A Federal Reserve survey of more than 12,200 Americans about their finances and a new United Way report on financial hardship reveal just how unstable life is for a large number of people.
Forty percent of American adults don't have enough savings to cover a $400 emergency expense.
Forty-three percent of households can't afford the basics to live, meaning they aren't earning enough to cover the combined costs of housing, food, child care, health care, transportation and a cellphone, according to the United Way study. More than a quarter of adults skipped necessary medical care last year because they couldn't afford it.
Twenty-two percent of adults aren't able to pay all of their bills every month.
Only 38 percent of non-retired Americans think their retirement savings is "on track."
Only 65 percent of African Americans and 66 percent of Hispanics say they are "doing okay" financially vs. 77 percent of whites.
The Fed and United Way findings suggest the U.S. economy isn't nearly as strong as statistics such as the unemployment rate and the GDP growth rate suggest. Taken alone, these metrics mask the fact that some Americans are doing well and some are not.
William Rodgers, a professor at Rutgers University and chief economist at the Heldrich Center for Workforce Development said "One segment has truly recovered from the Great Recession and is at full employment. The other continues to experience stagnating wages, involuntary part-time employment, inflexible work schedules and weaker access to health care."
Consider a single parent with kids who is earning the 20th-percentile wage (20 percent earn less; 80 percent earn more) and whose pay could rise to $13 per hour by the end of this year, or about $26,000 per year, pretax. Subtracting payroll taxes and adding tax credits for working parents could get her up to about $30,000. That clears the poverty line, but it doesn't pay for decent housing, child care, health care and transportation, at least not in most cities. Family budget calculators show that child care for two kids costs about $11,000 per year in Ohio, and more than twice that in New York. Add housing and health-care costs, and even middle-wage earners with children have trouble with their salaries.
This too-tight breathing room between what many families earn and what it costs them to live has created a widespread sense of economic insecurity, which shows up clearly in recent analysis of economic well-being by the Federal Reserve. One-fifth of white households and a third of black and Hispanic households grade their financial conditions "just getting by" or worse, while half of rural households grade their local economies to be "only fair" or "poor."
Though down from the years coming out of the crisis, these numbers are largely unchanged from 2017, suggesting that communities across the country, and especially communities of color, continue to face entrenched barriers to getting ahead even in a hot national labor market.
Compounding these challenges is a deepening crisis in affordable housing. Supply constraints are making it increasingly hard to find an affordable place to live anywhere near economic opportunity, forcing to choose between forgoing a good job and paying unaffordable rent.
The percentage of housing stock available for rent or sale has fallen sharply since the housing crash and is now as low as it has been in over 30 years. And it is set to get worse, possibly much worse. The current annual supply of new housing units is running an estimated 300,000 below the trend for new housing demand. The increasing shortfall of housing is pushing up house prices and rents, particularly in areas that offer better jobs, education and health care, as demand increasingly outstrips supply. This is not only holding back working families; by reducing labor mobility, it's also holding back the entire economy. On top of that, in some areas it's cheaper monthly to own a home, but because paying more in rent is not "proof" one can afford the mortgage, people are stuck renting at higher rates.
The Trump administration claimed that the tax cuts would pay for themselves by jump-starting stronger and sustainable growth, but it has not turned out that way (as anyone with half a brain predicted). In the absence of any meaningful boost in investment, revenue has fallen to levels far below where it should be in an economy closing in on full capacity. And in the absence of any spending cuts to offset the government's loss in revenue, the tax cuts are putting us in a hole that will make it harder to address the wide range of economic and social challenges that demand greater public investment.
The cuts did contribute to faster economic growth in 2018 and 2019, adding close to a point to gross domestic product growth and pushing the unemployment rate below 4 percent. However, given the failure of the cut to generate significant investment, it has offered more of a sugar high than any meaningful improvement to the economy.
So, how do we climb out of this fiscal trench we find ourselves in? By doing things no GOP (and even some Democrats) refuse to do.
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