Insights from the field—Economic conditions in low- and mode…

Conditions for economic mobility

Economic mobility in this survey refers to whether respondents see conditions for all the various factors that contribute to economic mobility leading to movement upward or downward. The survey question is not intended to measure whether economic mobility is occurring; rather, we are interested in this measure insofar as it speaks to overall economic conditions in LMI communities and the potential economic outcomes associated with those conditions.

As shown in Figure 2, over half of respondents reported that conditions at the time of the survey favored downward economic mobility, and that those conditions had worsened over the previous year. Respondents were mixed on what they expected for conditions for economic mobility over the next year.

Almost one-third of respondents said that employment was the most important factor contributing to upward mobility. According to responses to the survey’s employment questions, employment has been and is expected to remain the strongest component of the economy for LMI populations. One of the respondents noted:

“There is plenty of access to jobs, and there is some upwards wage pressure, but housing costs are going up faster than wages.”

Housing showed up as both a top positive factor and a top negative factor, as shown in Table 1. While many respondents stated they were seeing some improvement in the housing situation, the sentiment on housing was strongly negative for almost half of survey respondents. Comments largely centered on housing, but they also suggested that housing, transportation, food, and wages were all intersecting problems. For example, respondents indicated that while jobs were widely available, they were predominantly low paying and offered few opportunities for higher wages. Without higher wages, entities reported that their clients have struggled under the combined price pressures of housing, food, and transportation. Respondents further reported that such price pressures limited the ability of LMI populations to pursue skills training or education opportunities. Finally, higher-paying jobs were farther away from where their clients could afford to live. One respondent indicated how increasing costs are playing out in lives of people they serve:

“The increasing cost and lack of availability of affordable housing and quality child care are keeping some individuals out of the labor market and creating instability in terms of living conditions. More individuals are working multiple jobs to try and stay even, not to get ahead. Rent, food, and fuel costs are increasing more rapidly than income.”

Economic conditions in low- and moderate-income communities

Next, we highlight results from the various topics covered in the survey. Respondents were asked to provide data on topics they selected based on their entity’s top programming area. For example, if a respondent chose “Housing-Renters” because their programming was mainly focused on housing issues, they would only be asked about conditions for renters, and they would not be asked about employment or small business conditions. Each of the following sections—with the exception of human services and emergency assistance—covers two topics in that sector of the economy.

Employment

Conditions for finding work were neither good nor bad for 43% of survey respondents (Figure 3). For the rest, conditions for finding work were more negative than positive. Almost one-third of respondents said conditions were poor or very poor, compared with just under a quarter (23.5%) saying conditions were good or very good. Job quality conditions were worse, as 50.8% of respondents indicated that they were poor or very poor. Two respondents made comments regarding quality of jobs that illustrate the challenge:

“[There are] lots of low-wage jobs with little flexibility in hours and no benefits.”

“Finding work may not be difficult, but finding work that pays a living wage is very challenging, especially for individuals without education.”

Most respondents did not expect conditions to worsen for either the ability to find work or job quality (Figure 4). Nearly half of respondents (44.7%) expected the ability to find work to improve, and more than one-third expected an improvement in job quality over the next year.

Respondents largely expected jobs to remain widely available and wages to continue to increase over the next year (Table 2). Wages were not anticipated to rise to a level that would put workers in a better financial situation, though, with most respondents rating wages as the largest negative contributor to job quality in the next year (Table 2). Similarly, respondents noted several factors that posed significant barriers to finding employment over the same horizon, including lack of affordable child care, background checks and drug testing, skill/credential requirements, and the cost transportation. Several respondents indicated that a lack of digital skills was also a significant barrier to entering the workforce. One of the respondents’ comments highlights the importance of digital skills:

“All applications are done online and some LMI populations do not understand how to use computers or do not have access to the digital tools necessary to apply.”

Housing

Of survey topics, respondents were most pessimistic about conditions for housing, particularly rental housing, and very few said that they expected any positive change in housing conditions over the next year.

Most survey respondents indicated poor housing conditions for both renters (84.9%) and homeowners (71%) (Figure 5). More than 60% of respondents reported that housing conditions had worsened over the past year.

Figure 6 shows that 56.2% of respondents indicated that they expect further deterioration of rental conditions over the next year, with rental prices and an insufficient supply of affordable or subsidized units as the main challenges (Table 3). As one respondent noted, “Affordability continues to worsen. Developer-led investment continues to focus on high-end housing. Many eviction prevention and subsidy programs are now ending.” While prices were also listed as a positive contributor for future conditions, that is likely due to some markets in the United States having experienced softening prices and to broader expectations that price increases will eventually slow. Regardless, respondents indicated that they do not expect prices to decline enough to provide relief for LMI households.

With respect to homeownership, approximately 40% of respondents expected conditions to continue to worsen. Cost of housing was one of the major concerns, as one respondent noted:

“[There are] no homes [on the market] under $200,000 unless they need substantial repairs.”

Ongoing costs were also a concern for those who were already homeowners, as one respondent indicated:

“The carrying costs of maintaining a home (insurance, repairs, property taxes, utilities) are all burdening fixed- and low-income homeowners.”

Personal Finance

Financial stability among LMI populations at the time of the survey was largely seen as poor, and most respondents did not expect that to improve, mostly due to income not keeping up with the cost of living.

As Figure 7 shows, a significant portion of respondents indicated that conditions were poor or very poor for financial stability (66.1%) and personal credit (64%) in the communities they served. More than half of respondents (53%) noted that conditions for financial stability had worsened over the previous year, and 38.3% expected conditions to worsen over the coming year (Figure 8). The outlook was slightly less negative for personal credit conditions, with one-fifth noting that conditions had improved over the past year and a similar percentage expecting conditions to improve over the coming year.

Respondents reported that they had noticed wages were increasing, but also that they were not increasing enough to offset increased costs of living—as indicated by income appearing as both a positive and a negative contributor to their expectations for financial stability and personal credit conditions over the next year (Table 4). Meanwhile, many comments from the survey pointed to LMI populations taking on more debt through credit cards and alternative financial services to cover basic expenses, which put them on an unsustainable financial path. As one respondent stated, “The credit extended to LMI [populations] is usually very costly and places them in a position to default.”

Small Business

While survey respondents noted high interest rates were a challenge for small businesses, they were generally optimistic about conditions for small businesses in the near term.

“Higher interest rates and inflation are having a negative impact on small businesses. Additionally, the customers of these businesses have less money to spend (inflation) at the very time the businesses need the revenue.”

While nearly 40% of respondents indicated operating conditions for small businesses were poor or very poor in April 2024 (Figure 9), a similar share (39.4%) expected conditions to improve over the next year (Figure 10). The expectation for improving conditions was due to the availability of technical assistance and grant funding (Table 5). While many respondents said that they expected their ability to find reliable employees to continue to improve, a far larger share expected the labor market to remain a significant challenge for businesses. Several respondents also noted that they expected higher costs for small businesses and their inability to pass costs to consumers to contribute negatively to business operations over the next year. One respondent described how inflation impacts small businesses:

“Inflation can drive up operating costs that, when passed on to poor consumers, drives away business.”

Business credit conditions were considered poor by half of respondents, with 43% noting that they had worsened over the previous year. While expectations for business credit conditions over the next year were mixed, optimism outweighed negativity. One of the barriers identified as facing small businesses in LMI communities was the cost of credit, and a respondent illustrated a negative consequence of not having access to credit:

“Many small businesses took credit from predatory lenders out of desperation and have been paying extremely high interest rates on loans and can’t get ahead, forcing closures.”

Health

Most survey respondents rated public health conditions and access to health care as poor, with insurance coverage and mental health needs as the main challenges.

More than half of respondents reported poor overall health conditions (55.5%), as well as poor access to health care (56.3%), in the LMI communities they served (Figure 11). Over the previous year, conditions had either worsened or remained unchanged in either area, most respondents noted. Their outlook over the next year was a bit more positive, with approximately one-fifth saying that they expected health conditions and access to health care to improve (Figure 12).

When asked about factors that contributed to their expectations for public health conditions and health care access, insurance coverage showed up as both a positive and a negative contributor (Table 6). This suggests respondents are seeing improvements in insurance coverage, but that there are considerable challenges with uninsured populations. Respondents also reported improving availability of free/low-cost clinics, telehealth options, and nutritious foods.

Finally, respondents expected substance abuse and a lack of availability of mental health care providers to negatively impact health conditions in LMI communities, and comments throughout multiple survey sections related back to these issues. Many respondents in public health noted they were seeing some improvements in mental health needs being met, but also that a substantial need remained.

One respondent captured this well, noting, “Substance use is increasing among the most vulnerable populations. Access to benefits/insurance/Medicaid continues to have obstacles. Mental health services are improving, but access to appointments is challenging [for] LMI populations that work during the day and must sacrifice pay to seek treatment.”

Education

According to the survey results, conditions strongly differed between pre-K to 12th grade and adult education.

With respect to pre-K to 12th grade education, 45.7% of respondents indicated that conditions were poor, with 41% saying that they had worsened over the previous year (Figure 13). Fewer than 30% of respondents were optimistic for conditions in the near term (Figure 14). As one respondent noted:

“Teacher shortages and excessive absences, along with lack of caregiver support at home, contribute to poor academic performance.”

Conversely, only 26.7% of respondents said that conditions in adult education were poor (Figure 13), with 46% indicating no change over the previous year. Nearly half of respondents (48.1%) expected conditions in adult education to improve over the next year (Figure 14). However, costs and support for program completion continued to be a challenge (Table 7). As one respondent noted:

“In our community, I see a growing number of adult participants, but [they] have some problems with transportation, day care, and having to also work and miss classes.”

Human services and emergency assistance

Given that a large segment of survey respondents provided human services and emergency assistance, it is important to note that a separate report covers entities’ financial and operational health; this section’s summary focuses primarily on human services conditions. Nearly half of respondents noted that conditions for human services and emergency assistance were poor, with a large fraction expecting conditions to worsen over the next year (Figure 15). Based on comments, housing and mental health challenges appeared to be overwhelming service providers.

“Our organization is currently assisting 1,500+ families a month. As rent, food, and utility costs increase, we have seen a rise in new families needing assistance. We add 150-200 families to our services every month.”

Among the sectors measured in the survey, human services had the second largest share of respondents reporting that conditions were very poor (22%). (The largest was rental housing, at 37%.) Nearly half of respondents also noted that conditions for human services had worsened over the previous year. Like housing, there was little optimism in the human services sector over the next year, with 44.8% expecting conditions to worsen (Figure 15).

Many respondents saw coordination between organizations improving (Table 8), but many also mentioned in comments that the areas they serve were facing increased struggles because of a lack of coordination, suggesting that experiences are uneven across the United States. In addition to housing security and economic conditions negatively affecting their near-term expectations for human services conditions, a significant share of respondents also mentioned in comments that their clients were struggling to get help due to administrative burdens, eligibility problems, and difficulties reaching services.

Access to Digital Skills, Internet, and Technology

While over one-third of respondents reported that conditions for internet access were poor, most indicated that conditions had been improving and they expected them to continue improving over the next year. Nevertheless, the discontinuation of the federal Affordable Connectivity Program is expected to contribute to the loss of internet access among LMI populations. 

While the largest shares of respondents said that conditions for access to internet, technology, and digital skills were neither good nor poor, a significant portion did indicate that conditions in 2024 were poor (Figure 16). However, respondents indicated that conditions had improved recently, with one-third seeing improved conditions for access to internet and one-quarter seeing improved conditions for access to technology and digital skills over the year preceding the survey. More than one-third of respondents expected conditions in both areas to keep improving over the next year (Figure 17).

Respondents identified internet service availability, availability of subsidized internet service, and awareness of subsidized internet options as top factors expected to shape conditions for access in the near term (Table 9). Several comments from respondents pointed to the positive impacts of federal funds for expanding broadband infrastructure, particularly in rural areas. However, respondents reported that when broadband was available, people in LMI communities have struggled to afford plans, and several comments attributed expected struggles in the future to the end of the Affordable Connectivity Program. Respondents also indicated concern about increasing connectivity when many of their clients struggle with technology literacy and a lack of programs to help. One comment captured the dynamic well:

“Quality internet access in the most rural locations has been poor but is now improving. Many LMI people, however, lack the technology literacy to apply for online jobs, etc., or apply such skills to the workplace.”

Respondent profiles

About the survey

Starting in 2020, the Federal Reserve System began conducting surveys to better understand the range of challenges facing low- and moderate-income (LMI) communities as an effect of the COVID-19 pandemic. That collection of surveys was called “Perspectives from Main Street.”

While the United States is no longer amid a pandemic-induced public health and economic crisis, lower-income and under-resourced communities continue to face obstacles that may hinder their full participation in the economy. The need to better understand such challenges and those faced by entities serving these communities is still crucial. To that end, the Federal Reserve began implementing the Community Perspectives Survey in 2024.

The Community Perspectives Survey is a national survey aimed at reporting the economic conditions of LMI communities and the health of the entities that serve them. This survey has two objectives:

The survey was open from April 2 to May 3, 2024. Responses were collected through a convenience sampling method that relied on contact databases to identify representatives of nonprofit organizations, financial institutions, government agencies, and other community organizations. These representatives were invited to participate in the survey via emails, newsletters, and social media posts. The survey had a total of 937 responses from entities who serve LMI communities. However, the total number of responses across sectors could differ because not all entities provide services in each area asked about on the survey. Respondents were asked to select a topic area based on their entity’s top programming focus and answer questions related to that sector specifically and not others. All responses are from entities that serve LMI communities.