Economic News

Employed workers suffering lost income go frugal, shun credit

by Broderick Perkins

6/30/10 - It's not only the 15 million unemployed Americans who are struggling to make ends meet.

Since the onset of the Great Recession 30 months ago, more than half of the employed adults in the nation's workforce of 154 million people have suffered lost income due to some change at work.

Not all of the Pew Research Center's exhaustive new report, "A Balance Sheet at 30 Months: How the Great Recession Has Changed Life in America," is bad news.

The economic squeeze has led to a budding frugality as financially struggling consumers have turned to savings and cutting back, rather than piling on credit to see them through hard times, according to the study released today.

Among those currently employed, 28 percent have had work hours reduced; 23 percent suffered a pay cut; 12 percent were forced to take an unpaid leave and 11 percent were forced to switch to part-time hours.

Among the nation's total workforce of 154 million, 32 percent or nearly 50 million workers, have been unemployed at some time during the recession and 6 percent have been under-employed as a part-time worker seeking full-time employment.

Pew's report analyzed "economic outcomes, behavioral changes and attitudinal trends" related to the recession. It is based on a Pew Research Center survey of 2,967 adults conducted from May 11 to May 31, 2010, on cellular and landlines telephones and also on a Pew Research analysis of government economic and demographic data.

To make ends meet Americans are changing their lifestyles.

• More than seven-in-ten (71 percent) have purchased less expensive brands.

• Nearly six-in-ten (57 percent) have cut back or canceled vacation plans.

• About half (49 percent) have loaned money to someone.

• Twenty-four percent have borrowed money from someone.

• Three-in-ten say they have cut back on alcohol or cigarettes.

• Nearly one-in-ten (9 percent) say they have moved back in with their parents. Among adults aged 18 to 29, 24 percent have returned to the nest.

Americans suffering economic hardship are not resorting to credit to bail them out.

More than six-in-ten (62 percent) Americans say that since the recession began, they've cut back on household spending.

Half say they have reduced the amount they owe on mortgages, credit cards, car loans and other borrowing.

Of those who have savings or retirement accounts, more than four-in-ten (42 percent) say they've adopted a more conservative approach to saving and investing, compared with just 8 percent who say they've taken a more aggressive approach.

There's a good chance these budding, but sound financial habits will outlive the recession.

Asked to predict their financial behaviors once the economy recovers, 48 percent said they plan to save more, 31 percent said they plan to spend less and 30 percent say they plan to borrow less. Only small percentages said they plan to save less and borrow and spend more.

And how long before happy days are here again?

Sixty-three percent of those who said their family finances have suffered during the recession believe the nation is still at least three years away from recovery.

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