October 18, 2023

Disclaimer: FEDS Notes are articles in which Board staff offer their own views and present analysis on a range of topics in economics and finance. These articles are shorter and less technically oriented than FEDS Working Papers and IFDP papers 

Jesse Bricker, Sarena Goodman, Kevin Moore, Sarah Reber, Alice Henriques Volz, and Richard Windle with assistance from YeJin Ahn1

Between 2019 and 2022, the COVID-19 pandemic caused severe disruptions to the U.S. labor market and broader economic activity, leading to unprecedented levels of fiscal support. Nonetheless, over this period, net changes in major economic indicators were consistent with a robust economy, and according to the 2022 Survey of Consumer Finances (SCF), U.S. families experienced broad-based improvements in their finances, particularly with respect to net worth (Aladangady et al., 2023).2

The SCF is a detailed triennial survey of U.S. family finances that, on its own, is not particularly well-suited to capture between-survey dynamics at the unprecedented scale of the pandemic. In anticipation of a need to better understand these dynamics, the 2022 SCF added questions to capture families' pandemic experiences ("COVID-19 questions").3 These questions included a longer lookback period than is typical for the SCF — asking families to consider their experiences since "the onset of the pandemic in early 2020" — and probed families' health and employment status, relief on required payments, experiences of financial hardship, receipt of early stimulus benefits, and child-related responsibilities.

This FEDS Note summarizes high-level findings from the COVID-19 questions, showcasing differences in families' experiences of the first years of the pandemic across income and education groups and connecting these differences to income and net worth measured in the SCF. In particular, lower-income families and families with lower levels of educational attainment were more likely to experience a reduction in work, which could reflect their lower incidence of telework and higher incidence of a severe COVID-19 infection. These differential employment experiences appear to map well to between-survey income growth across the income distribution, especially after accounting for unemployment benefits, which were temporarily expanded over this period. In contrast, growth in net worth exhibited an inverse-U shape over the income distribution and, for most groups, exceeded income growth, largely reflecting asset price appreciation. On net, mean net worth among families that experienced pandemic-related setbacks was reduced relative to other families, particularly at the bottom of the income distribution, but still generally at levels that could cushion against future shocks.

I. Families' Experiences of the COVID-19 Pandemic

In the earliest stages of the pandemic, the economy came to a grinding halt, upending the U.S. labor market. For example, early lockdowns led many businesses to close or scale back operations, and the unemployment rate spiked. Still, demand for certain types of workers, such as those in essential industries, increased. On the supply side, heightened health concerns or new household demands may have weighed on families' ability to (or interest in) work.4 Altogether, the pandemic had potential to positively or negatively affect a family's overall employment situation. The first set of COVID-19 questions asked the survey respondent to describe their employment status and, if applicable, that of their spouse or partner during the pandemic, using any number of 10 possible responses for each individual. Table 1 condenses these responses into mutually exclusive categories to characterize a family's overall experience — a reduction in work, an increase in work, or no change in work —and reveals that the majority of families reported no change in their work status.5 Unsurprisingly, the next-most frequent experience — reported by one-third of families — is a reduction in work, with the remaining less than 10 percent of families reporting an increase in work. As with other indicators explored in this FEDS Note, the incidence of these employment experiences exhibits a gradient in economic well-being, measured by the family's income in a typical year (that is, their "usual income"), as well as the educational attainment of the SCF reference person.6 Specifically, lower-income and less-educated families were more likely to have experienced a reduction in work, while higher-income and more-educated families were more likely to have experienced both no change in work status and an increase in work.

Table 1: Families' Pandemic Experiences, by Family Characteristics

Some employers responded to the pandemic lockdowns by shifting workers to telework, enabling continuity of operations while minimizing the spread of COVID-19.7 Correspondingly, teleworking families generally faced reduced risks of infection and job loss, insulating them from potential reductions in work stemming from these factors.8 Two of the possible responses to the COVID-19 employment questions pertained specifically to telework: respondents could select that they (or their spouse or partner) moved to a new telework schedule or that they continued to telework. Nearly one-third of families reported telework, with two-thirds of these families reporting a new telework schedule.9 Income gradients for telework are quite strong, with 3 percent of the bottom quintile of the usual income distribution teleworking, compared with 68 percent of the top decile. Over 50 percent of families with a college degree teleworked versus 5 percent of families without a high school degree. Notably, while these telework gradients appear to have already existed before the pandemic, they were amplified considerably after its onset, as the incidence of families that reported a new telework schedule also rises with both income and education.10

Underlying the chaos in the labor market was the new serious health risk posed by the emergence of COVID-19, whereby a severe infection, among a number of other concerns, could have directly affected a family's employment status. To identify whether a family experienced a severe health infection, the COVID-19 questions probed whether the respondent or their spouse or partner was hospitalized due to COVID-19, which speaks to an acute (potentially shorter-term) shock, or experienced persistent symptoms from a COVID-19 infection, which speaks to a longer-term shock.11 Across all families, 4 percent reported a hospitalization while over 17 percent reported persistent symptoms. The strong gradient in economic well-being is again present, with lower-income and less-educated families more likely to experience each type of health shock. For example, 2 percent of families in the top decile of the usual income distribution were hospitalized and 11 percent had persistent symptoms, while 5 percent of families in the bottom quintile were hospitalized and 19 percent had persistent symptoms. The differences are even more stark by educational attainment, with 2 percent of families that had a college degree having been hospitalized (versus 8 percent of families without a high school degree) and 14 percent of such college-educated families experiencing persistent symptoms (versus 24 percent of families without a high school degree).

The incidence of a severe COVID-19 infection moves in the opposite direction of the incidence of telework, as one might expect. More generally, it parallels the incidence of negative employment changes, suggestive of a causal link between a severe COVID-19 infection and labor supply (Goda and Soltas, 2023). In its core survey, the SCF asks respondents to rate their health status and, if applicable, that of their spouse or partner.12 Within all usual income and education groups, these health ratings are lower for families that experienced a severe COVID-19 infection (not shown), indicative of a prolonged effect on a family's activities, including work.13 Indeed, families that reported a fair or poor health status that appeared to be connected to a severe COVID-19 infection were more likely to indicate a negative change in their employment status over the pandemic than other families that reported a fair or poor health status (also not shown).

As a potential buffer against the economic and health disruptions brought about by the pandemic, the federal government provided multiple rounds of stimulus, the earliest of which included direct payments, a temporarily expanded and more generous unemployment insurance (UI) program, and the Paycheck Protection Program (PPP), which allowed business owners to apply for funds to maintain their workforce.14 The COVID-19 questions probed whether families received money from each of these three programs. Around 16 percent of families reported receipt of unemployment benefits, with modestly higher incidence in the middle of the distribution than in the tails.15 Unsurprisingly, about 80 percent of families reported receiving stimulus payments, with incidence relatively stable across the income distribution but dropping off precipitously toward the top. In contrast to the distribution of the other two programs, PPP loans were more concentrated at the top, reflecting patterns in business ownership (Aladangady et al., 2023).