People stand in line at Harlem's Community Kitchen and Food Pantry in New York City, May 9, 2020, photo by Andrew Kelly/Reuters

People stand in line at Harlem's Community Kitchen and Food Pantry in New York City, May 9, 2020

Photo by Andrew Kelly/Reuters

The economic consequences of stay-at-home orders and precautionary quarantining are affecting U.S. households at every income level. One-third of Americans have lost income since the coronavirus disease 2019 (COVID-19) pandemic began, but how Americans approach paying their bills in the face of adversity differs by income level.[1]

We conducted a nationally representative survey of more than 2,000 individuals to determine how their financial well-being has changed as a result of the COVID-19 pandemic and how they are coping with the economic fallout. These income questions were posed as part of a survey fielded from May 1 through May 6, 2020, through the RAND American Life Panel (ALP), a nationally representative internet panel, to assess the effects of the COVID-19 pandemic on individuals and households across a variety of topics.[2]

After we analyzed a subset of the survey results, we found that about one-third of households experienced a decline in income (Figure 1), regardless of whether household income before the COVID-19 crisis was less than $25,000 per year (close to the family poverty line of $26,200 for a household of four),[3] $25,000 to $124,999 per year (middle-income households that were eligible for the spring 2020 stimulus payment), or $125,000 and more per year (high-income households that were mostly ineligible for the spring 2020 stimulus payment).[4]

Figure 1. Change in Household Income, by Income Level

Household Income My household income has fallen My household income is about the same My household income has increased
Less than $25,000 36% 52% 12%
$25,000 to $124,999 31% 64% 5%
$125,000 or more 31% 65% 4%

SOURCE: Authors' calculations based on 2,047 responses from the ALP survey conducted May 1–6, 2020.

NOTE: The exact wording of the question was "Has your household income changed significantly since February 2020? (Please EXCLUDE a stimulus payment from the federal government if you have received one.)" Household income is based on information from ALP's household information survey fielded in February 2020.

During these difficult economic times, many are struggling to make ends meet. About 30 percent of households, representing all levels of income, reported having difficulties with paying their bills, regardless of whether they have lost income (Figure 2). These problems are more highly concentrated among low-income households; even low-income households whose income has remained stable are struggling. These problems are also more highly concentrated among black and Hispanic households, reflecting the higher prevalence of low-income households among these communities. Forty percent of non-Hispanic black households and nearly 50 percent of Hispanic households reported problems paying their bills, compared with 21 percent of non-Hispanic white households.

Figure 2. Difficulty Paying Bills, by Income Level

Household Income Percentage of Respondents Who Reported Difficulty Paying Bills
Less than $25,000 52%
$25,000 to $124,999 27%
$125,000 or more 11%
Overall 28%

SOURCE: Authors' calculations based on 2,046 responses from the ALP survey conducted May 1–6, 2020.

NOTE: The exact wording of the question was "In the past month, how difficult has it been for you to cover your expenses and pay all your bills?" Respondents who selected "very difficult" or "somewhat difficult" are included in this figure. Household income is based on information from ALP's household information survey fielded in February 2020.

Households' methods of coping with these difficulties vary across the income spectrum. A widely cited survey question from the Federal Reserve asks how respondents would pay an emergency expense.[5] To take into account the widespread, unexpected job losses and financial downturn associated with the COVID-19 pandemic, we modified this question to ask people who are in the midst of an emergency—those who reported difficulty in paying their bills—how they are dealing with expenses.

Among households that are struggling to make ends meet, we found that approaches vary significantly across the income spectrum (Table 1). Unsurprisingly, low-income households have few options. They report borrowing from friends and family, selling possessions, and simply being unable to meet expenses. Consistent with these findings, evidence from other surveys reveals rising food insecurity among low-income households.[6]

Middle-income households report using formal credit: putting expenses on credit cards with the hopes of paying the debt off over time, using bank loans and lines of credit, and, in some cases, taking on payday loans. We found fewer reports of payday loans among the low-income group than among the middle-income group. Although this difference was not statistically significant, it might reflect the higher rates of job loss among low-income workers, as documented in other surveys;[7] without a job, a payday loan is not an option.

Among the high-income group, households are likely to report turning to existing assets (such as balances in checking or savings accounts), and they report planning to pay off those expenses they do put on credit cards at the end of the month.

Table 1. Methods of Paying Bills, by Income Level

Methods of Paying Bills Household Income
Less Than $25,000 $25,000 to $124,999 $125,000 or More
By putting it on my credit card and paying it off in full at the next statement 19% 17% 34%
By putting it on my credit card and paying it off over time 30% 37% 40%
With the money currently in my checking/savings account or with cash* 61% 84% 94%
Using a bank loan or line of credit 6% 14% 8%
By borrowing from a friend or family member* 42% 18% 7%
Using a payday loan, deposit advance, or overdraft 6% 13% 0%
By selling something* 48% 39% 7%
By using my stimulus payment 76% 87% 73%
By asking my landlord or mortgage provider for an extension 20% 24% 10%
I wouldn't be able to pay for the expense right now* 46% 33% 1%
Other 9% 8% 2%

SOURCE: Authors' calculations based on the ALP survey conducted May 1–6, 2020.

NOTE: The exact wording of the question was "What methods are you using or do you plan to use to cover your expenses?" Respondents were instructed to select all that applied. Household income is based on information from ALP's household information survey fielded in February 2020. Only respondents who indicated that they found it "very difficult" or "somewhat difficult" to pay their bills were asked this question. Sample size ranges from 475 to 492 because of some nonresponse for individual methods. * indicates that the response was statistically different across income groups at the 5-percent level of significance.

In fact, at all levels of income distribution, households report turning to available cash first to cover their expenses. Other than the lowest income group, 80 to 90 percent said that they would use money currently in checking and savings. The stimulus payment is a lifeline for those reporting having problems meeting current bills; more than 80 percent of those who were struggling to pay bills said that they planned to use the stimulus payment to meet current expenses. Rent and mortgage relief was less commonly reported as a way to pay bills, but it was still important; 20 percent of households having problems meeting current expenses indicated using this method.


Research conducted by

This report describes a subset of results from a May 2020 survey fielded through the ALP to assess the wide-ranging effects of the COVID-19 pandemic on individuals and households. A technical description of the survey, which includes details about the ALP, the objectives of the survey, and information about the fielding of the survey, are presented in Katherine Grace Carman and Shanthi Nataraj, 2020 American Life Panel Survey on Impacts of COVID-19: Technical Documentation, Santa Monica, Calif.: RAND Corporation, RR-A308-1, 2020.

Funding for this research was provided by gifts from RAND supporters and income from operations. The research was conducted by RAND Education and Labor, a division of the RAND Corporation that conducts research on early childhood through postsecondary education programs, workforce development, and programs and policies affecting workers, entrepreneurship, and financial literacy and decisionmaking. Questions about this report should be directed to Katherine Carman at, and questions about RAND Education and Labor should be directed to

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