Thirty percent of Black workers say that their overall financial condition today is worse than it was before the pandemic. Among Black workers with incomes of $40,000 or less, 36 percent said their financial condition was worse, primarily because of job losses, furloughs and reduced hours.
"What we see in this survey, as well as what we know about financial well-being, is that jobs, wages and employee benefits are key components to feeling financially secure,” says Gary Koenig, AARP senior vice president of financial security. “This was true pre-pandemic, was highlighted durifgng the pandemic, and will continue to be the case moving forward.”
Overall optimism for near future
Despite the hardships of the pandemic, 74 percent of Black workers think their financial situation will be better a year from now, compared with 63 percent of Hispanic workers and 45 percent of white workers. Just 8 percent of Black workers expect their situation to be worse a year from now.
Why the optimism? For most Black workers, the major reason (41 percent) was the perception that they would get a job or change jobs. National hiring and wage trends back their expectations: Black unemployment peaked at 16.7 percent in April 2020, but fell to 9.2 percent in June 2021, the latest data available from the Bureau of Labor Statistics. (In comparison, the unemployment rate for all races fell from 14.8 percent in April 2020 to 5.9 percent in June.)
Join today and get instant access to discounts, programs, services, and the information you need to benefit every area of your life.
But that's not all. Nearly the same percentage of Black workers — 40 percent — said the major reason for their optimism was the expectation that they would get a raise or work more hours. Here, too, national trends support their expectations: Credit card balances fell in the first quarter of 2021. Average weekly earnings rose 3.9 percent in June over a year earlier. And average weekly hours for all workers have risen modestly — from 34.1 at the beginning of pandemic restrictions in March 2020 to 34.7 hours in June 2021.
Black workers with incomes above $75,000 were especially optimistic — 79 percent expected their financial situation to improve in the year ahead. Younger Black workers were almost as optimistic, with 76 percent of those ages 25–49 hopeful about their financial future.
Nevertheless, fewer Black workers say they are currently satisfied with their jobs (51 percent) than Hispanic workers (57 percent) and white workers (66 percent). And fewer Black workers express satisfaction with their overall financial situation. Just 51 percent of Black workers say they are at least somewhat satisfied with their financial positions, compared with 57 percent of Hispanic workers and 66 percent of white workers.
Retirement outlook less certain
Despite their optimism for the near future, fewer than half (46 percent) of Black workers say they are very likely to achieve financial security and avoid being a burden in retirement. Those who are 50-plus are the most pessimistic, with just 38 percent thinking that they will have a financially secure retirement, and 44 percent confident that they won't be a burden on others.
Black workers say that lack of money is their largest barrier to a secure retirement (54 percent), followed by debt burdens (40 percent) and the cost of health care (14 percent). During the pandemic, 28 percent of Black workers say they have taken money from retirement savings early or stopped contributing to retirement plans.
Managing debt and reducing expenses are the top issues that Black workers want to work on this year. Fifty percent want to reduce their debt, and 47 percent plan to work on budgeting. Ten percent feel they need to tackle issues related to caring for an adult loved one. And 16 percent of Black workers say they need advice to reach their goals.
Black workers overwhelmingly support the creation of workplace programs to help them build emergency savings. These programs, like 401(k) and other savings plans, would automatically direct money from their paychecks to an emergency savings account. A similar number approve of tax incentives to help workers save for emergencies.
"What we saw is that debt remains a barrier to saving for retirement, and there is a wide gap between what people say they want their financial futures to look like and their expectations of achieving it,” Koenig says. “A good job with steady employment is priority number one, but having a manageable amount of debt and savings for an emergency are keys to financial security today and in the long run."
Just 39 percent of Black workers have a savings account, compared with 60 percent of white workers. And only 43 percent have an employer-provided retirement account, compared with 62 percent of white workers.
The AARP study looked at adults age 25-plus to assess their financial experience from February 2020 through February 2021 — the height of the global COVID-19 pandemic. A total of 5,430 Black, Hispanic and white workers completed the survey, which was taken Jan. 13, 2021 through Feb. 8, 2021. Of those who responded, 1,911 Black workers completed the survey.
John Waggoner covers all things financial for AARP, from budgeting and taxes to retirement planning and Social Security. Previously he was a reporter for Kiplinger's Personal Finance and USA Today, and has written books on investing and the 2008 financial crisis. Waggoner's USA Today investing column ran in dozens of newspapers for 25 years.