During recessions, the young, the less educated, and minorities are more likely to experience flat or declining wages, reduced hours, and unemployment.9 While this disparity is not a new phenomenon, dealing with a loss in labor income during the most recent recession was a heightened challenge to households that had mortgage obligations and no other forms of wealth to cushion the blow.
The adverse developments in the labor market added to the difficulty most households were having in repaying their existing debts and in accessing credit in the recession. These low- to middle-income households that bore the strains in both housing and labor markets, and had little wealth cushion, had more difficulty making payments on their mortgages and other consumer credit debt.