According to an ongoing Burbio.com survey, more than 60% of K-12 public schools in the U.S. have started the school year completely virtually.
As many parents geared up for continued virtual learning this fall, they saw back-to-school spending increase. Some have also prioritized childcare over income, as remote classes have forced working parents to leave jobs.
Childcare vs. income
In the U.S., mothers tend to handle the bulk of childcare duties under normal circumstances. Still, in states that enacted early stay-at-home orders and school closures, working moms were more than twice as likely to leave their jobs than working mothers in states that had later shutdowns, according to the U.S. Census Bureau and Federal Reserve. Working moms leaving the workforce means a loss in income for those families. And in the case of single-parent households, this could be particularly devastating.
Nearly 20% of working-age adults who weren’t working said they were out of work because COVID-19 disrupted their childcare situation one way or another.
Lower-income and increased debt
More than 10 million people in the U.S. applied for unemployment benefits back in March when the coronavirus first led states to enact stay-at-home orders. But that doesn’t account for parents who managed to keep their jobs and still took a hit to their income.
Twice as many workers in the U.S. dealt with pay cuts because of coronavirus than they did during the Great Recession from 2007 to 2009. Many companies implemented pay cuts as a way to avoid layoffs. But what impact did that have on workers taking on debt?
Lower-income workers were more likely to experience job loss or wage cuts, and they are also less prepared to deal with a financial emergency. Without an emergency fund, these workers are more likely to take on additional debt.
The cost of distance learning
A recent National Retail Federation survey found that parents with school-aged children planned to spend an average of nearly $800 per family, up from a record of nearly $700 last year.
Because of the increase in virtual learning, families spend more on laptops, home furnishings, and computer accessories to accommodate their children’s school-at-home setup. This mix of higher spending and lower-income—an unfortunate reality for many families—can lead to a dangerous increase in credit card debt.
Credello is a great tool that offers must-know tips for managing credit card debt, including guides for repayment strategies like debt snowball and debt avalanche.
