RESEARCH & ANALYSIS Economic Well-Being of U.S. Households in 2021 May 2022 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
The Federal Reserve System is the central bank of the United States. It performs five key functions to promote the effective operation of the U.S. economy and, more generally, the public interest. The Federal Reserve ■conducts the nation's monetary policy to promote maximum employment and stable prices in the U.S. economy; ■promotes the stability of the financial systemand seeks to minimize and contain systemic risks through active monitoring and engagement in the U.S. and abroad; ■promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole; ■fosters payment and settlement system safety and efficiency through services to the banking industry and U.S. government that facilitate U.S.-dollar transactions and payments; and ■promotes consumer protection and community development through consumer-focused supervision and examination, research and analysis of emerging consumer issues and trends, community economic development activities, and administration of consumer laws and regulations. To learn more about us, visit www.federalreserve.gov/aboutthefed.htm.
RESEARCH & ANALYSIS Economic Well-Being of U.S. Households in 2021 May 2022 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Contents Executive Summary......................................................................................................... 1 Overall Financial Well-Being ................................................................................................ 2 Income ............................................................................................................................. 2 Employment ...................................................................................................................... 3 Dealing with Unexpected Expenses ..................................................................................... 3 Banking and Credit ............................................................................................................ 3 Housing ............................................................................................................................ 4 Education .......................................................................................................................... 4 Student Loans ................................................................................................................... 5 Retirement and Investments ............................................................................................... 5 Overall Financial Well-Being .......................................................................................... 7 Current Financial Situation ................................................................................................. 7 Changes in Financial Situation over Time ........................................................................... 12 Local and National Economic Conditions............................................................................ 14 Overall Life Satisfaction .................................................................................................... 15 Income ............................................................................................................................. 17 Level and Source ............................................................................................................. 17 Child Tax Credit ................................................................................................................ 19 Income Variability ............................................................................................................. 20 Employment .................................................................................................................... 23 Reasons for Not Working .................................................................................................. 23 Working from Home.......................................................................................................... 25 Job Changes.................................................................................................................... 28 COVID-19 Precautions at Work .......................................................................................... 29 Part-Time Jobs, Temporary Jobs, and Irregular Schedules .................................................... 31 The Gig Economy ............................................................................................................. 31 Dealing with Unexpected Expenses ........................................................................... 35 Small, Unexpected Expenses ............................................................................................ 35 Health-Care Expenses ...................................................................................................... 38 Hardships from Natural Disasters ..................................................................................... 39 Banking and Credit ........................................................................................................ 43 Unbanked and Underbanked ............................................................................................. 43 Overdraft ......................................................................................................................... 46 Credit Outcomes and Perceptions ..................................................................................... 47 Credit Cards .................................................................................................................... 48 Buy Now, Pay Later ........................................................................................................... 49 iii
Housing............................................................................................................................ 53 Living Arrangements ......................................................................................................... 53 Moving ............................................................................................................................ 54 Homeownership and Mortgages ........................................................................................ 55 Renting and Evictions ....................................................................................................... 56 Education ........................................................................................................................ 61 Modes of Learning in Primary and Secondary School .......................................................... 61 Perceptions of Children’s Performance in School ................................................................ 64 Modes of Learning in Higher Education .............................................................................. 65 Overall Value of Higher Education ...................................................................................... 66 Look Back on Education Decisions .................................................................................... 68 Student Loans ................................................................................................................ 71 Incidence and Types of Education Debt .............................................................................. 71 Student Loan Payment Status ........................................................................................... 73 Relation to Financial Well-Being ......................................................................................... 75 Relation to Self-Assessed Value of Higher Education .......................................................... 75 Retirement and Investments ....................................................................................... 77 Current Retirees .............................................................................................................. 77 Retirement Savings among Non-Retirees ........................................................................... 79 Financial Literacy and Experience with Investments ............................................................ 82 Description of the Survey ............................................................................................. 85 Survey Participation ......................................................................................................... 85 Targeted Outreach and Incentives...................................................................................... 85 Survey Questionnaire ....................................................................................................... 86 Survey Mode ................................................................................................................... 86 Sampling and Weighting ................................................................................................... 87 Item Non-response and Imputation .................................................................................... 88 Acknowledgments ......................................................................................................... 91 iv Economic Well-Being of U.S. Households in 2021
Executive Summary This report describes the responses to the 2021 Survey of Household Economics and Decisionmaking (SHED). The Federal Reserve Board has fielded this survey each fall since 2013 to understand the wide range of financial challenges and opportunities facing families in the United States.1 The findings in this report primarily reflect financial circumstances in late October and early November of 2021, before the increase in coronavirus (COVID-19) cases from the Omicron variant. Despite persistent concerns that people expressed about the national economy, the survey highlights the positive effects of the recovery on the individual financial circumstances of U.S. families. In 2021, perceptions about the national economy declined slightly. Yet self-reported financial well-being increased to the highest rate since the survey began in 2013. The share of prime-age adults not working because they could not find work had returned to pre-pandemic levels. More adults were able to pay all their monthly bills in full than in either 2019 or 2020. Additionally, the share of adults who would cover a $400 emergency expense completely using cash or its equivalent increased, reaching a new high since the survey began in 2013. Parents with children at home, who had been disproportionally affected by the pandemic in 2020, exhibited notable improvements in their financial well-being in 2021. After declining in 2020, parents’ assessments of their financial circumstances rebounded in 2021. This improvement is consistent both with reduced childcare burdens as schools returned to in-person classes, as well as additional financial resources provided to parents such as the enhanced child tax credit (CTC). Most parents also said that their child was doing better academically, socially, and emotionally in 2021 than they were a year earlier. The report also highlights several new topics added to the survey in 2021, such as disruptions from natural disasters, rental debt, and employer vaccine mandates. These new questions provide additional context on the experiences of U.S. adults in handling unexpected expenses, paying for housing, and navigating ongoing changes in the labor market. To better understand consumer experiences with emerging products, cryptocurrencies and “Buy Now, Pay Later” (BNPL) products were included on the survey for the first time. While most adults did not use cryptocurrencies in the prior year, cryptocurrency use as an investment was far more 1 The latest survey interviewed over 11,000 individuals in October and November 2021. The anonymized data, as well as appendixes containing the complete SHED questionnaire and responses to all questions in the order asked, are also available at https://www.federalreserve.gov/consumerscommunities/shed.htm. 1
common than use for transactions or purchases. However, while transactional use of cryptocurrencies was low, those using cryptocurrencies for purchases rather than as investments frequently lacked traditional bank and credit card accounts. The report also provides insights into long-standing issues related to individuals’ personal financial circumstances, including returns to education, housing situations, and retirement savings. In many cases, the report finds that disparities by education, race and ethnicity, and income persisted in 2021. Key findings from the survey include the following: Overall Financial Well-Being In the fourth quarter of 2021, the share of adults who were doing at least okay financially increased relative to 2020. With these improvements, overall financial well-being reached its highest level since the survey began in 2013. • Seventy-eight percent of adults were either doing okay or living comfortably financially, the highest share with this level of financial well-being since the survey began in 2013. • Parents experienced particularly large gains in financial well-being over the prior year. In 2021, three-fourths of parents said they were doing at least okay financially, up 8 percentage points from 2020. • Forty-eight percent of adults rated their local economy as “good” or “excellent” in 2021. This share was up from 43 percent in 2020 but well below the 63 percent of adults who rated their local economy as “good” or “excellent” in 2019, before the pandemic. Income The majority of parents received additional income in 2021 through the monthly CTC. Most higherincome parents primarily saved this money, while most lower-income parents primarily spent it on housing, items for their children, or food. • Three in 10 CTC recipients with income less than $50,000 used the largest portion of their credit on housing expenses, just over 2 in 10 spent the largest portion on their child, and 15 percent spent the largest portion on food. • Fifteen percent of adults with income less than $50,000 struggled to pay their bills because of varying monthly income. This challenge was even more acute among people who were parents in this income range, of whom 27 percent struggled to pay their bills because of income variability. 2 Economic Well-Being of U.S. Households in 2021
Employment Many people switched jobs in 2021, and those who did generally said that their new job was better than their old one. Most employees also said that their employer was taking about the right amount of COVID-19 precautions, although some people not working indicated that concerns about the virus contributed to the choice not to work. • Fifteen percent of workers said they were in a different job than 12 months earlier. Just over 6 in 10 people who changed jobs said their new job was better overall, compared with 1 in 10 who said that it was worse. • Seventy-seven percent of employees said their employers were taking the right amount of precautions against COVID-19. Those who did not were almost evenly split between thinking their employers were taking too many and too few precautions. • Seven percent of all prime-age adults said that they were not working and that concerns about getting COVID-19 contributed at least in part to their decision not to work. • Among those working from home, the share of employees who would look for another job if their employer required they work in person was similar to the share who would look after a pay freeze. Dealing with Unexpected Expenses The overall share of adults who would cover a small emergency expense using cash or its equivalent increased to the highest level since 2013, when the survey began. Financial preparedness is an important buffer for those who encounter unexpected events, such as medical expenses or disruptions from natural disasters. • Sixty-eight percent of adults said they would cover a $400 emergency expense exclusively using cash or its equivalent, up from 50 percent who would pay this way when the survey began in 2013. • Twenty percent of adults had major, unexpected medical expenses in the prior 12 months, with the median amount between $1,000 and $1,999. • Sixteen percent of adults experienced a financial disruption or hardship from a natural disaster or severe weather event in the prior year. Banking and Credit Most adults had a bank account and were able to obtain credit from mainstream sources in 2021, but notable gaps in access to basic financial services still exist among Black and Hispanic adults and those with low income. Executive Summary 3
• Six percent of adults did not have a bank account. Black (13 percent) and Hispanic (11 percent) adults were more likely not to have a bank account than adults overall. • Eleven percent of adults with a bank account paid an overdraft fee in the previous 12 months, with higher shares of low-income adults having overdrafted over this period. • Three percent of adults used cryptocurrency for purchases or money transfers. Among these transactional users of cryptocurrencies, 13 percent did not have a bank account. Housing Low mortgage rates resulted in a continuation of the wave of refinancing in 2021, although highincome borrowers were primarily the beneficiaries of this opportunity to reduce monthly housing costs. The share of renters who had been behind on their rent in the prior 12 months was higher than before the pandemic, and many still owed back rent at the time of the survey. • Nearly one-fourth of all homeowners with a mortgage refinanced their mortgage in 2021. This includes nearly 3 in 10 mortgage holders with an income of at least $100,000, but a lower 16 percent of those with income under $50,000. • Seventeen percent of renters were behind on their rent at some point in 2021, including 8 percent who were behind at the time of the survey in late 2021. Among those still behind in late 2021, the total outstanding back rent was between $9.3 billion and $10.9 billion. Education At the time of the survey, most parents of primary or secondary school students reported that their children were attending classes completely in person. Most parents also said that their child was doing better academically compared with a year earlier. In contrast to the experience of K–12 students, online education remained prevalent at higher education institutions in the fall of 2021. • Ninety-three percent of parents with a child in public or private school said their youngest child who was enrolled in K–12 education was attending classes completely in person, compared with 27 percent attending completely in person in 2020. • Fifty-six percent of parents with a child in public or private school said that their child’s academic performance improved in 2021, compared with 7 percent who said it declined. • Seventy-six percent of higher education students in 2021 said they prefer online or hybrid education, given the situation with the pandemic. 4 Economic Well-Being of U.S. Households in 2021
Student Loans The share of student loan borrowers who were behind on their payments in the fall of 2021 declined relative to before the pandemic. These borrowers also saw increases in their financial well-being compared with prior years. • Twelve percent of borrowers were behind on their payments in 2021, a significant decline from the 17 percent who were behind in the fall of 2019. • Seventy-three percent of those who went to college and have student loans for their own education were doing at least okay financially in 2021, up from 65 percent before the pandemic. Retirement and Investments Among non-retirees, a higher share reported they felt like their retirement savings were on track than in either 2020 or 2019. However, a sizeable share of recent retirees said COVID-related factors affected the timing of their retirement decision. • Forty percent of non-retirees thought their retirement saving was on track, up from 36 percent in 2020 and 37 percent in 2019. • Twenty-five percent of adults who retired in the prior 12 months, and 15 percent of those who retired one to two years ago, said factors related to COVID-19 contributed to when they retired. Executive Summary 5
Overall Financial Well-Being The share of adults doing at least okay financially rose to the highest level since the survey began in 2013.2 Although financial challenges and risks to the recovery remain, this generally positive assessment of financial well-being was consistent with improved economic conditions and additional COVID-19 relief measures in 2021. The increase in financial well-being occurred broadly across the population and was especially large among parents. Even so, existing gaps by education and by race and ethnicity persisted. Current Financial Situation At the end of 2021, 78 percent of adults were doing at least okay financially, meaning they reported either “doing okay” financially (39 percent) or “living comfortably” (39 percent). The rest reported either “just getting by” (16 percent) or “finding it difficult to get by” (6 percent). The 78 percent of adults doing at least okay financially in 2021 was up 3 percentage points from 2020 and was well above the 62 percent doing at least this well in 2013 (figure 1). As further evidence of greater financial wellbeing in 2021, the share of adults who said they were living comfortably rose by 4 percentage points. This increase in financial wellbeing aligns with improved economic conditions and the additional COVID-19 relief measures enacted in 2021.3 2 The survey was fielded in October and November 2021 and results reflect financial situations at that time. References to “in 2021” refer to the 12-month period before the survey rather than the precise calendar year. 3 The American Rescue Plan Act of 2021 became law in March 2021 and provided additional relief to most households to address the continued impact of the COVID-19 pandemic; see https://www.congress.gov/bill/117th-congress/housebill/1319 and https://www.whitehouse.gov/wp-content/uploads/2021/03/American-Rescue-Plan-Fact-Sheet.pdf. Figure 1. At least doing okay financially (by year) 78 75 75 75 74 70 69 65 62 2021 2020 2019 2018 2017 2016 2015 2014 2013 Percent Note: Among all adults. 7
Adults with at least a bachelor’s degree continued to be much more likely to be doing at least okay financially (91 percent) than those with less than a high school degree (49 percent). The 42 percentage point gap in well-being was little changed from the 44 percentage point gap in 2020 (figure 2). Moreover, looking over the past five years shows a steady and sizeable increase in financial well-being among those with at least a bachelor’s degree (an increase of 9 percentage points in the share doing at least okay from 2016 to 2021), while adults with less than a high school degree have not experienced lasting gains in financial well-being. Parents were one group that experienced particularly large gains in financial well-being over the prior year. In 2021, three-fourths of parents said they were doing at least okay financially, up 8 percentage points from 2020 (figure 3). Low-income parents saw even more substantial increases in their financial well-being in 2021. Among parents with income under $25,000, the share doing at least okay financially rose by 13 percentage points, from 40 percent in 2020 to 53 percent in 2021. The share of parents with income between $25,000 and $49,999 who were doing at least okay financially increased by 7 percentage points, while those with higher income exhibited more modest improvements. A potential explanation for the large rise in financial well-being among parents is the expansion of the CTC. The American Rescue Plan temporarily increased the CTC from $2,000 per child to $3,000 per child ($3,600 for a child under age 6), increased eligibility among low-income families, Figure 2. At least doing okay financially (by year and education) Percent Bachelor’s degree or more Some college/technical or associate degree High school degree or GED Less than a high school degree 2021 2020 2019 2018 2017 2016 2015 2014 2013 89 88 87 85 82 80 77 77 62 55 47 42 48 46 56 49 54 45 60 64 64 69 69 66 67 62 66 68 69 72 73 72 91 49 70 74 Note: Among all adults. Results for 2017 to 2019 differ slightly from previous reports because of adjustments in education coding for consistency. 8 Economic Well-Being of U.S. Households in 2021
and paid the credit monthly (the “Income” section of this report discusses how parents used this credit).4 Many families also saw a return to in-person schooling in the fall of 2021, which may have eased childcare responsibilities and allowed some parents to return to work or work more hours. The increase in financial well-being among parents in 2021 contrasts with the decline they experienced from 2019 to 2020 (figure 3).5 Parents were hit especially hard by the pandemic in 2020, having experienced higher rates of job loss and having faced disruptions to childcare and in-person K–12 schooling that affected their availability to work. (See the report Economic Well-Being of U.S Households in 2020 for additional information).6 4 More details on the enhanced CTC are available from U.S. Department of the Treasury, “Child Tax Credit,” https:// home.treasury.gov/policy-issues/coronavirus/assistance-for-american-families-and-workers/child-tax-credit. 5 Results in earlier years were updated for consistency with 2021 methods for classifying education status so may differ slightly from earlier reports. 6 See Economic Well-Being of U.S. Households in 2020, https://www.federalreserve.gov/publications/files/2020-reporteconomic-well-being-us-households-202105.pdf. Figure 3. At least doing okay financially (by year and parental status) Percent Parents (living with own children under age 18) All other adults 2021 2020 2019 2018 2017 2016 2015 79 78 77 76 75 71 70 65 68 71 72 71 67 75 Note: Among all adults. Overall Financial Well-Being 9
Differences in financial well-being across racial and ethnic groups persisted in 2021. Eightyeight percent of Asian adults were doing at least okay financially, followed by 81 percent of White adults, 71 percent of Hispanic adults, and 68 percent of Black adults (figure 4).7 All racial and ethnic groups measured in the survey saw an increase in financial well-being over the prior year, with Hispanic adults seeing a particularly sharp increase. In 2021, the 71 percent of Hispanic adults who said they were doing at least okay was up 7 percentage points from 2020. The increase in well-being for Hispanic adults was largely concentrated among parents, similar to the pattern for adults overall. The share of Hispanic parents doing at least okay increased 14 percentage points (to 70 percent) in 2021. However, Hispanic adults not living with their own children under age 18 saw a relatively slight increase (figure 5). 7 The reported categorizations reflect the largest statistical groupings but are neither exhaustive nor the only distinctions important to understand. Sample sizes for other racial and ethnic groups and subpopulations are not large enough to produce reliable estimates. Asian adults were separately identified for the first time in the survey in the Economic WellBeing of U.S. Households in 2020, and in 2021 the Federal Reserve Board identified Asian adults in earlier years of the survey. However, results for Asian adults are sometimes excluded when the sample size is insufficient to provide a reliable estimate. Figure 4. At least doing okay financially (by year and race/ethnicity) Percent 84 80 79 85 78 81 77 78 72 79 71 75 68 79 65 75 56 53 61 65 66 66 65 55 55 63 64 64 67 66 64 64 88 81 71 68 Asian Hispanic Black White 2021 2020 2019 2018 2017 2016 2015 2014 2013 Note: Among all adults. 10 Economic Well-Being of U.S. Households in 2021
Other dimensions across which financial well-being differed include income, geography, LGBTQ+ status, and disability status (table 1). Fifty-five percent of adults with family income less than $25,000 were doing at least okay financially, compared with 96 percent of adults with family income greater than $100,000. People living in low- or moderate-income communities also had lower levels of financial well-being than those living in middle- or upper-income communities.8 Additionally, those living in metro areas were faring better than those in non-metro communities.9 Other surveys have shown that adults identifying as LGBTQ+ were more likely to face economic insecurity, suggesting LGBTQ+ status may be associated with financial well-being.10 Consistent with this evidence, the 2021 SHED found that 67 percent of adults identifying as LGBTQ+ were doing at least okay financially, compared with 78 percent of the overall population.11 Moreover, an even lower 62 percent of adults who were transgender or nonbinary, or who reported their sexual 8 Neighborhood income is defined using the Community Reinvestment Act definition. Under this definition, low- and moderate-income refers to communities that have a median family income of less than 50 percent of the area median income. For details on the definition, see https://www.federalreserve.gov/consumerscommunities/cra_resources.htm. 9 Non-metro areas are defined throughout this report as being outside of a Metropolitan Statistical Area (MSA), and metro areas are those inside of an MSA, as defined by the Office of Management and Budget. This definition differs from the Census Bureau’s definition of urbanized areas. For details, see U.S. Census Bureau, “2010 Urban Area FAQs,” https:// www.census.gov/programs-surveys/geography/about/faq/2010-urban-area-faq.html. 10 For example, see U.S. Census Bureau, “Household Pulse Survey Shows LGBT Adults More Likely to Report Living in Households with Food and Economic Insecurity than Non-LGBT Respondents,” https://www.census.gov/library/stories/ 2021/08/lgbt-community-harder-hit-by-economic-impact-of-pandemic.html. 11 Survey respondents could report their sexual orientation and gender identity on a demographic profile survey previously conducted by the survey vendor. Respondents are classified as LGBTQ+ based on responses to these questions. Figure 5. At least doing okay financially (by year, race/ethnicity, and parental status) 2021 2020 2019 2018 Asian Hispanic Black White 2021 2020 2019 2018 Percent Percent 84 84 82 66 67 68 67 69 68 79 80 82 88 70 71 82 83 87 79 63 62 53 66 62 56 76 76 73 89 61 70 79 Parent s All other adults Note: Among all adults. Parents are adults living with their own children under age 18. Overall Financial Well-Being 11
orientation as something other than straight, gay, lesbian, or bisexual, were doing at least okay financially.12 Finally, 60 percent of adults with a disability were doing at least okay financially, markedly lower than the overall population.13 Prior to 2021, the SHED did not include disability status, so we cannot observe how financial well-being has evolved for adults with a disability through the pandemic. However, as discussed in the “Employment” section of this report, other surveys find evidence of an increase in employment among adults with a disability in recent years. Changes in Financial Situation over Time The survey also tracks overall financial wellbeing by asking respondents whether they are better or worse off financially than they were 12 months earlier. Measuring well-being in this way helps track changes in perceived wellbeing over time, as some individuals may feel worse off financially than they were a year earlier, for instance, even if they feel they are still doing okay overall (or that their financial wellbeing is improving even if they are still struggling overall). The share of adults who said they were worse off financially than a year earlier fell from 24 percent in 2020 to 20 percent in 2021, yet remained much higher than the 14 percent seen in 2019, 12 Differences in financial well-being between adults identifying as LGBTQ+ and other adults were present across age groups. For example, only 58 percent of LGBTQ+ adults ages 45 to 54 were doing at least okay, compared with 75 percent among all adults in that age group. 13 Disability status is defined based on a five-question functional limitation sequence that asks about hearing, vision, ambulatory, self-care, and independent living difficulties. This approach for determining disability status is similar to the six-question sequence used for the American Community Survey (see U.S. Census Bureau, “How Disability Data Are Collected from the American Community Survey,” https://www.census.gov/topics/health/disability/guidance/datacollection-acs.html). Table 1. At least doing okay financially (by demographic characteristics) Percent Characteristic 2021 1-year change 5-year change Family income Less than $25,000 55 3 8 $25,000–$49,999 67 2 5 $50,000–$99,999 85 1 5 $100,000 or more 96 1 4 Disability status Disability 60 n/a n/a No disability 81 n/a n/a LGBTQ+ status Identifies as LGBTQ+ 67 -1 n/a Does not identify as LGBTQ+ 79 2 n/a Marital status Married 86 4 9 Not married 67 0 6 Place of residence Metro area 79 3 9 Non-metro area 72 3 4 Neighborhood income Low or moderate income 66 4 6 Middle or upper income 82 2 9 Overall 78 3 8 Note: Among all adults. Low- or moderate-income neighborhoods are defined here using the definition from the Community Reinvestment Act. LGBTQ+ status was first identifiable in the 2020 survey and disability status was first identifiable in the 2021 survey. Here and in subsequent tables and figures, percentages may not sum to 100 because of rounding. n/a Not applicable. 12 Economic Well-Being of U.S. Households in 2021
before the pandemic (figure 6). The share doing about the same as a year earlier increased 3 percentage points to 54 percent, while the share who said they were better off was unchanged at 25 percent. When asked to compare their financial situation to two years ago, before the pandemic, nearly one-fourth (24 percent) said they were worse off. Forty percent said they were doing about the same, and 36 percent said they were better off than two years ago.14 Those who were doing worse off than before the pandemic were disproportionately adults with lower family income and less education. To get a longer-term perspective, individuals were also asked to compare their current financial circumstances to how they perceived their parents’ financial situation at the same age. Looking across a generation shows evidence of economic progress over time, despite financial setbacks during the pandemic. A majority of adults (57 percent) thought they were better off financially than their parents were, up from 54 percent in 2020 and back to the pre-pandemic level from 2019. Twenty-one percent thought they were worse off than their parents were at the same age. 14 A subset of respondents completed both the 2020 and 2021 surveys. Combining the one-year change in well-being results in the 2020 and 2021 surveys for these repeat respondents leads to similar results. Twenty-four percent reported that their financial well-being declined in one year and did not improve in the other, while 34 percent indicated that their well-being improved in one year and did not decline in the other. The remaining 43 percent either said their well-being was about the same in each year (35 percent) or had an improvement in one year and a decline in the other (7 percent). Figure 6. Financial situation compared with 12 months prior (by year) Percent Better off Worse off 2021 2020 2019 2018 2017 2016 2015 2014 25 32 31 33 27 27 29 21 19 17 15 13 14 25 20 24 Note: Among all adults. Overall Financial Well-Being 13
People holding at least a bachelor’s degree were more likely to experience upward economic mobility, relative to those with less education. This is particularly true among first-generation college graduates, among whom 70 percent thought they were better off financially than their parents were.15 Local and National Economic Conditions Along with questions about their own financial circumstances, people were asked to rate their local economy and the national economy as “excellent,” “good,” “only fair,” or “poor.” The share of adults rating their local economy favorably increased from 2020 to 2021. Forty-eight percent of adults rated their local economy as “good” or “excellent” in 2021, with the rest rating conditions as “only fair” or “poor.” This share was up from 43 percent in 2020, but well below the 63 percent of adults who rated their local economy as “good” or “excellent” in 2019, before the pandemic. This pattern was generally similar across racial and ethnic groups, with higher shares rating their local economy favorably relative to 2020 but still below the share from 2019 (table 2). One exception was Black adults: the share of Black adults rating their local economy favorably increased 10 percentage points from 2020 to 2021, and was much closer to the pre-pandemic level than for other groups. However, Black and Hispanic adults remained the least likely to report that their local economy was faring well. People’s perceptions about their local economy diverged in 2021 for metro and nonmetro areas. While perceptions of the local economy improved for residents of metro areas, perceptions ticked down 1 percentage point for those in non-metro areas. Additionally, the 34 percent of non-metro residents who rated their local economy as “good” or “excellent” remained far below the 53 percent that did so in 2019. 15 First-generation college graduates are those who have at least a bachelor’s degree and who report that neither of their parents completed at least a bachelor’s degree. Table 2. Self-assessment of the local economy as good or excellent (by race/ethnicity and place of residence) Percent Characteristic 2019 2020 2021 Race/ethnicity White 67 46 50 Black 46 32 42 Hispanic 57 39 44 Asian 72 44 61 Place of residence Metro area 65 44 50 Non-metro area 53 35 34 Note: Among all adults. 14 Economic Well-Being of U.S. Households in 2021
Similar to people’s perceptions of their local economy, the share rating the national economy favorably fell precipitously from 2019 to 2020, after the onset of the pandemic (figure 7). However, people’s perceptions of the national economy continued to decline in 2021. Only 24 percent of adults rated the national economy as “good” or “excellent” in 2021, down 2 percentage points from 2020 and about half the rate seen in 2019. This trend contrasts starkly with people’s increasingly favorable assessment of their own financial well-being. Overall Life Satisfaction In addition to questions on financial wellbeing, the 2021 survey included a question on overall life satisfaction to provide a broader look at how people were faring. Respondents rated how satisfied they were with life as a whole on a scale from 0 to 10. Fifty-eight percent of adults reported “high” life satisfaction (rating 7 to 10), 30 percent reported “medium” life satisfaction (rating 4, 5, or 6), and 11 percent reported “low” life satisfaction (rating 0 to 3). Life satisfaction was strongly associated with income. Nearly three-fourths (73 percent) of adults with family income of $100,000 or more reported high life satisfaction, compared with 41 percent among those with family income less than $25,000. Differences by education were also large, as were those by disability status and LGBTQ+ status (table 3).16 Differences in overall life satisfaction by race/ethnicity, on the other hand, were small. The shares of White, Black, and Hispanic adults reporting high life satisfaction were all within 2 percentage points of the share doing so for the overall population. Asian adults exhibited the largest difference from the overall population, with 63 percent reporting high life satisfaction. 16 The scales used to measure life satisfaction and financial well-being are not directly comparable. Figure 7. Assessment of own financial well-being, local economy, and national economy (by year) 78 75 75 75 74 41 51 50 26 24 57 64 63 43 48 Own financial well-being (doing at least okay) Local economy (good or excellent) National economy (good or excellent) 2021 2020 2019 2018 2017 Percent Note: Among all adults. Overall Financial Well-Being 15
Table 3. Share of adults with high life satisfaction (by demographic characteristics) Characteristic Percent Family income Less than $25,000 41 $25,000–$49,999 51 $50,000–$99,999 61 $100,000 or more 73 Education Less than a high school degree 40 High school degree or GED 53 Some college/technical or associate degree 55 Bachelor’s degree or more 67 Race/ethnicity White 59 Black 56 Hispanic 57 Asian 63 Disability status Disability 41 No disability 62 LGBTQ+ Identifies as LGBTQ+ 46 Does not identify as LGBTQ+ 60 Parental status Not living with own children under age 18 57 Parent (living with own children under age 18) 62 Place of residence Metro area 59 Non-metro area 53 Overall 58 Note: Among all adults. 16 Economic Well-Being of U.S. Households in 2021
Income Income is central to most people’s financial well-being. Recognizing this, the survey included a series of questions on income level and sources, as well as monthly income volatility. Most parents with a child under age 18 received additional income in 2021 from the CTC. Parents used these monthly payments in a variety of ways, including saving them, spending them on food, and spending them on rent, mortgage, and utilities. Most adults had income that was roughly the same each month. For adults with varying monthly income, 3 in 10 reported that the volatility caused financial challenges. Income variability was more likely to result in financial challenges among those with lower income. Level and Source Family income in this survey is the cash income from all sources, before taxes and deductions, that the respondents and their spouse or partner received during the previous year. Income is reported in dollar ranges and not exact amounts. Just over one-fourth of adults had a family income below $25,000 in 2021, and nearly one-third had $100,000 or more (table 4). Family income varied dramatically by race and ethnicity in 2021. Forty-three percent of Black adults and 40 percent of Hispanic adults had a family income below $25,000. This is at least twice the rate among White and Asian adults. Conversely, White and Asian adults were disproportionately likely to have family income above $100,000. Labor earnings were the most common source of income, but many people had other sources of income as well. Sixty-seven percent of adults and their spouse or partner received wages, Table 4. Family income (by race/ethnicity) Percent Race/ ethnicity Less than $25,000 $25,000– $49,999 $50,000– $99,999 $100,000 or more White 20 16 27 37 Black 43 18 22 17 Hispanic 40 18 22 20 Asian 17 10 23 51 Overall 26 16 25 32 Note: Among all adults. 17
salaries, or self-employment income (collectively referred to here as labor income) (figure 8), matching the share from 2020. Yet, 59 percent of adults and their spouse or partner received nonlabor income in 2021.17 The share of adults receiving unemployment income in 2021 (9 percent) remained higher than before the pandemic but was lower than in 2020, when the job losses caused by the COVID-19 pandemic peaked. Individuals who received income from unemployment insurance in 2021 reported that they were most likely to learn about their eligibility from their employer (45 percent), followed by their own internet research (32 percent). Assistance from nonprofits and private sources—including financial support from a friend or family member living outside of their home—can also supplement family income. Fifteen percent of adults ages 21 and older received at least one type of assistance from private or nonprofit 17 Non-labor income is defined as income from interest, dividends, or rental income; social security (including old age and Disability Insurance (DI)); Supplemental Security Income (SSI), Temporary Assistance for Needy Families (TANF), or cash assistance from a welfare program; unemployment income; or income from a pension. Non-labor income does not include Economic Impact Payments, tax credits such as the Earned Income Tax Credit, or in-kind benefits. Figure 8. Family income sources 2021 2020 Any non-labor income Unemployment income SSI, TANF, or cash assistance from a welfare program Social security (including old age and DI) Interest, dividends, or rental income Non-labor income Wages, salaries, or self-employment income Percent 67 67 32 33 27 27 5 5 14 9 61 59 Note: Among all adults. Respondents could select multiple answers. DI is Disability Insurance; SSI is Supplemental Security Income; and TANF is Temporary Assistance for Needy Families. Key identifies bars in order from top to bottom. 18 Economic Well-Being of U.S. Households in 2021
sources in 2021 (table 5). Nearly 1 in 10 adults received groceries or meals from a food pantry, religious organization, or community organization, down 2 percentage points from 2020. Seven percent of adults ages 21 and older received financial assistance from a friend or family member living outside of their home, essentially unchanged from 2020. On the other hand, 15 percent of adults provided support to others. Adults with less education were more likely to receive at least one type of assistance from private or nonprofit sources. More than 3 in 10 (34 percent) adults with less than a high school degree received this type of assistance, compared with less than 1 in 10 adults with at least a bachelor’s degree. Child Tax Credit Starting in July 2021, most parents of children under age 18 saw their income supplemented by the enhanced CTC. Eighteen percent of all adults, and 70 percent of adults living with their children under age 18, reported receiving monthly CTC payments in 2021.18 An additional 5 percent of adults living with children under age 18 did not know if they received monthly CTC payments. Parents who received monthly CTC payments most frequently saved the payments, spent them on their child, or used them for necessities. Saving was the most common use of the monthly CTC payments, with 43 percent of recipients saying they saved at least a portion of them. 18 This estimate corresponds to 27 million payments to 52 million children. Administrative data from the Treasury Department find that 36 million payments were made in December 2021 for 61 million qualifying children (U.S. Department of the Treasury, By State: Advance Child Tax Credit Payments Distributed in December 2021(Washington, DC: Department of the Treasury, December 2021), https://home.treasury.gov/system/files/131/Advance-CTC-Payments-DisbursedDecember-2021-by-State-12152021.pdf). The lower estimate of parents reporting the credit in the SHED suggests that some parents either did not know their family received the payment or did not know that it was the CTC. Table 5. Financial assistance received (by educational attainment) Percent Characteristic Free groceries or meals Financial support from religious or community organization Financial support from friends or family not in household Received at least one type of private or nonprofit support Less than a high school degree 27 5 15 34 High school degree or GED 13 2 7 17 Some college/technical or associate degree 10 2 9 17 Bachelor’s degree or more 3 1 5 8 Overall 9 2 7 15 Note: Among adults age 21 and older. Respondents could select multiple answers. Income 19
Other common uses were spending on their child (40 percent); spending on food (31 percent); and spending on rent, mortgage, or utilities (29 percent) (table 6). Respondents were also asked how they used the largest portion of the monthly CTC payments. Saving the monthly payment was again the most common response (36 percent), with many others saying that they spent the largest portion on their child or on rent, mortgage, or utilities. The ways people used the CTC payments varied by income. Higher-income adults were most likely to save the largest portion of their credit, whereas lower-income adults were most likely to spend it on housing. For instance, 54 percent of recipients with income of at least $100,000 saved the largest portion of their credit, whereas only 18 percent of recipients with income less than $25,000 did so (table 7). Income Variability Since many bills must be paid monthly, variations in monthly income can lead to financial challenges. Most adults had income that was roughly the same each month, but about 3 in 10 had income that varied from month to month. This share was essentially unchanged from 2020. Since income variability can result from either dips or spikes in monthly income, the survey asked those who reported varying monthly income whether they struggled to pay bills as a result. Thirty percent of those who experienced varying monthly income, representing slightly less than Table 6. Uses for Child Tax Credit (CTC) Percent Purpose Used any for purpose Used largest portion for purpose Saved it 43 36 Paid off debt 21 10 Spent on child 40 20 Spent on rent, mortgage, or utilities 29 17 Spent on food 31 12 Spent on other things 12 5 Note: Among parents with a child under age 18 who reported receiving CTC payments. Respondents could select multiple answers. Table 7. Use for largest portion of Child Tax Credit (by family income) Percent Purpose Less than $25,000 $25,000– $49,999 $50,000– $99,999 $100,000 or more Saved it 18 15 33 54 Paid off debt 14 9 9 10 Spent on child 22 22 22 16 Spent on rent, mortgage, or utilities 29 33 18 6 Spent on food 13 19 15 7 Spent on other things 5 2 5 7 Note: Among parents with a child under age 18 who reported receiving CTC payments. 20 Economic Well-Being of U.S. Households in 2021
1 in 10 adults overall, said they struggled to pay their bills at least once in the past 12 months because of varying monthly income. Lower-income adults were more likely to have varying monthly income and to report that they struggled to pay their bills at least once in the past 12 months as a result (table 8). Fifteen percent of adults with income less than $50,000 struggled to pay their bills because of varying monthly income. Among lowerincome parents, an even greater 27 percent struggled to pay their bills because of income variability. Adults with and without a disability were similarly likely to experience income variability. However, when those with a disability experienced such variability, it was more likely to lead to a hardship. Income variability also continued to differ greatly by industry in 2021. Workers in the leisure and hospitality industry were the most likely to have varying monthly income (figure 9). Table 8. Income volatility and related hardship (by family income, race/ethnicity, and disability status) Percent Characteristic Varying income, causes hardship Varying income, no hardship Stable income Family income Less than $25,000 16 23 61 $25,000–$49,999 14 17 69 $50,000–$99,999 6 18 75 $100,000 or more 1 19 79 Race/ethnicity White 7 19 75 Black 12 19 69 Hispanic 14 23 63 Asian 4 20 76 Disability status No disability 7 20 72 Disability 13 15 72 Overall 9 20 72 Note: Among all adults. Figure 9. Income varied at least occasionally from month to month (by industry) Public administration Armed forces Professional and business services Financial activities Manufacturing Information Education and health services Transportation and utilities Other services Construction Wholesale and retail trade Natural resources and mining Leisure and hospitality Percent 47 42 39 37 35 34 27 27 27 24 22 22 21 Note: Among adults who reported industry of employment. Income 21
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