Job Loss and Financial Distress During COVID-19: The Protective Role of Emergency Savings

Nearly a quarter of U.S. households experienced job or income losses related to the COVID-19 pandemic. Liquid assets mitigate financial distress amidst financial shocks such as job loss, yet this relationship concerning the COVID-19 pandemic is unknown. Using a nationally representative sample of U.S. respondents (N = 4,765) who completed a survey in the early days of the pandemic, we examined pre-pandemic liquid assets as a moderator of the relationship between COVID-19-related job and income loss and financial distress such as difficulty meeting financial obligations and the use of high-cost financial resources. Estimates from propensity score-weighted linear probability models indicated that greater liquid assets lessened the probability of experiencing all eight measures of financial distress and moderated the effect of COVID-19-related job/income loss on five out of eight measures. These results hold when examining financial distress specifically attributed to COVID-19 and controlling for public program participation and Coronavirus Aid, Relief, and Economic Security Act supports.