The lockdown that came about with the attempts to contain the Coronavirus was perhaps the most strict regulation on the public. As incomes and confidence fall, spending in some discretionary areas such as households, rein-in expenditure may also be significantly affected. Among the sectors affected include areas such as food services and homewares which make up 25% of household expenditure.
Although spending patterns often vary according to each household, it is safe to say that the pandemic affected most families.
With the reduction in income, many households across the country have been forced to find ways to cope; from cut down on expenditure to the reduction of water usage. Some have even tried to find the cheapest electricity rates in an attempt to keep the lights on, literally.
What Effects Has the Pandemic Had On Household Expenditure?
The outbreak of the virus led to a sudden fall in employment, earnings and incomes. By April, there were no signs of a recovery. The number of jobs was 4% lower when compared to what was predicted just before the crisis based on trends leading up to that point.
Below are the effects that the lockdown has had:
- Decreased Income: With many businesses operating on reduced hours and others entirely closed, workers stay sheltered in their homes. Because of this, many families experience significant income volatility, with low-income families most susceptible to downside risks.
- Accumulated Debt: Non-payment of household bills vastly increased after the lockdown due to more and more expenses being incurred, with none being paid. As people are forced to stay indoors, they are no longer able to generate income to cater to their daily household costs. Understandably, non-payment of mortgages became spread more evenly across the income distribution. This means the additional debt is carried forward, wearing heavily on the families affected.
- Prioritized Spending: Some homes experienced a change in spending habits because of the cut-backs that had to be made. The rapidly changing spending options largely affected lower-income families who were forced to pick which expenses were more critical to handle over the others.
- Increase in Online Entertainment Expenditure: This is mostly seen with the high-income families and the younger demographic. Most people turned to online entertainment due to staying indoors with little to no activities to do. Therefore those who could afford it spent most of their time online just to pass the time. Experts suggest that individuals and families that are looking to curb this expenditure can turn to platforms like thenewpiratebay.org for free access to the latest movies and tv shows. This is a safe, free and efficient way to avoid paying money for streaming services.
- Bulk Buying: In preparation for the lockdown, some spending categories, notably groceries and home expenses, saw a considerable increase.
Below are organized intervention ideas in the effort to improve income and ease the severity of household expenditure.
Efforts to Boost Income
- Expanding Access to Paid Leaves: Giving tax credit to employers enables them to provide paid and sick leaves to employees. Additionally, each state ought to provide programs to deliver expanded benefits, particularly to hourly-paid, low-income workers, as well as small business owners.
- Extending and Expanding Unemployment Insurance (UI) Benefits: Extending eligibility and increasing the duration of UI would provide significant relief for those who experience job loss or small business revenue.
- Improving Eligibility to Social Insurance Programs: More families would avail themselves for social assistance programs when they have a shortage of income if work requirements and asset limit tests were removed.
Effort Application on Demand
It’s clear that the crisis brought about by the virus outbreak has significantly impacted families in terms of earnings. Understanding the efforts to increase income helps provide ways to deal with the effects that come with lockdowns. Therefore it is necessary to realize the importance of quick recovery in household incomes.