Huge number of Bay Area residents couldn’t afford a $400 emergency before coronavirus

Thousands of Bay Area households headed into the coronavirus crisis already struggling to pay their monthly bills, unable to afford even a $400 emergency expense.

That was before the pandemic forced 4.1 million Californians into unemployment in less than two months.

A new survey, released Thursday, offers one of the last snapshots of the Bay Area’s economic health, based on data from last year when the region had one of the hottest job markets in the world. Produced by anti-poverty nonprofit Tipping Point, The University of California, Berkeley and the Othering & Belonging Institute, the survey also raises troubling questions about how thousands of already hard-pressed residents will cope with the worst jobs crisis since the Great Depression.

“We have data of what it was like during the highlight of economic success and we’ll be able to see how deep this pandemic goes,” said Sam Cobbs, Tipping Point’s CEO, adding that the information can be used to evaluate disparities that likely will be exacerbated by COVID-19. “Disparities of who gets the virus, who doesn’t. Who dies, who doesn’t.”

Nearly one in five people in the six-county Bay Area — made up of Marin, San Francisco, San Mateo, Santa Clara, Alameda and Contra Costa counties — headed into the crisis with less than $400 in savings, according to the survey, although that differed significantly by race. About 77 percent of black residents and 43 percent of Latinos had less than $400 in savings compared to 18 percent of white and 11 percent of Asian residents surveyed. The survey was based on interviews with 3,100 Bay Area residents 18 and older between 2018 and 2019. All of the residents were interviewed three times during that period.

Cobbs said he was shocked by the racial disparities, as well as by how many people in the region struggle with financial security. One in three residents regularly run out of money before the month is over, the survey found.

“We know people were making impossible choices,” he said.

The findings highlight who has access to family assets and wealth that can help them cushion financial challenges. About one-third of people in the Bay Area don’t have friends or family they can turn to for financial assistance, said Jake Leos-Urbel, Tipping Point’s lead in the study.

Cobbs said that having grown up low-income in the Bay Area, he knows what it’s like to rely on informal networks of friends and relatives to make ends meet or to cover large expenses like college tuition. But that can become a problem if everyone is turning to a few well-paid relatives to help with emergency expenses. That’s harder in black and Latinx communities where fewer family members are financially secure enough to play that role.

“It does end up being a huge drain on those families because it’s family, there’s a sense of responsibility there and if you’re African American or Latinx, there are fewer family members you can call in times of emergencies,” he said.

He said Tipping Point, which raises millions of dollars for grants to Bay Area nonprofits, is thinking about ways to slowly build up assets for lower-income black and Latinx families with programs like employee savings accounts. And they’re focusing on nonprofits working on the front lines of poverty with the knowledge of the level of need. As part of the study, researchers calculated the supplemental poverty measure for the Bay Area, which takes into account federal financial aid and cost of living to calculate poverty. The study found 17 percent of Bay Area residents live in poverty, nearly twice as many as suggested by federal statistics.