Courtesy of The Atlantic
Annie Lowrey’s thought-provoking article asks the question: in an economy that looks great on paper, why are a third of American households “financially fragile”?
The economy has made a slow but steady recovery since the Great Recession, and wages have gone up, but many Americans still struggle.
The answer lies in how quickly expenses have increased relative to paychecks. Mortgages and rent take up more than their fair share of paychecks, along with student debt, medical bills and childcare.
Table of Contents
It Starts at Home
Homes are in short supply, and prices make them out of reach for many families. People who can’t afford to buy are forced to rent (although renting isn’t always affordable, either), further impacting the housing market and their own long-term financial stability. Job markets are hurt when potential workers can’t afford to live nearby.
Insuring You’ll Be Broke
Insurance premiums and deductibles have increased alongside prices for medical care, making it a huge expense even for people who qualify for government assistance. Median household incomes increased less than 20 percent from 2010 to 2016. Family health insurance premiums, though, rose 28 percent in the same six years, while deductibles also increased by more than $1,000. An industry that’s supposed to protect average families from financial crises is itself becoming a crisis for many.
The Value of Education
Traditionally, if you want to earn more in this country, you need more education. But the increased salaries we expect when we earn college degrees haven’t kept up with the load of student debt many have taken on in hopes of a better life. Now the country’s young adults are often saddled with $20,000-plus of debt to pay off (with paychecks that are already spread too thin).
Prohibitive Cost of Childcare
The high cost of living is one factor causing many millennials to delay having a family. And they’re right—for those who do have children, the cost of childcare is often right up there with the cost of housing. In the nation’s capital, low-income moms can expect to pay more than they actually earn if someone else cares for their child while they go to work.
Knowledge Is Power
In this climate, it’s really important to know what you’re up against. While legislation is unlikely to effect any real improvement in the near future, the economy is cyclical. (Read: The best video on economic cycles explained: parts one, two, and three) There are affordable places to live in the U.S. And new construction is poised to pick up in the next few years.
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