The Pandemic Has Created a Class of Super-Savers

“We’re just rife with cash and it has led to a decent amount of guilt.”

Shutterstock / The Atlantic

One paradox of the pandemic economy is that even as businesses have shut down and jobs have disappeared, American households have on average been saving more money than they usually do. The country’s “personal saving rate”—the share of people’s disposable income that gets saved or invested—has rarely exceeded 10 percent in the past 20 years, but it shot up to more than three times that in April. In the first few months of the coronavirus pandemic, the checking-account balances of Americans up and down the income scale rose, thanks to government aid.

Now that that aid has been discontinued, many people’s balances are likely falling, making daily life even more precarious. But one segment of the country will keep on saving, seemingly living in an economy all their own. Their incomes have remained steady, while their spending has decreased dramatically.

In March, when lockdowns began, spending declined steeply for low earners and high earners alike. But while low earners’ spending returned nearly to normal levels in May, higher earners’ spending has remained much lower. “The people who had the least job loss are precisely the people who have the biggest cut in spending,” Peter Ganong, an economist at the University of Chicago who co-authored a paper analyzing household finances in March, April, and May, told me.

In the course of reporting this article, I spoke with people whose monthly expenses have fallen by hundreds, in some cases thousands, of dollars during the pandemic. They’re spending less on daily comforts that are now dangerous, or merely unnecessary, including eating out, entertainment, new clothes, and extracurriculars for their kids.

Travel cutbacks in particular are keeping large amounts of cash in people’s accounts. Lyn Alden, a 33-year-old investment researcher in New Jersey, told me that by skipping one short trip to New York City and two longer ones to visit relatives in Florida and Egypt, her family reduced their travel spending by about $15,000 this year.

Other spending cuts are more minor, but still add up. “One of the largest costs prior to the pandemic was my ‘bad’ habit of eating out nearly every day at work,” Jeremiah Stanley, a 40-year-old engineer at a tech company in North Carolina, wrote to me in an email. “The office culture is to have [lunch] meetings off-campus and this [costs] about $23 a day.” Lately, he’s been working from home and making ham sandwiches instead, leaving him an extra $400 a month to spend or save. Overall, he estimates that he and his girlfriend have together been spending about $750 less on food each month.

Another remote worker I heard from, Taryn, who is in her late 20s and works at an accounting firm in the Chicago area, estimated that she’s spending $400 less per month during the pandemic. She and her husband qualified for $2,400 in stimulus payments earlier this year, even though “we didn’t need the money,” she said—she currently makes $87,000 a year.

“It honestly feels pretty good, but it also feels kind of strange,” Taryn said. “It’s a weird feeling of Oh yeah, I’ve got extra money! but also I want to buy things, but there’s no reason to buy things.” (She requested that I publish only her first name, because of the sensitive nature of her job.)

Instead of buying things, Taryn and her husband have put that extra money toward a down payment for a house. They previously thought about buying one next spring, but since mortgage rates have fallen to historic lows, they’re buying one now—so in that sense, the pandemic has brought them closer to their financial goals.

To others higher up the income scale, the additional cash is much less consequential. “We’re really privileged … Honestly, our life doesn’t change a ton” with extra money, says Byron Hing, a 39-year-old lawyer at a tech company in San Francisco, whose family of five has been spending about $3,000 less a month during the pandemic. Another interviewee, a 60-something in Southern California working in finance, told me, “I hate to be the bourgeoisie, but there’s a point where you have enough money and it doesn’t make any difference.”

That 60-something, who expects to earn at least $750,000 this year, has been saving enormous amounts of money during the pandemic. Recently, he realized just how much more slowly cash has been flowing out of his checking account this year: His balance was about $70,000 higher than it would have been in normal times. (He requested anonymity in order to protect his privacy.)

There’s “just nothing to spend money on,” he told me. He said he used to spend $300 twice a week on restaurant meals, and $3,000 roughly once a month on short family getaways. He estimated that his spending is down by at least $10,000 a month since the pandemic started, and that doesn’t factor in the $25,000 he got back after canceling a two-week vacation in Europe. “We’re [also skipping] one this Christmas,” he said, “so I’ll save another 25 grand.”

A lot of the money that well-off people aren’t spending right now is money that lower-paid people would normally receive as income. Many industries that employ lots of lower-wage workers, such as restaurants, hotels, and child care, are ones that make life more comfortable or fun for higher-income people. So when those people’s spending on in-person services dries up, those lower-wage workers’ pay dries up too.

In mid-August, reduced spending among the top 25 percent of earners accounted for 57 percent of the estimated drop-off in spending overall, according to Opportunity Insights, a team of economic researchers based at Harvard. The damage done by that lost spending “reflects what happens in a pandemic when high-income people can work at home … but it also reflects the huge growth of inequality of recent decades,” Lawrence Katz, an economist at Harvard, told me. “Such a large part of our economy, and of employment, has been embedded in servicing high-income people, as opposed to making things and manufacturing.”

The savers I spoke with were aware of, and felt conflicted about, the fact that they were prospering in a brutally stratified system. “We’re just rife with cash and it has led to a decent amount of guilt when we hear about friends that are struggling with their jobs that can’t go remote,” said Stanley, the North Carolinian saving money on lunches. “We don’t take this lightly and wish there was some way that we could make sure that society was a bit more just.” (He told me that he’s doubtful about the efficacy of charitable giving and believes it’s the government’s job to step in when people need financial support.)

“We’re doing a really bad job as a society,” the 60-something working in finance said. “I would gladly give a big chunk of my savings to make sure that [others are] okay … I’m fine with [the government raising] my taxes.”

The starkest example of someone thriving during the pandemic came up in a conversation I had with Dan Ho, who is in his late 40s and lives in Brighton, Michigan. Ho has been playing the stock market since the beginning of the year, when he came to suspect that traders were underestimating the threat of the pandemic. He correctly bet that certain stocks were going to lose value, and has profited from the market’s unusually jagged ups and downs. Overall, he’s turned an initial investment of $100,000 into about $500,000 this year.

Ho told me that he doesn’t feel bad about these gains, because, due to the nature of day-trading, he could just as easily have lost his money. “I can see how [the pandemic] has really hurt a lot of people,” he said. “Do I feel guilty? No, because it’s not anything that I personally did. I’m just a little more financially savvy or literate than a lot of people.”

Some of those I interviewed felt compelled to give away some of their money. One, a 40-year-old software engineer in Boston named Mike who asked to have his last name withheld for his privacy, said his family has kept paying the man who cleans their house, even though they’ve asked him to stop coming during the pandemic. Taryn said she sent some money to the hairstylist she used to see, to compensate for the money she normally would have given as a tip. And several have donated to charitable causes.

These are humane responses, and they certainly don’t hurt. But they are no substitute for government policy. For much of the pandemic, many people out of work were able to, if not keep pace with these super-savers, at least stay afloat because of federal aid. Now, in the absence of comprehensive support, the gainfully employed will keep piling up money, while millions of other people strain to make ends meet.