Nearly one in four Americans reports that it is fairly or very difficult for them to make ends meet, according to the 2018 General Social Survey. Here's the survey question: "Thinking of your household's total income, including all the sources of income of all the members who contribute to it, how difficult or easy is it currently for your household to make ends meet?"
How difficult/easy to make ends meet?
Very difficult: 6.5%
Fairly difficult: 16.6%
Neither difficult nor easy: 26.6%
Fairly easy: 32.8%
Very easy: 17.5%
Perhaps the most interesting finding when analyzing the results by demographic characteristic is how little difference the demographics make. By generation, for example, the percentage who find it fairly or very difficult to make ends meet ranges narrowly from a low of 22 percent in the generation preceding the baby boom (aged 73 or older in 2018) to a high of 28 percent among Gen Xers. By race and Hispanic origin, the figure is lowest among non-Hispanic Whites (21 percent) and highest among Blacks (30 percent). The biggest demographic gap is by education. Among people without a bachelor's degree, 29 percent find it fairly or very difficult to make ends meet. Among those with a bachelor's degree, only 10 percent are struggling.
Source: Demo Memo analysis of the 2018 General Social Survey
Showing posts with label standard of living. Show all posts
Showing posts with label standard of living. Show all posts
Monday, June 24, 2019
Friday, April 05, 2019
Are You a Have or a Have-Not?
Most Americans (58 percent) do not think the U.S. is divided into Haves and Have-nots, according to a Gallup Survey. While this figure is lower than the 71 percent of 1989, it is higher than the 49 percent of 2008 (in the midst of the Great Recession).
Those most likely to think the country is divided are Democrats (57 percent) and Blacks (70 percent). A smaller 24 percent of Republicans and 36 percent of non-Hispanic Whites agree. Hispanic attitudes mirror those of non-Hispanic Whites, with just 38 percent believing that the country is divided into Haves and Have-nots.
Although the majority of the public does not believe the country is divided into Haves and Have-nots, most Americans can readily classify themselves as one or the other. Fifty-six percent of the public sees itself as a Have, very close to the 58 percent who deny that the U.S. is divided in such a way. Could it be that the Haves are in denial? Those most likely to see themself as a Have are those with household incomes of $100,000 or more (81 percent), college graduates (71 percent), non-Hispanic Whites (64 percent), and Republicans (71 percent).
Overall, 36 percent of Americans identify themselves as a Have-not. Those most likely to see themselves this way are those with household incomes below $40,000, those who did not graduate from college (43 percent), Blacks and Hispanics (57 percent), and political independents (45 percent).
Source: Gallup, Majority Rejects Idea of Haves, Have-Nots Divide in U.S.
Those most likely to think the country is divided are Democrats (57 percent) and Blacks (70 percent). A smaller 24 percent of Republicans and 36 percent of non-Hispanic Whites agree. Hispanic attitudes mirror those of non-Hispanic Whites, with just 38 percent believing that the country is divided into Haves and Have-nots.
Although the majority of the public does not believe the country is divided into Haves and Have-nots, most Americans can readily classify themselves as one or the other. Fifty-six percent of the public sees itself as a Have, very close to the 58 percent who deny that the U.S. is divided in such a way. Could it be that the Haves are in denial? Those most likely to see themself as a Have are those with household incomes of $100,000 or more (81 percent), college graduates (71 percent), non-Hispanic Whites (64 percent), and Republicans (71 percent).
Overall, 36 percent of Americans identify themselves as a Have-not. Those most likely to see themselves this way are those with household incomes below $40,000, those who did not graduate from college (43 percent), Blacks and Hispanics (57 percent), and political independents (45 percent).
Source: Gallup, Majority Rejects Idea of Haves, Have-Nots Divide in U.S.
Tuesday, January 22, 2019
Is There an Economic Bar to Marriage?
Is there an "economic bar" to marriage? To answer this question, try this thought experiment. Who would you rather marry: someone who lives on a couch in his/her parents' basement, or someone who has a job with health insurance and a home of his/her own? If you would rather marry the person with health insurance and a home, then yes, Virginia, there is an economic bar to marriage. We can all feel the bar, but there have been few empirical studies to determine whether facts support our feelings.
Until now. A recent study in Demography sets out to describe the economic bar to marriage and tests whether those who meet the bar are more likely to marry than those who do not. Researchers defined the bar as these seven accomplishments: 1) having private health insurance; 2) experiencing earnings growth in the past 15 months; 3) homeownership; 4) having a bank account; 5) being employed; 6) not experiencing any material hardship in the past year (hardship is defined as not being able to pay rent or mortgage, having utilities cut off, and/or being evicted); and 7) not receiving public assistance in the past month. Those who scored a four out of seven were defined as meeting the economic bar.
Analyzing three waves of the Building Strong Families dataset, the researchers determined how many unmarried parents in their 20s got married after a 15 and 36 month time period, controlling for whether or not they met the economic bar. Among study respondents, one or the other parent passed the bar (had a score of 4 or higher) in 67 percent of the couples. Only the mother passed the bar in 28 percent of couples, and only the father in 48 percent of couples. Both parents passed the bar in 14 percent of couples.
Those who met the bar were more likely to have gotten married after 15 and 36 months, the study found. "At both time points, using the either parent definition of the bar, couples who met the bar were significantly more likely to marry than couples who did not meet the bar." The study also found that "meeting the both-parent bar was associated with larger increases in marriage than meeting the either-parent bar." Meeting the mother-only bar also boosted marriage, although not as much as meeting the father-only bar. "Our findings suggest that father's economic contributions may be more important than mother's in determining marriage entry. Nevertheless...the bar's association with marriage was not driven solely by the father's contribution," report the researchers.
"Our results suggest that the [academic] enthusiasm for the marriage bar is warranted," conclude the researchers. "Couple-level economic progress may play a role in marriage formation."
Source: Demography, "His" and "Hers": Meeting the Economic Bar to Marriage, Volume 55, No. 6 ($39.95)
Until now. A recent study in Demography sets out to describe the economic bar to marriage and tests whether those who meet the bar are more likely to marry than those who do not. Researchers defined the bar as these seven accomplishments: 1) having private health insurance; 2) experiencing earnings growth in the past 15 months; 3) homeownership; 4) having a bank account; 5) being employed; 6) not experiencing any material hardship in the past year (hardship is defined as not being able to pay rent or mortgage, having utilities cut off, and/or being evicted); and 7) not receiving public assistance in the past month. Those who scored a four out of seven were defined as meeting the economic bar.
Analyzing three waves of the Building Strong Families dataset, the researchers determined how many unmarried parents in their 20s got married after a 15 and 36 month time period, controlling for whether or not they met the economic bar. Among study respondents, one or the other parent passed the bar (had a score of 4 or higher) in 67 percent of the couples. Only the mother passed the bar in 28 percent of couples, and only the father in 48 percent of couples. Both parents passed the bar in 14 percent of couples.
Those who met the bar were more likely to have gotten married after 15 and 36 months, the study found. "At both time points, using the either parent definition of the bar, couples who met the bar were significantly more likely to marry than couples who did not meet the bar." The study also found that "meeting the both-parent bar was associated with larger increases in marriage than meeting the either-parent bar." Meeting the mother-only bar also boosted marriage, although not as much as meeting the father-only bar. "Our findings suggest that father's economic contributions may be more important than mother's in determining marriage entry. Nevertheless...the bar's association with marriage was not driven solely by the father's contribution," report the researchers.
"Our results suggest that the [academic] enthusiasm for the marriage bar is warranted," conclude the researchers. "Couple-level economic progress may play a role in marriage formation."
Source: Demography, "His" and "Hers": Meeting the Economic Bar to Marriage, Volume 55, No. 6 ($39.95)
Wednesday, April 18, 2018
Earnings Rise, but It Feels Like a Loss
Men without a bachelor's degree earn more than their counterparts did several decades ago, reports Stephen J. Rose of the Urban Institute in a recent analysis. But the rise in their earnings feels like a loss because they are losing ground relative to the rest of the workforce.
Take a look at the growing gap between the earnings of men with and without a bachelor's degree: Men with a bachelor's degree earned 50 percent more than those without a degree in 1980, says Rose. The gap grew to 81 percent by 2000. It climbed to 119 percent in 2015. Ouch. Because the earnings of men without a bachelor's degree are growing much more slowly than the earnings of college graduates, their standard of living is in relative decline.
In the past, says Rose, a middle-class lifestyle was achieved by owning a 1,000 square foot home with a single bathroom. Today, it requires owning "a 2,000 square foot house with air conditioning and multiple bathrooms, bigger and more appliances, TVs, computers, cell phones, and other amenities not available in the past." The earnings of working men without a college education are enough to achieve the modest middle-class lifestyle of yesterday. But they are not enough to achieve the middle-class lifestyle of today. "Plainly, the norms of today's middle-class life...require more money," says Rose.
Source: Urban Institute, Manufacturing and the Economic Position of Men without a College Degree
Take a look at the growing gap between the earnings of men with and without a bachelor's degree: Men with a bachelor's degree earned 50 percent more than those without a degree in 1980, says Rose. The gap grew to 81 percent by 2000. It climbed to 119 percent in 2015. Ouch. Because the earnings of men without a bachelor's degree are growing much more slowly than the earnings of college graduates, their standard of living is in relative decline.
In the past, says Rose, a middle-class lifestyle was achieved by owning a 1,000 square foot home with a single bathroom. Today, it requires owning "a 2,000 square foot house with air conditioning and multiple bathrooms, bigger and more appliances, TVs, computers, cell phones, and other amenities not available in the past." The earnings of working men without a college education are enough to achieve the modest middle-class lifestyle of yesterday. But they are not enough to achieve the middle-class lifestyle of today. "Plainly, the norms of today's middle-class life...require more money," says Rose.
Source: Urban Institute, Manufacturing and the Economic Position of Men without a College Degree
Friday, April 13, 2018
How's the Tchotchke Index Doing?
If you want proof of the economic recovery, look no further than the Tchotchke Index. As defined by Demo Memo nearly a decade ago (see post), the Tchotchke Index is the amount of money spent by the average household on "decorative items for the home," one of the detailed categories in the Consumer Expenditure Survey. As explained all those years ago, the Tchotchke Index is "an excellent gauge of the economic wellbeing of American households...Spending on tchotchkes tracks the economy's ups and downs with the precision of other, better-known measures such as the Consumer Confidence Index, the unemployment rate, and the Dow Jones Industrial Average."
No one needs tchotchkes. Decorative items for the home are purely discretionary and an impulse buy. Spending on them rises when times are good and falls when times are bad, which is why they are a good measure of household economic wellbeing. Here is the latest on the Tchotchke Index for selected years since 2000 (in 2016 dollars)...
Tchotchke Index
2016: $162.75
2015: $137.97
2014: $112.66
2013: $105.87 (low)
2007: $179.33
2000: $266.50 (high)
In 2016, the Tchotchke Index was higher than at any time since 2007 and fully 54 percent above the $105.87 post-Great Recession low of 2013. But the 2016 Index was still well below the $266.50 of 2000. Why was the Tchotchke Index so high in 2000? Because American household incomes peaked one year earlier, in 1999.
Source: Demo Memo analysis of the Consumer Expenditure Survey
No one needs tchotchkes. Decorative items for the home are purely discretionary and an impulse buy. Spending on them rises when times are good and falls when times are bad, which is why they are a good measure of household economic wellbeing. Here is the latest on the Tchotchke Index for selected years since 2000 (in 2016 dollars)...
Tchotchke Index
2016: $162.75
2015: $137.97
2014: $112.66
2013: $105.87 (low)
2007: $179.33
2000: $266.50 (high)
In 2016, the Tchotchke Index was higher than at any time since 2007 and fully 54 percent above the $105.87 post-Great Recession low of 2013. But the 2016 Index was still well below the $266.50 of 2000. Why was the Tchotchke Index so high in 2000? Because American household incomes peaked one year earlier, in 1999.
Source: Demo Memo analysis of the Consumer Expenditure Survey
Wednesday, February 07, 2018
What Happens to Young Adults Who Don't Go To College?
Is going to college pretty much the only path to financial security for today's young adults? That's what is suggested by the results of the National Center for Education Statistics' longitudinal survey of the ninth grade class of 2009. The 2016 follow up, seven years later, provides a disturbing look at the financial situation of those who did not go to college.
A substantial 28 percent of the nation's 2009 ninth graders had not enrolled in a postsecondary institution since graduating from high school, according to the 2016 follow up. When asked why they never went to college, 43 percent cited personal reasons and 42 percent financial.
Anxiety was widespread among these young adults, with 60 percent worried about having enough money to pay for regular expenses. Many depended on parents to get by: 26 percent said their parents regularly helped them pay for their rent or mortgage; 26 percent said their parents regularly helped with health care costs; and 19 percent said their parents regularly helped pay their monthly bills. Among those who were employed, 39 percent reported having an income of less than $10,000 in the previous year.
Source: National Center for Education Statistics, High School Longitudinal Study of 2009 (HSLS:09) Second Follow-Up: A First Look at Fall 2009 Ninth-Graders in 2016
A substantial 28 percent of the nation's 2009 ninth graders had not enrolled in a postsecondary institution since graduating from high school, according to the 2016 follow up. When asked why they never went to college, 43 percent cited personal reasons and 42 percent financial.
Anxiety was widespread among these young adults, with 60 percent worried about having enough money to pay for regular expenses. Many depended on parents to get by: 26 percent said their parents regularly helped them pay for their rent or mortgage; 26 percent said their parents regularly helped with health care costs; and 19 percent said their parents regularly helped pay their monthly bills. Among those who were employed, 39 percent reported having an income of less than $10,000 in the previous year.
Source: National Center for Education Statistics, High School Longitudinal Study of 2009 (HSLS:09) Second Follow-Up: A First Look at Fall 2009 Ninth-Graders in 2016
Friday, January 20, 2017
When Boom Goes Bust, Stay or Go?
When boom turns to bust, is it better to hunker down and stay put or pull up stakes and move elsewhere? Move appears to be the answer.
"We find that geographic mobility following the bust is associated with stronger consumer financial health," say researchers at the Federal Reserve Bank of Cleveland. The researchers examined the credit records of people living in counties experiencing oil rig boom and bust between 2011 and 2014. The finances of movers and stayers were similar during the boom times, but they diverged in the bust. Those who left ended up better off financially than those who stayed (lower credit utilization, fewer derogatory accounts, lower past-due balances, and greater access to credit). "Our analysis implies that geographic mobility could have quantifiable benefits for consumer financial health," they conclude.
Source: Federal Reserve Bank of Cleveland, Geographic Mobility and Consumer Financial Health: Evidence from Oil Production Boom Towns
"We find that geographic mobility following the bust is associated with stronger consumer financial health," say researchers at the Federal Reserve Bank of Cleveland. The researchers examined the credit records of people living in counties experiencing oil rig boom and bust between 2011 and 2014. The finances of movers and stayers were similar during the boom times, but they diverged in the bust. Those who left ended up better off financially than those who stayed (lower credit utilization, fewer derogatory accounts, lower past-due balances, and greater access to credit). "Our analysis implies that geographic mobility could have quantifiable benefits for consumer financial health," they conclude.
Source: Federal Reserve Bank of Cleveland, Geographic Mobility and Consumer Financial Health: Evidence from Oil Production Boom Towns
Wednesday, August 03, 2016
Who Claims Social Security at Age 62?
Are those who claim Social Security benefits early—at age 62—and receive a reduced benefit for life better or worse off than those who wait? That question was posed by the Center for Retirement Research in an analysis of data from the Health and Retirement Study. The answer: those who claim at age 62 are a mixture of the "disadvantaged," described as those with little education and poor job prospects, and the "advantaged" who have at least some college and more financial resources such as defined-benefit pension plans. The results of the study show...
"The results are discouraging," say the researchers, because they reveal the importance of defined-benefit plans to retirement preparedness. "These plans may persist in the public sector, but are not coming back in the private sector. The challenge is whether 401(k)s can be enhanced enough to fill that gap."
Source: Center for Retirement Research at Boston College, Are Early Claimers Making a Mistake?
- Most Americans have gotten the message and are waiting to claim Social Security, which will boost their retirement income. The percentage of households claiming Social Security at age 62 has fallen from 52 percent among the cohort of beneficiaries born in 1931-36 to 47 percent among those born in 1942-47.
- Despite the decline in early claiming, nearly half of households still claim early. And the 66 percent majority are not prepared for retirement, the study finds—meaning their projected retirement income is not high enough to meet the recommended replacement rate. About 80 percent of the disadvantaged are unprepared. Among the advantaged, a smaller 40 percent are unprepared because many have the additional stable income provided by a defined-benefit pension plan.
"The results are discouraging," say the researchers, because they reveal the importance of defined-benefit plans to retirement preparedness. "These plans may persist in the public sector, but are not coming back in the private sector. The challenge is whether 401(k)s can be enhanced enough to fill that gap."
Source: Center for Retirement Research at Boston College, Are Early Claimers Making a Mistake?
Wednesday, June 15, 2016
Finances Getting Better or Worse?
Every year for the past three, the Federal Reserve Board has surveyed the nation's households to determine their economic well-being. Among many other questions, the survey asks respondents how they're doing financially. In 2015, this is what they said:
Economic well-being in 2015
28% living comfortably
41% doing okay
22% just getting by
9% finding it difficult to get by
The 69 percent of Americans who were doing okay or living comfortably in 2015 was 4 percentage points greater than in 2014—a statistically significant increase, according to the report. But some are doing better than others. The 2015 survey included a panel of 2014 respondents, which was asked whether their finances had gotten better or worse over the past year. Among those living comfortably in 2014, a substantial 35 percent were doing even better in 2015 and 7 percent were worse. Among those finding it difficult to get by in 2014, only 18 percent were doing better in 2015 and fully 49 percent said their finances were even worse.
Source: Federal Reserve Board, Report on the Economic Well-Being of U.S. Households in 2015
Economic well-being in 2015
28% living comfortably
41% doing okay
22% just getting by
9% finding it difficult to get by
The 69 percent of Americans who were doing okay or living comfortably in 2015 was 4 percentage points greater than in 2014—a statistically significant increase, according to the report. But some are doing better than others. The 2015 survey included a panel of 2014 respondents, which was asked whether their finances had gotten better or worse over the past year. Among those living comfortably in 2014, a substantial 35 percent were doing even better in 2015 and 7 percent were worse. Among those finding it difficult to get by in 2014, only 18 percent were doing better in 2015 and fully 49 percent said their finances were even worse.
Source: Federal Reserve Board, Report on the Economic Well-Being of U.S. Households in 2015
Monday, June 13, 2016
What Would Help Low-Income Households the Most?
What is the most effective way to improve the economic wellbeing of the nation's low-income households? A study by the Brookings Institution answers the question by simulating different labor market interventions and determining which one would boost income the most.
The study focused on the poorest one-third of households headed by able-bodied 25-to-54-year-olds. These households are struggling to get by on average annual earnings of just $12,415. By simulating the effect of different labor market interventions on these households—such as raising the minimum wage, helping single mothers, boosting high school graduation rates, and so on—the researchers identify the one intervention that would make the biggest difference: full-time work.
Only 46 percent of low-income householders have a full-time job versus 87 percent of their higher-income counterparts. If all low-income household heads worked full-time at the wage expected for their education, race, and gender, their earnings would rise substantially. No other labor market intervention comes close to making this big a difference. Boosting the high school graduation rate to 90 percent, for example, adds only $370 to the $12,415 annual earnings of low-income households. Raising the minimum wage to $12/hour increases earnings to $14,722. But finding every low-income household head a full-time job makes the biggest difference, lifting earnings to $19,163, a 54 percent increase.
Source: The Brookings Institution, Isabel Sawhill, Edward Rodrigue, and Nathan Joo, One Third of a Nation: Strategies For Helping Working Families
The study focused on the poorest one-third of households headed by able-bodied 25-to-54-year-olds. These households are struggling to get by on average annual earnings of just $12,415. By simulating the effect of different labor market interventions on these households—such as raising the minimum wage, helping single mothers, boosting high school graduation rates, and so on—the researchers identify the one intervention that would make the biggest difference: full-time work.
Only 46 percent of low-income householders have a full-time job versus 87 percent of their higher-income counterparts. If all low-income household heads worked full-time at the wage expected for their education, race, and gender, their earnings would rise substantially. No other labor market intervention comes close to making this big a difference. Boosting the high school graduation rate to 90 percent, for example, adds only $370 to the $12,415 annual earnings of low-income households. Raising the minimum wage to $12/hour increases earnings to $14,722. But finding every low-income household head a full-time job makes the biggest difference, lifting earnings to $19,163, a 54 percent increase.
Source: The Brookings Institution, Isabel Sawhill, Edward Rodrigue, and Nathan Joo, One Third of a Nation: Strategies For Helping Working Families
Friday, March 04, 2016
Financial Stability, Upward Mobility, Depend on Family Help
In a pinch, families come to the rescue. In the past year, 26 percent of American households provided financial assistance to family (or friends) who needed help with day-to-day expenses, according to a Pew Charitable Trusts study. Analyzing data from its Survey of American Family Finances, Pew reports that the helping households provided a median of $1,000 in assistance.
Some families do much more, providing their adult children with what Pew call "mobility-enhancing" funds: money for higher education and homeownership. According to Pew's analysis of the 2013 Panel Study of Income Dynamics, 10 percent of adult children received financial help from their parents for home purchasing, and 31 percent received funds for higher education. Of course the wealthiest families are most likely to provide these funds. Among adults raised in the wealthiest one-third of families, 52 percent received money from their parents for higher education and 61 percent received money for home purchasing. Among those in the least wealthy one-third, the comparable figures are just 14 and 6 percent.
"The safety net provided to households by friends and relatives," says Pew, "is a hidden dimension of the financial system and one that may reinforce existing advantages and disadvantages in family finances."
Source: The Pew Charitable Trusts, Extended Family Support and Household Balance Sheets
Some families do much more, providing their adult children with what Pew call "mobility-enhancing" funds: money for higher education and homeownership. According to Pew's analysis of the 2013 Panel Study of Income Dynamics, 10 percent of adult children received financial help from their parents for home purchasing, and 31 percent received funds for higher education. Of course the wealthiest families are most likely to provide these funds. Among adults raised in the wealthiest one-third of families, 52 percent received money from their parents for higher education and 61 percent received money for home purchasing. Among those in the least wealthy one-third, the comparable figures are just 14 and 6 percent.
"The safety net provided to households by friends and relatives," says Pew, "is a hidden dimension of the financial system and one that may reinforce existing advantages and disadvantages in family finances."
Source: The Pew Charitable Trusts, Extended Family Support and Household Balance Sheets
Wednesday, February 18, 2015
Technology May Immiserate Humanity
"Will smart machines, which are rapidly replacing workers in a wide range of jobs, produce economic misery or prosperity?"
That's the question posed in Robots Are Us: Some Economics of Human Replacement, a National Bureau of Economic Research working paper. The authors create a model to see how technological progress will impact the human economy. The model's outcome is, to use the authors' term, "disturbing."
The results of the model show that the growing legacy of software code may very well put the human economy out of business. "As the stock of legacy code grows," say the researchers, "the demand for new code and, thus for high-tech workers, falls." Former high-tech workers will seek jobs in low-tech occupations, driving those wages down. Smart machines are now on track to immiserate humanity, and open-source technology is likely to make matters worse. The researchers recommend generation-specific redistribution policies that could soften the blow.
Source: National Bureau of Economic Research, Robots Are Us: Some Economics of Human Replacement, NBER Working Paper 20941 ($5)
That's the question posed in Robots Are Us: Some Economics of Human Replacement, a National Bureau of Economic Research working paper. The authors create a model to see how technological progress will impact the human economy. The model's outcome is, to use the authors' term, "disturbing."
The results of the model show that the growing legacy of software code may very well put the human economy out of business. "As the stock of legacy code grows," say the researchers, "the demand for new code and, thus for high-tech workers, falls." Former high-tech workers will seek jobs in low-tech occupations, driving those wages down. Smart machines are now on track to immiserate humanity, and open-source technology is likely to make matters worse. The researchers recommend generation-specific redistribution policies that could soften the blow.
Source: National Bureau of Economic Research, Robots Are Us: Some Economics of Human Replacement, NBER Working Paper 20941 ($5)
Tuesday, February 17, 2015
Fewer Minimum Wage Workers
Between 2010 and 2014, the number of minimum wage workers in the United States fell by 31 percent—a decline of more than 1 million.
Number (and percent) of wage and salary workers paid at or below minimum wage
2014: 2,992,000 (2.9%)
2010: 4,360,000 (6.0%)
Source: Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey
Number (and percent) of wage and salary workers paid at or below minimum wage
2014: 2,992,000 (2.9%)
2010: 4,360,000 (6.0%)
Source: Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey
Wednesday, February 04, 2015
Emergency Cash: How Long Would It Last?
Most households have little money saved for emergencies, according to an analysis of the 2013 Survey of Consumer Finances by the Pew Charitable Trusts. Financial advisors recommend having three to six months of income in liquid savings (cash, checking, and savings accounts). By income quintile, here is how much liquid savings households have for emergencies...
Top quintile: 52 days
Fourth quintile: 30 days
Middle quintile: 21 days
Second quintile: 15 days
Bottom quintile: 9 days
Source: The Pew Charitable Trusts, The Precarious State of Family Balance Sheets
Top quintile: 52 days
Fourth quintile: 30 days
Middle quintile: 21 days
Second quintile: 15 days
Bottom quintile: 9 days
Source: The Pew Charitable Trusts, The Precarious State of Family Balance Sheets
Monday, January 05, 2015
The Unpredictable Schedules of Hourly Workers
If you're a worker who gets paid by the hour, chances are you don't know your work schedule more than a week in advance. That's the finding of a Brookings Institution analysis of data from the National Longitudinal Survey of Youth.
Among 26-to-32-year-olds who are paid by the hour, 41 percent do not know their work schedule more than a week in advance, creating instability for millions of workers. The percentage who must cope with such short notice exceeds the 39 percent who know their schedule at least four weeks in advance. Unpredictable work schedules, says Brookings, limit the upward mobility of low-income workers.
Source: The Brookings Institution, Do Unpredictable Hours Undermine Upward Mobility?
Among 26-to-32-year-olds who are paid by the hour, 41 percent do not know their work schedule more than a week in advance, creating instability for millions of workers. The percentage who must cope with such short notice exceeds the 39 percent who know their schedule at least four weeks in advance. Unpredictable work schedules, says Brookings, limit the upward mobility of low-income workers.
Source: The Brookings Institution, Do Unpredictable Hours Undermine Upward Mobility?
Tuesday, October 07, 2014
Why the Decline in Households Headed by 25-to-34-Year-Olds?
The release of 2014 Current Population Survey data a few weeks ago was almost ho-hum. Median household income was unchanged, and there were few clues about emerging trends.
But one thing stood out: the decline in households headed by 25-to-34-year-olds. The number fell by a small but surprising 8,994 between 2013 and 2014. The decline was a surprise because the 25-to-34-year-old population is growing by more than half a million a year, and households headed by the age group had been growing by more than 100,000 a year—until now. What happened?
To find out, let's take a look at which household types in the 25-to-34 age group contributed to the 2013-14 decline: married couples (down 89,216), women who live alone (down 88,688), and men who live alone (down 44,932).
These declines are a sign of economic distress. A Pew Research Center survey has uncovered the reason why so many 25-to-34-year-olds aren't marrying: they're looking for a partner with a steady job. With rents rising and student loan payments looming, fewer can afford to live by themselves while waiting for Mr. (or Ms.) Right. Looking back, we should have seen this coming. Since 2010, the annual increase in the number of households headed by 25-to-34-year-olds has been shrinking to the point where there's no increase at all...
Annual change in number of households headed by 25-to-34-year-olds
2010-11: 315,000
2011-12: 274,000
2012-13: 171,000
2013-14: -8,994
In light of this trend, the 2013-14 decline is not a surprise.
But one thing stood out: the decline in households headed by 25-to-34-year-olds. The number fell by a small but surprising 8,994 between 2013 and 2014. The decline was a surprise because the 25-to-34-year-old population is growing by more than half a million a year, and households headed by the age group had been growing by more than 100,000 a year—until now. What happened?
To find out, let's take a look at which household types in the 25-to-34 age group contributed to the 2013-14 decline: married couples (down 89,216), women who live alone (down 88,688), and men who live alone (down 44,932).
These declines are a sign of economic distress. A Pew Research Center survey has uncovered the reason why so many 25-to-34-year-olds aren't marrying: they're looking for a partner with a steady job. With rents rising and student loan payments looming, fewer can afford to live by themselves while waiting for Mr. (or Ms.) Right. Looking back, we should have seen this coming. Since 2010, the annual increase in the number of households headed by 25-to-34-year-olds has been shrinking to the point where there's no increase at all...
Annual change in number of households headed by 25-to-34-year-olds
2010-11: 315,000
2011-12: 274,000
2012-13: 171,000
2013-14: -8,994
In light of this trend, the 2013-14 decline is not a surprise.
Monday, September 22, 2014
Gen X: Higher Incomes, Less Wealth
A study of the upward mobility of Generation X reveals contradictory trends. Although the incomes of Gen Xers are higher than their parents, they are not as wealthy. This is true especially of college graduates: 82 percent have higher incomes than their parents, but only 30 percent have greater wealth.
What accounts for this disparity? One factor is student debt. Although the education debt of Gen Xers is manageable on a day-to-day basis, notes the report, it is limiting their wealth accumulation and may hamper their ability to send their own children to college—the troubling "generational reach" of students loans.
Source: The Pew Charitable Trusts, A New Financial Reality—The Balance Sheets and Economic Mobility of Generation X
What accounts for this disparity? One factor is student debt. Although the education debt of Gen Xers is manageable on a day-to-day basis, notes the report, it is limiting their wealth accumulation and may hamper their ability to send their own children to college—the troubling "generational reach" of students loans.
Source: The Pew Charitable Trusts, A New Financial Reality—The Balance Sheets and Economic Mobility of Generation X
Tuesday, August 12, 2014
Household Economic Well-Being in 2013
Disturbing findings have emerged from a Federal Reserve Board survey of the economic well-being of American households in 2013. While the average household is doing alright, many are not. The struggling segments are large enough to raise eyebrows and pose a potential threat to the stability of the overall U.S. economy. These are the some of the worrisome findings...
Source: Federal Reserve, Report on the Economic Well-Being of U.S. Households in 2013
- 34% of households say they are worse off financially than they were five years ago.
- 45% did not save any portion of their income in 2012.
- 58% do not have a rainy day fund that could cover expenses for three months.
- 45% of renters say they rent because they can't afford a down payment.
- 24% of households have education debt, owing a median of $15,000.
- 37% of those with education debt say the cost outweighs the benefits.
- 44% of households bought lottery tickets in the past year; only 33% own stock.
- 54% would have to go into debt or be unable to pay an unexpected $400 expense.
- 28% of householders aged 60-plus say their retirement plan is to keep working.
Source: Federal Reserve, Report on the Economic Well-Being of U.S. Households in 2013
Wednesday, March 12, 2014
The Declining Fortunes of Young Adults
Percent change in average real net worth of households by age of householder, 1989 to 2013:Q3...
Under age 40: -8.5%
Aged 40 to 61: +65.4%
Aged 62-plus: +92.9%
Source: Federal Reserve Bank of St. Louis, Housing Crash Continues to Overshadow Young Families' Balance Sheets
Under age 40: -8.5%
Aged 40 to 61: +65.4%
Aged 62-plus: +92.9%
Source: Federal Reserve Bank of St. Louis, Housing Crash Continues to Overshadow Young Families' Balance Sheets
Wednesday, February 12, 2014
Young Adults Are Splitting into Haves and Have-Nots
Young adults are splitting into Haves and Have-Nots based on their education, according to a Pew Research Center report. While this is a long-term trend, Pew's analysis of Census Bureau income data for people aged 25 to 32 shows just how much more important a bachelor's degree is to millennials than it was for generation Xers or boomers.
First, the good news. Today's 25-to-32-year-olds with a bachelor's degree have a higher median household income than did their generation X or baby-boom counterparts at the same age. For college-educated millennials, median household income in 2012 was $89,079. This compares with a median of $86,237 for gen Xers when they were 25-to-32-years-old, $81,686 for younger boomers at that age, and $71,916 for older boomers as young adults. (Note: household income is in 2012 dollars and adjusted for changes in household size.) In other words, the standard of living of college-educated young adults has improved over the decades.
Now the bad news. Today's 25-to-32-year-olds with no more than a high school diploma are decidedly worse off than their generation X or baby-boom counterparts at the same age. Millennials with no more than a high school diploma had a median household income of $39,842 in 2012. This compares with a larger $45,164 for gen Xers when they were 25-to-32-years-old, $47,986 for younger boomers at that age, and $50,097 for older boomers as young adults. In other words, the standard of living of young adults who do not go to college has dropped, their median household income now 20 percent below what it was a few decades ago.
The household income gap between young adults with a bachelor's degree and those with no more than a high school diploma has more than doubled, growing from $22,000 in 1979 to $49,000 in 2012. That growing gap explains why 22 percent of today's 25-to-32-year-olds with no more than a high school diploma are living in poverty (up from 7 percent in 1979) and 18 percent are living with their parents (up from 9 percent in 1979).
For more on the growing importance of a college education for young adults, see Pew Research Center's report The Rising Cost of Not Going to College.
First, the good news. Today's 25-to-32-year-olds with a bachelor's degree have a higher median household income than did their generation X or baby-boom counterparts at the same age. For college-educated millennials, median household income in 2012 was $89,079. This compares with a median of $86,237 for gen Xers when they were 25-to-32-years-old, $81,686 for younger boomers at that age, and $71,916 for older boomers as young adults. (Note: household income is in 2012 dollars and adjusted for changes in household size.) In other words, the standard of living of college-educated young adults has improved over the decades.
Now the bad news. Today's 25-to-32-year-olds with no more than a high school diploma are decidedly worse off than their generation X or baby-boom counterparts at the same age. Millennials with no more than a high school diploma had a median household income of $39,842 in 2012. This compares with a larger $45,164 for gen Xers when they were 25-to-32-years-old, $47,986 for younger boomers at that age, and $50,097 for older boomers as young adults. In other words, the standard of living of young adults who do not go to college has dropped, their median household income now 20 percent below what it was a few decades ago.
The household income gap between young adults with a bachelor's degree and those with no more than a high school diploma has more than doubled, growing from $22,000 in 1979 to $49,000 in 2012. That growing gap explains why 22 percent of today's 25-to-32-year-olds with no more than a high school diploma are living in poverty (up from 7 percent in 1979) and 18 percent are living with their parents (up from 9 percent in 1979).
For more on the growing importance of a college education for young adults, see Pew Research Center's report The Rising Cost of Not Going to College.
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