American families are facing a state of financial fragility that is worse than they have ever experienced. Earlier this year, Bankrate issued its annual report. They found that a sizable majority (57%) of US adults are currently unable to afford a $1,000 emergency expense. They also found that two-thirds (68%) were worried they wouldn’t be able to cover their living expenses for one month if they lost their primary source of income.
Many years ago, the Federal Reserve Board conducted a similar survey of Americans. They found that nearly half of the respondents said that the only way they could cover an unexpected expense would be by borrowing or selling something. They could not come up with the money any other way.
At that time, Neal Gabler, writing in The Atlantic, asked: Who knew? He then answered that he knew because he was one of the people. He knew what it was like to dread going to the mailbox because it usually had more new bills and rarely a check to pay for them. He knew what it was like to tell his daughter that he may not be able to pay for her wedding.
His point was you wouldn’t know this by looking at him. You could look at his resume as a writer and conclude he was doing fine. He is in the middle-class with five books and hundreds of articles to his name. That is why he wrote about what he calls, “the secret shame of middle-class Americans.”
He represents so many US adults who are financially fragile and “living close to the financial edge.” And it is worth mentioning that this is not just a liquidity problem: they don’t have enough ready cash in their checking and savings accounts. They are living in a world where the cost of living is rising faster than their wages.
When we say that American workers are hurting, it is much worse than we might suspect.