Context
The rapid onset of the coronavirus pandemic and the consequences of the necessary response to it have affected living standards in many ways, including people’s engagement in paid work; what they spend their money on; how they spend their time; and their physical and mental health and wellbeing. Much of the early analysis that was available on this topic was focused on jobs and earnings, so this study was undertaken to give a more rounded assessment of how outcomes have differed across income distributions of all working-age adults, not just those in work, by looking not just at labour markets and earnings, but also at incomes and consumption.
The study
The report presents findings from a survey on the early impact of coronavirus on living standards amongst working-age people in the UK. The survey was commissioned by The Resolution Foundation, an independent think-tank focused on improving living standards for those on low to middle incomes. It was conducted using an online interview administered to a sample of 6,005 adult members of the YouGov Plc UK panel and the findings were weighted to be representative of all UK adults (aged 18+) according to age, gender, and region. The analysis considers families and households, rather than just individuals, and it focuses on how the impacts of the crisis vary by where individuals were in the pre-coronavirus income distribution.
Key findings
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Labour market: The survey shows the bottom-heavy effects of the coronavirus crisis in the labour market. Employees in the bottom earnings quintile are more likely to have lost their jobs, been furloughed, or experienced hours reductions than those in the top quintile.
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Incomes: The negative effects of the crisis on incomes are more evenly shared out across the income distribution; the authors explain that low earners aren’t all in low income households, low earners are less likely to be working and therefore lose work, and the benefits system protects incomes.
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Spending: There is a much starker pattern in relation to spending changes, with those on higher incomes most likely to have reduced spending. The authors state that in normal times, we might interpret spending falls as a ‘bad thing’, reflecting either falls in income or precautionary savings behaviour. However, falling levels of spending in this crisis also reflect reduced opportunities amongst high income families to spend on non-essentials – and therefore to save money.
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Ability to manage financially: Respondents’ views of changes in their ability to manage financially show a much clearer gradient across income quintiles than do income changes. Those in the bottom quintile of pre-coronavirus incomes are much more likely to say that their ability to manage has worsened whereas, despite a deep recession being underway, respondents in the top quintile are as likely to say that things have improved as worsened.
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Implications: The authors conclude that policy makers must take heed of the more serious living standards implications of the crisis for lower-income families.
Points to consider
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Methodological strengths/weaknesses: The sample used was only representative of UK working-age adults by age, gender and region. However the authors have compared the sample against other sources and are satisfied that their analysis is accurate. The analysis divides the sample into pre-coronavirus income quartiles, and attempts to include all outgoings, which involves making a number of assumptions, and imputing some data.
- The process of analysis is recorded in detail in an annex to the report, and the findings are checked against other sources at all stages. Confidence intervals are not stated, however 6,005 is a good sample size for a nationally representative survey.
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Generalisability/ transferability: The study is specific to working-age adults in the UK and can’t be applied to any other markets or audiences as the response and impact of coronavirus has been so different in every country.
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Relevance: The study is highly relevant, despite being conducted in the early days of coronavirus, as the impact will continue to be felt by the most affected families for some time.
- This report is applicable to anyone with an interest in the impact of coronavirus on living standards, such government, support agencies, policy makers, policy implementers, regulators or educators.
