How Is COVID-19 Impacting Eighth District LMI Communities? An Update

Using the 2022 Community Impact Survey (CIS), we found that low- to moderate-income (LMI) communities within the Eighth District continued recovering from the COVID-19 pandemic over the past year and experienced fewer disruptions. Respondents reported that inflation and labor shortages continued to create barriers to an inclusive recovery.

Eighth District Communities: More than Halfway Recovered

On average, respondents noted, the communities they serve had recovered more than halfway to pre-pandemic conditions. Furthermore, respondents expected continued recovery, with half reporting that they anticipated their communities to be almost three-fourths recovered by next year.

The picture looks a bit different when we focus only on communities that are almost or fully recovered, which is defined as 80% to 100% recovered relative to pre-pandemic conditions. During the survey period, less than 20% of respondents from the Eighth District reported being almost or fully recovered. When asked about 2023, however, almost 45% of respondents expected their communities to be almost or fully recovered. These numbers closely align with sentiment from the CIS at the national level and highlight the challenges that communities continue to face.

Fewer Disruptions than in 2021 across the Economy

To learn how community conditions have changed over the past year, we asked respondents to note disruption levels in their communities during the survey period and for 2021 across six different segments of the economy: household financial stability, small business, access to health care, services for children, housing stability and basic consumer needs. Relative to 2021, the share of respondents reporting significant disruptions in their communities fell between 35% and 55% across the board, except for housing. Inflation and labor shortages seem to be at the core of these disruptions. In the following section, we provide an outlook for community conditions across various segments of the economy that are vital for LMI communities to thrive.

Household Financial Stability

There was a 37% decline in the share of respondents reporting significant disruption to household financial stability,All changes from 2021 to 2022 are expressed as the percent change between the two years—that is, the relative change—not the difference in percentage points. which includes income loss, income instability, increasing costs and debt. At the time of the survey, 42% of organizations still noted significant disruption, while 15% reported either minimal or no disruption.

Top challenges in this area were related to inflation: increases in prices of consumer goods (32%) and increases in housing prices (22%), followed by the expiration of government relief (16%) and issues with employment (14%). Similar to CIS results at the national level, lack of child care, including day care center closures and reduced hours, was the primary barrier for employment.

Disruption Levels across Segments of the Economy

 

SOURCE: 2022 Community Impact Survey.

NOTE: The survey asked the following questions to obtain the data in this figure: During 2021, what level of disruption (on average) did COVID-19 have on household financial stability, small business, health care, services for children, housing stability and basic consumer needs in the community(ies) your entity serves? Currently, what level of disruption is COVID-19 having on household financial stability, small business, health care, services for children, housing stability and basic consumer needs in the community(ies) your entity serves?

Small Business

Relative to 2021, there was a 44% decrease in respondents indicating severe disruption to small businesses, which includes short- and/or long-term closure, supply chain disruptions and reduced demand. Almost a third (32%) of organizations still noted significant disruption in August 2022; 11% reported either minimal or no disruption. Labor shortages (43%) and increases in the prices of goods (25%) were noted as primary sources of disruptions for small businesses, followed by supply chain disruptions (11%).

Access to Health Care

Survey results showed considerably lower disruption than in the previous year to access to health care, which includes access to health insurance and mental health services. The number of respondents noting significant disruption declined by half relative to 2021. Slightly more than one-fifth (22%) did note significant disruption in 2022, while 30% reported either minimal or no disruption. Lack of access to mental health services (32%), a shortage of health care staff (28%) and lack of access to health insurance (19%) were the primary sources of disruptions.

Services for Children

This segment—which includes availability of early child care and education, access to child welfare services and access to K-12 education—showed the greatest improvement, with a relative reduction of 56% in organizations reporting significant disruption, going from 69% in 2021 to 30% in 2022. Another 20% reported either minimal or no disruption. Staff shortages (31%), difficulties with virtual schooling (29%) and lack of available child care (25%) were the primary reasons cited for disruptions.

Housing Stability

In comparison to other segments, housing stability shows little signs of improvement. In August 2022, 44% of respondents indicated significant disruption to housing stability, which includes evictions, back rent, foreclosures and homelessness. This is only a 15% decrease from 2021. Another 17% of organizations reported either minimal or no disruption. According to respondents, the lack of availability of affordable housing (46%) and high housing costs (40%) were the two primary challenges driving household instability. Housing costs include rent, mortgages and utilities.

Basic Consumer Needs

In the survey, 37% of respondents indicated significant disruption to basic consumer needs, including food, household essentials and other personal needs. The number of respondents indicating significant disruption, however, did decrease by 31% relative to 2021. Inflation seems to be at the core of challenges relative to the availability of goods, with the increased cost of food (45%) followed by the increased cost of household goods and services (29%) contributing the most toward disruptions.

Housing Stability and Child Care Remain Priority Needs in LMI Communities

The impacts of the COVID-19 pandemic continue to be felt in LMI communities. Although these communities are in a better place than they were at the peak of pandemic-related distress, there are some communities whose needs have not been fully addressed. Results from the Fed’s 2022 CIS suggest that enhancing housing stability and increasing the availability of child care to help people participate in the economy could be areas in which to focus attention in 2023. Also, organizations serving communities in need can benefit from resources to further their work of fostering inclusivity and economic resiliency.

Notes and References

1. The seven states are Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.
2. All changes from 2021 to 2022 are expressed as the percent change between the two years—that is, the relative change—not the difference in percentage points.