People across income levels report struggles to pay bills during pandemic
Massive job losses and a record levels of unemployment caused by the coronavirus pandemic have sacked the U.S. economy and caused families to struggle paying their monthly expenses. The hardship of paying bills is widespread, from low-income households all the way to upper-middle-class Americans, according to new research.
A Rand Corp. survey found that half of the respondents who make less than $25,000 annually said they're having difficulty paying bills. Almost one-third of middle-class families, who make between $25,000 and $125,000 a year, said they're struggling as well. One in 10 people who earn more than $125,000 annually also said paying bills has been tough.
Middle-class families are using credit cards, bank loans, stimulus payments or payday loans to pay household bills, the survey said. Lower-income families have had to use more drastic measures, the survey's authors said.
"They report borrowing from friends and family, selling possessions, and simply being unable to meet expenses," Rand researchers Katherine Carman and Shanthi Nataraj said in their analysis.
Rand's survey underscores an April report from the Urban Institute that found more than 4 in 10 Americans affected by the pandemic said they weren't able to pay their rent, mortgage or utility bills. Many Americans were forced to use savings or take on credit card debt to pay their bills, the Urban Institute said.
Housing costs have been particularly troubling for cash-strapped families. More than 2 million homeowners missed their May mortgage payments, according to the Mortgage Bankers Association. Some 300,000 people didn't pay their rent on time, according to the National Multifamily Housing Council.
The plight of American households could grow worse as economists expect this Friday's unemployment report to far exceed figures from the Great Depression. The April unemployment rate was near 15%.
"We expect the unemployment rate to move up from 14.7% to 17% in May, the likely peak in [the] unemployment rate for this cycle," Morgan Stanley economist said in a research note.
The Rand survey, which covered more than 2,000 people between May 1 and May 6, also found that Hispanic and black households have been hit particularly hard. Forty percent of black households and about half of Hispanic households reported problems with paying their bills, compared with 21% of white households.