Author: Mat Despard, PhD, University of North Carolina at Greensboro
Only half of all U.S. households and less than a quarter of low income households had enough emergency funds set aside to cover three months of expenses (FINRA Investor Education Foundation, 2019) – roughly the amount of time households might expect to comply with stay at home orders during the COVID-19 pandemic. Yet the three months’ standard for emergency savings is predicated on “ordinary” financial shocks such as a spell of unemployment or an illness.
The federal government has recognized the wide-scale and catastrophic nature of COVID-19 as a macroeconomic shock by enacting the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. Yet, like any other crisis-response measure, its effectiveness is determined in part by the systems through which relief is delivered and related policies that were already in place. In this sense, the U.S. was not only unprepared for the public health fallout of COVID-19; its financial services system and financial capability and asset building policies are ill-equipped to help vulnerable households cope with the economic fallout of COVID-19.
Social workers can advocate for a host of policy changes that will help households better cope with the economic fallout of COVID-19 and be better prepared for future catastrophic events.