rounding and question nonresponse. Census tracts were not included in the 2015 SHED, so changes in neighborhood income since 2015 are not available.
n/a Not applicable.
Given the potential economic repercussions of the pandemic, the 2020 survey included five additional questions on financial well-being that were last asked in the 2017 survey.12 These questions were developed by the Consumer Financial Protection Bureau (CFPB) to measure financial well-being among U.S. adults by combining an individual's responses to the five questions into a single "financial well-being score," ranging from 0 to 100. Research has shown that a score of 50 or below on this scale is associated with a high likelihood of material hardship, such as the inability to afford food, medical treatment, housing, or utilities.13
Based on the CFPB score, 38 percent of adults had a high likelihood of material hardship in 2020. As was also seen in the share "just getting by" or "finding it difficult to get by," adults with at least a bachelor's degree, White adults, and people living in metro areas exhibited higher levels of financial well-being than the overall population (table 2).
Table 2. Share of adults with high likelihood of material hardship (by select characteristics)
|Less than a high school degree||62||3|
|High school degree or GED||47||-2|
|Some college/technical or associate degree||43||-3|
|Bachelor's degree or more||25||-5|
|Place of residence|
Note: Among all adults. High likelihood of material hardship based on the Consumer Financial Protection Bureau financial well-being score.
n/a Not applicable.
Recent changes in well-being, based on the CFPB score, were similar to changes seen in the share of adults doing at least okay financially. The share with a high likelihood of experiencing material hardship decreased slightly for adults overall and for nearly all subgroups. Consistent with the results described earlier, the notable exception was for adults with less than a high school degree, who saw a 3 percentage point increase in the share with a high likelihood of material hardship.
Box 1. Financial Well-Being for the Same People over Time
The effect of the pandemic on family finances varied widely. People who kept their jobs during the pandemic generally had stable or improving finances in 2020. However, those who suffered a layoff and an extended period of unemployment saw a deterioration of their financial circumstances. Recognizing that layoffs during the pandemic were concentrated among lower-wage workers, this exacerbated pre-existing disparities in financial well-being in the United States.
One feature of the SHED is that a subset of respondents also participated in prior waves of the survey. In 2020, about one-third of respondents had participated in the fall 2019 survey. Consequently, it is possible to observe the same individuals over time to determine the trajectory of their finances over the course of the year.
Those who were laid off during the pandemic typically had a relatively small financial cushion to begin with. Less than two-thirds of those who were laid off were doing at least okay financially in late 2019, before the job loss.
In general, they also entered the year with limited financial resources to weather an economic downturn. Fifty-nine percent did not have emergency savings that could cover three months of expenses in late 2019, and nearly 4 out of 10 either could not pay all of their monthly expenses in full or did not expect to be able to do so if faced with a modest emergency expense. Each of these exceeds the share of the overall population who were ill prepared for financial setbacks.
Those who were laid off and were not working at the time of the survey saw a substantial deterioration in their financial circumstances. While nearly two-thirds of this group were doing at least okay financially in 2019, a lower 51 percent were still doing at least okay in late 2020 (table A). Large declines in more concrete financial measures were similarly apparent. For example, the share expecting to pay their current month's bills in full also fell—from 66 percent in 2019 to 58 percent in late 2020 (table B).
Table A. Doing at least okay financially (by year)
|No layoff, working from home full time||85||90||5|
|No layoff, working but not from home||79||82||3|
|No layoff, not working||76||75||-1|
|Laid off, but currently employed||62||60||-2|
|Laid off, currently not working||65||51||-14|
Note: Among respondents who completed both the 2019 and 2020 surveys.
Although they also had limited financial resources at the start of the year, workers who were laid off in 2020 but who were back at work by the time of the survey in November had more muted changes in well-being. Among this group, there was a far smaller 2 percentage point decline in overall financial well-being in 2020 when compared to a year earlier and a 4 percentage point decline in the share expecting to pay all of their monthly bills in full.
In sharp contrast to that seen for those out of work after a layoff, those who kept their jobs fared relatively well financially in 2020. Additionally, across each financial metric considered, those who worked from home in 2020 had relatively high levels of financial well-being leading into the pandemic and appeared to be even better off financially by the end of the year. Nine out of 10 people who were working from home in late 2020 were doing at least okay financially, up 5 percentage points from how the same group was faring a year earlier.
Table B. Expect to pay all current monthly bills in full (by year)
|No layoff, working from home full time||91||92||1|
|No layoff, working but not from home||87||89||2|
|No layoff, not working||85||83||-1|
|Laid off, but currently employed||82||78||-4|
|Laid off, currently not working||66||58||-8|
Note: Among respondents who completed both the 2019 and 2020 surveys.
The scale of layoffs during the pandemic was unprecedented, with 14 percent of all adults suffering a layoff in the past year. Those who were not laid off appeared to be faring relatively well, on average, in late 2020. This has contributed to the relative strength of aggregate economic statistics. Yet, those who were laid off faced markedly different circumstances. Laid-off workers generally had fewer financial resources to begin with, and the layoffs appear to have resulted in additional financial strain for their families.
Box 2. Racial and Ethnic Discrimination
In 2020, Black and Hispanic adults faced challenges across numerous measures, including overall financial well-being, employment, ability to pay bills, and credit access. Although these challenges likely have numerous interrelated causes, many adults reported experiencing racial discrimination, including in specific contexts that could negatively impact financial well-being.
Ten percent of adults reported they experienced discrimination in the 12 months before the survey, and two-thirds of those who did said they faced racial discrimination.1 Although racial and ethnic discrimination was the type most commonly cited, other respondents reported discrimination or unfair treatment occurred across a range of protected classes, including age, religion, disability status, sexual orientation, gender, and/or gender identity.2 Sixty-six percent of those who reported discrimination cited racial discrimination, while 38 percent reported discrimination based on age and 37 percent based on gender (table A).
Table A. Basis of discrimination experienced in the prior 12 months
|Characteristic||Among adults experiencing discrimination||Among adult population|
|Race or ethnicity||66||6|
Note: Among all adults. Respondents could select more than one category.
Moreover, Black adults overall were more likely to report discrimination of some form than adults of other racial and ethnic groups. More than one-fifth of Black adults reported experiencing discrimination in the prior year. Thirteen percent of Asian adults, 13 percent of Hispanic adults, and 6 percent of White adults reported discrimination. In 2020, evidence suggests that a somewhat larger share of discrimination occurred among Asian adults than was the case in 2019.3
Those who reported discrimination faced discrimination or unfair treatment in a variety of aspects of life (table B). The most frequently cited contexts for experiencing discrimination were shopping and working or applying for a job. Of those adults who reported discrimination, 44 percent (4 percent of all adults) said they were shopping, and 43 percent (4 percent of all adults) said they were working or applying for a job.4 Moreover, evidence shows that discrimination in employment contributes to differences in earnings across racial and ethnic groups.5
While fewer adults reported experiencing discrimination while banking or applying for a loan than in other contexts, this form of discrimination can affect access to safe and affordable financial services. Black and Hispanic adults were more likely to be denied credit than other racial and ethnic groups. Furthermore, concerns about discrimination deter some people from trying to access financial products, even if they would qualify.
Table B. Context of discrimination experienced in the prior 12 months
|Characteristic||Among adults experiencing discrimination||Among adult population|
|Shopping for goods or services, including restaurants||44||4|
|Working or applying for a job||43||4|
|Interacting with the police or a government official||23||2|
|Receiving or scheduling medical care||13||1|
|Banking or applying for a loan||13||1|
|Renting or buying a home||11||1|
|Other activities not listed (please specify)||13||1|
Note: Among all adults. Respondents could select more than one category.
Among those adults who reported facing banking discrimination, 45 percent desired more credit but did not apply because they expected a denial. This far exceeds the 11 percent of people who did not report banking discrimination, but desired credit that they did not apply for.
These differences in credit access can have financial repercussions during economic downturns, as credit can be one way to manage fluctuations in income. Indeed, a larger share of adults who were laid off reported they had more debt at the time of the survey than one year prior, compared to adults who did not face a layoff. This approach of borrowing to weather a financial hardship is less available to those who have less access to banking and credit products for any reason, including discrimination.
1. The survey asked respondents about discrimination they observed themselves, known as perceived discrimination. Other methods, such as audit studies, can detect discrimination that may go undetected by the person affected (see Devah Pager and Hana Shepherd, "The Sociology of Discrimination: Racial Discrimination in Employment, Housing, Credit, and Consumer Markets," Annu. Rev. Sociol. 34 (2008): 181–209). Moreover, perceived discrimination is associated with harmful effects on mental well-being (see Michael T. Schmitt, Nyla R. Branscombe, Tom Postmes, and Amber Garcia, "The Consequences of Perceived Discrimination for Psychological Well-Being: A Meta-Analytic Review," Psychological Bulletin 140, no. 4 (2014): 921; and E.A. Pascoe and L. Smart Richman, "Perceived Discrimination and Health: A Meta-Analytic Review," Psychological Bulletin, 135, no. 4 (July 2009): 531–54). Return to text
2. The Civil Rights Act of 1964 prohibits discrimination on the basis of race, color, religion, sex, or national origin. In the June 2020 ruling in Bostock v. Clayton County, the U.S. Supreme Court held that title VII's protections cover sexual orientation and gender identity. Return to text
3. In 2019, Asian adults were included in the "other, non-Hispanic" category. In 2020, data on Asian adults were reported separately. However, in 2020, Asian adults made up a substantial majority (82 percent) of the "other non-Hispanic" category. Therefore, this category is a reasonable proxy measure of Asian adults to compare between 2019 and 2020. In 2020, 9 percent of all adults reporting discrimination were "other, non-Hispanic" adults, compared to 7 percent in 2019. The uptick occurred as the share of "other non-Hispanic" adults who reported discrimination was nearly unchanged, whereas it declined for adults across all other racial and ethnic groups. Return to text
4. The COVID-19 pandemic changed the nature of shopping, dining, and employment for many, which may have affected the frequency and type of discrimination reported in 2020. Return to text
5. For a summary of research on discrimination in labor markets, see William A. Darity, Jr. and Patrick L. Mason, "Evidence on Discrimination in Employment: Codes of Color, Codes of Gender," Journal of Economic Perspectives, 12, no. 2 (1998): 63–90 and David Neumark, "Experimental Research on Labor Market Discrimination," Journal of Economic Literature, 56, no. 3 (2018): 799–866. Return to text
Changes in Financial Situation over Time
The survey also tracks overall economic well-being by asking respondents whether they are better or worse off financially than they were 12 months earlier. Measuring well-being in this way helps track changes in perceived well-being over time, as some individuals may feel worse off financially than they were a year earlier, for instance, even if they feel they are still doing okay overall (or that their financial well-being is improving even if they are still struggling overall).14
Indeed, the share of adults who said they were worse off financially than a year earlier increased to the highest level since 2014, even though the share of adults doing at least okay financially remained unchanged.15 In 2020, nearly one-fourth of adults were worse off financially compared to a year earlier, up from 14 percent in 2019 (figure 4). One-fourth of adults were better off compared to a year ago, down 7 percentage points from 2019. The share of adults doing about the same financially compared to a year ago was 51 percent, a modest decline from 2019.
The rise in the share of people who were worse off financially was widespread, but those with less than a high school degree were especially likely to be worse off. Thirty-six percent of people with no high school degree were worse off financially in 2020 than they were a year earlier. In 2019, a far smaller 18 percent of those with no high school degree were worse off than they were the year before. The share of adults with at least a bachelor's degree who were worse off also rose, from 10 percent to 18 percent, but remained well below that seen among people with less education.
The shares of both metro and non-metro residents who were worse off financially compared to a year ago nearly doubled from 2019 to 2020. Twenty-four percent of metro residents were worse off in 2020, up 11 percentage points from a year earlier, and 27 percent of non-metro residents were worse off in 2020, up 12 percentage points.
The widespread increase in adults doing worse off financially compared to a year earlier likely reflects the broad impacts of the COVID-19 pandemic on the economy.
To get a longer-term perspective, individuals were also asked to compare their current financial circumstances to how they perceived their parents' financial situation at the same age. Looking across a generation shows evidence of economic progress over time, despite financial setbacks during the pandemic. A majority of adults (54 percent) thought they were better off financially than their parents were, although this is a slight decline from 2019 when 57 percent thought they were better off. Twenty-one percent thought they were worse off than their parents were at the same age.
Having at least a bachelor's degree is generally associated with greater rates of upward economic mobility than having less education. This is particularly true among first-generation college graduates, among whom two-thirds (67 percent) thought they were better off financially than their parents were.16
Local Economic Conditions
Along with questions about their own financial circumstances, people were asked to assess their local economy. The share of adults rating their local economy as "good" or "excellent" declined precipitously from 2019 to 2020. Forty-three percent of adults rated their local economic conditions as "good" or "excellent" in 2020, with the rest rating conditions as "only fair" or "poor." This share was markedly lower than the 63 percent of adults who had a positive assessment of their local economic conditions in 2019.
The decline in positive assessments of one's local economy occurred broadly across different demographic groups and geographies (figure 5). For example, from 2019 to 2020, the share of adults rating their local economy as "good" or "excellent" fell from 65 percent to 44 percent for metro residents and from 53 percent to 35 percent for non-metro residents.
Looking across demographic groups and geographies also shows that despite the broad declines, gaps in how people assessed their local economies persisted in 2020. Whereas 46 percent of White adults and 44 percent of Asian adults viewed their local economic conditions as good or excellent, 32 percent of Black adults and 39 percent of Hispanic adults rated their local economies favorably. Adults who live in LMI neighborhoods were much less likely to rate their local economy favorably than those in middle- or upper-income neighborhoods.
3. The survey was fielded in November 2020 and results reflect financial situations at that time. References to "during 2020" refer to the 12-month period before the survey rather than the precise calendar year. Return to text
4. The Federal Reserve conducted two supplemental surveys, the first in April 2020 and the second in July 2020, to monitor the financial well-being of U.S. households during the COVID-19 pandemic. Full results from these supplemental surveys are available at https://www.federalreserve.gov/consumerscommunities/shed.htm. Return to text
5. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided enhanced unemployment insurance benefits of $600 per week, which supplemented normal unemployment insurance benefits. In addition, for most U.S. families, the CARES Act authorized Economic Impact Payments of $1,200 per adult and an additional $500 per qualifying dependent child. The amount of the payment also varied with income and tax filing status, phasing out for single filers with income over $75,000 and married joint filers with income over $150,000. Payment distribution began in April 2020. For details on the unemployment insurance benefit changes in the CARES Act, see "Unemployment Insurance Relief during COVID-19 Outbreak," U.S. Department of Labor, 2020, https://www.dol.gov/coronavirus/unemployment-insurance. For details on the Economic Impact Payments, see "Economic Impact Payment Information Center," https://www.irs.gov/coronavirus/economic-impact-payment-information-center. Return to text
6. The passage of the Consolidated Appropriations Act of 2021 (CAA) on December 21, 2020, which reauthorized and modified many of the relief measures established by the CARES Act, occurred after the survey. The CAA extended the unemployment insurance supplement originally authorized by the CARES Act but reduced the amount from $600 to $300. For more information on the CAA see, "Unemployment Insurance Provisions in the Consolidated Appropriations Act, 2021 (Division N, Title II, Subtitle A, the Continued Assistance for Unemployed Workers Act of 2020)," https://crsreports.congress.gov/product/pdf/IF/IF11723. Return to text
7. The 2020 survey, for the first time since the survey began in 2013, was able to include Asian as a separate racial and ethnic category. However, the relatively small sample of Asian adults means that results are not broken out for all statistics. Additionally, results for surveys before 2020 continue to only include White, Black, and Hispanic racial and ethnic categories. The reported categorizations reflect the largest statistical groupings but are neither exhaustive nor the only distinctions important to understand. Sample sizes for other racial and ethnic groups and subpopulations are not large enough to produce reliable estimates. Return to text
8. Survey respondents could report their sexual orientation, gender assigned at birth, and gender identity. Respondents are classified as LGBTQ+ based on responses to these questions. Return to text
9. The discrimination reported by Black adults was predominantly ascribed to race or ethnicity, while the discrimination reported by those identifying as LGBTQ+ was more evenly dispersed across that due to sexual orientation, gender, age, and race or ethnicity. Return to text
10. These estimates may underestimate the prevalence of discrimination if people experienced discrimination that they were unaware of or overestimate it if perceived discrimination is misattributing actions. Return to text
11. Non-metro areas are defined throughout this report as being outside of a Metropolitan Statistical Area (MSA) and metro areas are those inside of an MSA, as defined by the Office of Management and Budget. This definition differs from the Census Bureau's definition of urbanized areas. For details, see U.S. Census Bureau, "2010 Urban Area FAQs," https://www.census.gov/programs-surveys/geography/about/faq/2010-urban-area-faq.html. Return to text
12. The first three questions ask respondents how well the following statements describe them or their situation: "because of my money situation, I feel like I will never have the things I want in life;" "I am just getting by financially;" and "I am concerned that the money I have or will save won't last." The final two questions ask respondents how often each of these statements apply to them: "I have money left over at the end of the month" and "My finances control my life." Return to text
13. The CFPB's financial well-being scale was included on the SHED in 2017 and again in 2020. See Financial Well-Being in America (September 2017), www.consumerfinance.gov/documents/5606/201709_cfpb_financial-well-being-in-America.pdf, for details on the development of these questions and their relation to material hardships. Mapping to the well-being scale uses Austin Nichols's PFWB package in Stata: Austin Nichols, "PFWB: Stata Module to Predict Financial-Well-Being Scale Scores from CFPB Survey Instrument," Statistical Software Components S458353 (2017), Boston College Department of Economics. Return to text
14. For example, someone who was laid off in the past year, but is receiving unemployment benefits to make up for lost income, might feel they are doing okay financially. However, if comparing to a year ago, before the layoff, they might also feel that they are worse off now given that they were laid off and are relying on government assistance. Return to text
15. The 2013 survey asked respondents if they were better off now financially than five years ago and therefore is not comparable with later surveys. Return to text
16. First-generation college graduates are those who have at least a bachelor's degree and who report that neither of their parents completed at least a bachelor's degree. Return to text