Why Were Fifth District Residents Out of Work? Insights From the July Household Pulse Survey

Introduction

The COVID-19 pandemic upended economic activity this spring, with labor market indicators such as the unemployment rate rising to unprecedented levels. Understanding why people were not working in the spring and summer could provide insight into the labor market as we move into the fall and perhaps provide policymakers with problems to which they can devise solutions.  Though this information is not captured in standard indicators, results from an experimental survey instrument administered by the U.S. Census Bureau offer insight into working and spending decisions in the wake of the pandemic. The Household Pulse Survey, a collaborative effort by the U.S. Census Bureau and five federal agencies, provides insights into education, employment, food security, health, and housing challenges stemming from COVID-19. The U.S. Census Bureau collected data weekly from households across the United States between April 23 and July 21. In this post, we will focus on results for the Fifth District from Employment Table 3, which contains information on reasons behind unemployment and how households met their spending needs.

Reasons for Not Working

The figure below shows the percentage of respondents, excluding the retired population, who reported not working between April 23 and July 21. The first survey period was between April 23 and May 5. In the nation, 37.9 percent of non-retired adults reported not working the week ending July 21, which is the latest week of available data. During the week ending July 21, the percent of respondents who reported not working for pay ranged from 28.7 percent in West Virginia to 38.9 percent in North Carolina.

What reasons did people report for not working? Nationally, about 61.3 percent of respondents indicated that their reason was directly tied to the coronavirus pandemic. This was primarily because of layoffs — about 14.5 percent reported being laid off due to the pandemic, but another 12.7 percent cited the reduction in business experienced by their employer. 7.6 percent of respondents cited concerns about getting or spreading coronavirus as their reason for not working along with 4 percent who reported not working due to being sick with coronavirus symptoms. The share of coronavirus-related reasons for not working varied by state ranging from 51.1 percent in West Virginia to 64.2 percent in Virginia. The percent of respondents who reported not working due to their employer experiencing a reduction in business ranged from 6.6 percent in South Carolina to 25.8 percent in Virginia. Temporary closures had the largest impact in South Carolina and the smallest in West Virginia.

Another reason cited for not working centered on child care. Nationally, 8.6 percent of respondents listed caring for children not in school or day care as their reason for not working in July; in the Fifth District, the share ranged from 5.1 percent in South Carolina to 15.5 percent in North Carolina. This need to care for or instruct children will be a critical component of any unemployment analysis as we move into the fall. Many states have left the decision on whether to offer in-person or virtual instruction this fall up to school districts and local governments, and many school districts throughout the Fifth District have already decided on a virtual or a hybrid option. Some districts are leaving the choice of whether to send their children for in-person instruction up to parents or caregivers. Although social distancing mandates have relaxed in many parts of the country and economic activity has started to return, the question remains of how many people will be able to return to work with children at home.

Policies to Help Workers

The coronavirus relief bill was signed into law on March 27, and assisted businesses through the Paycheck Protection Program, unemployed workers through enhanced unemployment insurance (UI) including an additional $600 benefit per employer, and an economic impact payment of $1,200 per eligible individual and $500 per child. Additionally, the coronavirus relief bill initiated a mortgage and student loan forbearance period and an eviction moratorium. These policies, along with policies enacted at the state level, allowed households to prioritize spending. Results from the Household Pulse Survey help shed light on the extent to which households were financially impacted due to the pandemic and on the various ways coronavirus relief bill beneficiaries used the assistance.

Meeting Household Spending Needs During Financial Hardship

As the pandemic forced workers to confront layoffs, reduced labor hours, and difficult challenges in balancing safety with obligations at home and work, households across the country experienced employment income losses. During the week ending July 21, 51.1 percent of respondents reported a loss in household income. In the Fifth District, the percent of households reporting income loss ranged from 37.3 percent in the District of Columbia to 49.1 percent in Maryland. With a significant portion of households experiencing employment income losses, how did people meet their spending needs?

Starting the seventh week of the Pulse Survey (June 11-June 16), participants who reported not working were asked how they met their spending needs in the last seven days. During the week ending July 21, 51.8 percent of respondents reported using regular income sources like those used before the pandemic. In the Fifth District, the percent of respondents who reported using regular income sources ranged from 44.4 percent in the District of Columbia to 72.7 percent in West Virginia. Nationally, about a quarter of respondents answered that they used money from their savings or sold assets to meet their spending needs, and about 1 in 5 households relied on credit cards and loans. Many households reported using UI benefit payments, and many also answered that they used the stimulus payment to meet their spending needs. In the Fifth District, households in the District of Columbia had the highest usage of these programs, with 28.7 percent using UI benefit payments and 28.8 percent using the stimulus payment. In West Virginia, on the other hand, 13.0 percent reported using UI benefit payments and 14.3 percent reported using the stimulus payment to meet their spending needs.

Note: Percentages do not add to 100 percent because respondents could choose multiple categories

Conclusion

The Household Pulse Survey is a useful supplement to traditional economic sources by providing insight into how American households are surviving and adjusting to this uncertain environment. Although the planned final wave of the survey data collection ended on July 21, the U.S. Census Bureau plans to resume data collection on August 19 and make new data available starting September 9. Since the last week of the current phase of the survey was before the July 31 expiration of the extra $600 per week unemployment benefit, it will be important to follow the responses of unemployed workers during the next round of the Household Pulse Survey.

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Views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.