What’s it like to be a middle-class American?
Increasingly precarious, it seems. In an article entitled ‘The Secret Shame of Middle Class Americans’ in this month’s issue of The Atlantic, the writer Neal Gabler – an author, film critic and academic – came out as one of the many millions of apparently middle-class Americans who are in fact living in a ‘more or less continual state of financial peril’ – scrabbling around to make ends meet, and mostly failing.
Gabler draws attention to a regular survey by the Federal Reserve, which asks consumers a set of questions, including how they would pay for a $400 emergency. ‘The answer: 47% of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all’, writes Gabler. ‘Four hundred dollars! Who knew? Well, I knew. I knew because I am in that 47%.’
Does the data support this?
Yes. Research into this niche area of microeconomics – day-to-day ‘financial fragility’ – has boomed since the Great Recession, according to David Johnson, an economist at the University of Michigan who specialises in income and wealth inequality. A 2014 survey study found that only 38% of Americans would cover a $1,000 emergency medical bill or a $500 car repair bill with money they had saved.
Another academic study found that a quarter of households would definitely fail to get their hands on $2,000 within 30 days in an emergency, and a further 19% would be able to do so only by pawning possessions or taking out a payday loan.
This post was published at David Stockmans Contra Corner on June 1, 2016.
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