More than three in 10 households in the four largest U.S. cities emptied their savings to survive the economic fallout due to the coronavirus, according to a new analysis.
“Millions of families in America are living paycheck to paycheck. There isn’t a lot of savings or a lot of wealth, so when you have superimposed on top of the daily struggles of life a major crisis like the COVID pandemic, you can see how it pushes many families over the edge,” said Richard Besser, CEO of the Robert Wood Johnson Foundation, one of the organizations that helped gather survey data for the report.
Researchers from the Robert Wood Johnson Foundation, the Harvard T.H. Chan School of Public Health, and NPR found that more than half of all households in New York City, Los Angeles, Chicago, and Houston reported facing serious financial problems during the pandemic, with issues ranging from depleting their savings to problems paying rent and utilities.
The major cities that have experienced the greatest financial destruction due to business restrictions and lockdowns started out with the most social supports in place, such as food stamps and access to health coverage through Medicaid. Zeroing in on households in these cities, Besser said, would give economists “a better picture than what we saw in other places.”
“We’re dealing with a number of crises at the same time: the crisis of the COVID pandemic, the crisis of the economic downturn, the crisis around racism,” Besser said. “These all play out in really significant ways in terms of people’s lives.”
Minority households made up a high proportion of those most seriously financially affected in all major cities. In New York City, for example, 73% of Latino and 62% of black households reported financial problems. In Chicago, only 33% of white households reported financial difficulties compared to 69% of black and 63% of Latino households.
Some major U.S. cities have an economic output that rivals that of entire countries thanks in part to the rise of complex industries that attract the most skilled workers, who can demand high-paying jobs. Harvard economist Edward Glaeser told the New York Times that he is optimistic about a speedy financial recovery in big cities “because the downside of a nonurban world is so terrible that we are going to spend whatever it takes to prevent that.” But in order for cities to climb out of the financial crater formed by the pandemic, locally owned and minority-run businesses will need more federal assistance than what was doled out in the March CARES Act.
“There’s a number of ways to do it, but it does involve Congress coming together and saying, ‘OK, the protections that we provided back in March? Those needs are still there,’” Besser said. “This is a pandemic and an economic crisis that’s not hitting all families and all communities the same.”
It’s not a coincidence that households in large urban centers are struggling harder than sparsely populated rural areas, which tend to have smaller immigrant and minority populations. Overall, the U.S. population remains majority white, but not so much in urban areas as a whole, the Pew Research Center reported. Among urban residents, only 44% are white, compared with 68% in suburban counties and 79% in rural counties.
The major cities included in the report are also run by Democrats, which President Trump has noted as a reason to withhold federal assistance, saying that flawed Democratic leadership has crippled large cities, making them more vulnerable to financial crashes. In a May New York Post interview, Trump said that “all the states that need help — they’re run by Democrats in every case.”
“I don’t think the Republicans want to be in a position where they bail out states that are, that have been mismanaged over a long period of time,” Trump said.
But the COVID-19 pandemic and subsequent economic destruction, Besser said, should not be politicized. Digging cities and rural areas out of this economic hole will take the cooperation of both parties in Congress to lend assistance to states.
“It’s a false narrative that this is only affecting cities and only affecting Democratic strongholds,” Besser said. “Viruses don’t care what your political party is. Viruses will infect everybody.”
