Tough times in the USA

Millions of families are living in perpetual financial insecurity. 

Low-income families are still unable to accrue enough savings to see themselves through a period of joblessness. Some 37% of those households are “liquid asset poor,” based on the latest U.S. Census Bureau data, meaning they don’t have enough money in their bank account or other assets to replace three months of income at the poverty level (that’s just $6,150 for a family of four).

This inability to save is partly due to irregular work, according to the “2017 Prosperity Now Scorecard,” an annual review of new research covering the state of finances of U.S. households by the Washington, D.C.-based Prosperity Now, formerly known as the Center for Enterprise Development, a non-profit think tank focused on expanding opportunities for low-income families.

 The “liquid asset poor” figure is supported by previous research of all income groups. (When asked if they had set aside a rainy day fund that would cover three months of expenses, only 47% said they did, a separate U.S. Federal Reserve study found.)

The financial situation was far worse for people of color, the Prosperity Now report found. Some 81% of Latino households and 57% of African-American households have virtually no savings, versus 28% of Caucasian households. These households are defined as “liquid asset poor.” The poverty rate fell to 13.8% for the first year since the recession, but the gap between white households in poverty (10.4%) and those of color (21.8%) was unchanged.

Nearly 20 million households (17%) have zero or negative net worth, meaning they owe more than they own. And disparities in net worth by race and income are the largest of any data measured by the latest report. “Households of color have 14 cents for every dollar of net worth of Caucasian households, including 7 cents for African-American households and 10 cents for Latinos.”

“This inability to save stems in part from the increasing number of jobs that don’t provide a reliable stream of income, leaving many working families vulnerable to jarring ups-and-downs in their take-home pay,” the report concluded. It also found that one-in-five households experienced “moderate to significant income volatility” from month-to-month during the past year due to irregular jobs.

The annual unemployment rate of 4.9% almost reached the 2006 to 2007 low of 4.6%, and yet 1 in 4 jobs are in low-wage occupations, a rate unchanged since 2012.