Being middle class, I feel like you're really just
in between a rock and a hard place. So there are certain kinds of assumptions around
being a middle class person that have sort of shattered. And wages, really in some ways, are a reflection
of the productivity and skills of American workers. Four in ten Americans say that money affects them
negatively and the state of their mental health. The consumers that have a whole lot of debt really
are struggling to survive. The middle class was once a symbol of the American
dream. But the American middle class today paints quite
a different picture. Being middle class, I feel like you're really just
in between a rock and a hard place, you know. You're in a spot where everyone's like, Hey,
you're doing better than, you know, low class. You're doing great. You should be fine. And you're underneath the people who are actually
doing fine. It was at least a secure category. Your kids would go to a school that you felt at
least okay about. You probably owned a car or two and you owned
your own home and you could pay for your kids' college educations. So there were certain kinds of assumptions around
being a middle class person that have sort of shattered. A survey in 2018 found that a third of
middle income adults don't have $400 to cover an unexpected expense. In polls, when people are asked about being middle
class, they frequently are less likely to say so. And more people now urge the pollsters to suggest
that they're working class. So I think that many people who maybe in prior
years would have thought of themselves as middle class now no longer think of themselves that way. So when we think about economic status, we think
about it as some static, you know, state of the world. That you are either poor or not poor,
you're middle class or you're not. But in fact, the reality is that many middle
class families will experience one or a few years in poverty. In fact, most American families will
have years where they'll be poor or near poor. That precarity, that uncertainty, that is now a
feature of the middle class experience for most U.S. families. So what exactly happened to the American middle
class? A study by the Pew Research Center discovered
that the middle class, which was once comprised of the majority of Americans, has steadily shrunk
since the 1970s. About 61% of American adults were considered
middle class in 1971, compared to just 51% in 2019. However, the issue still remains widely debated. When people think about the state of the middle
class and whether or not it's shrinking, it really is a difficult question, and I think the reason
why is that as a nation, we've not actually established a formal definition of middle class. I was at a seminar recently where somebody
literally said, there is no middle class anymore. The middle class is gone. And I thought, oh, dear, you know, that's
political rhetoric. And I understand that it's a sort of a standard
for saying that folks in the middle are hurting, but it's just really not accurate. We looked at the size of the middle class in
these 16 rich countries in 1985 and again in 2016. And one of the things that surprised me was the
size of the middle class in the United States did not change. It was about 59% in 1985, and it was
59% in 2016. Experts instead prefer the term "squeezed" to
describe what's happening to the middle class today. Even if the middle class hasn't statistically
shrunk, I do think that the middle class faces more in the way of pressures to maintain or even
build upon their position. What it takes to actually live a middle class
life, to have quality of life, in many American cities is not what it once was. They're not necessarily able to pay their rent
easily. They can't own a property. If they're in their thirties, they may not feel
comfortable having kids because they realize that having a child would be too expensive. And forget about medical care. If you have one thing happen to you physically,
often people don't have good enough medical care, they don't have any insurance. This all goes into making somebody part of the
squeezed middle class. As the middle class lifestyle grows more expensive
and uncertain, it's also moving farther beyond the reach of younger generations. In 2019, just 60% of millennials were part of
middle income households in their twenties, compared with almost 70% of baby boomers. Meet Chantal Jacob. Chantal lives in suburban Texas with her husband
and one child. And while a household income of just over 100,000
should put her family in the middle income tier, she says that her family is still struggling
toward financial stability. Sounds great. Six figures. But once we got married, the taxes that come out
of my check before I even get any money, before all of my benefits, $500 come out of my check
automatically. And then you add in insurance, life insurance for
my spouse, myself and my son. And I also have money going aside for my son's
college fund. It's not a lot because I can't do that much, but I
want to have something for him. You know, my check that starts off at about $3000
goes down to $2200 before I even get to touch it. Our rent's about $1700. Electricity is about $150. Phone bill's about $280. Internet's $60. We both have vehicles. Those are about $800. Insurance on those vehicles is about $400. On food, $400 to $500 a month, but that's
increasing. We budget down to the dollar. And sometimes it's very disheartening to work all
week and have people tell you like, Oh, you're so lucky, you have a great job. And you're like, Hmm, I don't know about that. There are several reasons why the middle class is
feeling squeezed. The first reason is stagnated income. Between 1970 and 2018, the middle class share of
aggregate income fell by 19% in the U.S. In comparison, the share of aggregate income
for upper income households saw a rise of 19%. Another study by the Brookings Institute
found that income in the middle class has grown half as fast compared to both the bottom 20% and
the top 20% of income tiers once taxes and transfers were taken into account. If a stay at a company for a while, my income
becomes stagnant. You know, it increases by a couple thousand. I generally have to job hop to have increases in
my income, which in itself is not security. Middle class workers over the last 40 years have
not been able to adequately benefit from the productivity growth, the expansion of the pie, in
the economy. We've measured this and found that the typical
worker has fallen 43 percentage points behind the growth of productivity. What that means is that the middle class worker
could have earned one percentage point more per year in compensation growth over the last 40
years, and they didn't get it because there was an erosion of labor share of overall income and
because of rising inequality such that the top 10%, particularly the top 1%, and even more so
the top 0.1%, took in much of the gains from the growth of the economy. While incomes stagnate, the cost of living has
risen dramatically over the years. To put it into perspective, the average household
income in the U.S. saw just a 16% increase over the last 50 years. In comparison, housing costs increased by 190%
and college tuition shot up by nearly 264% in the same time period. I first moved in over here in these apartments I
live in five years ago. My income, my rent was like $1100. It's now $1700. That's $600 increase happened. I did not have a $600 increase, like my income
did not increase at the same rate. Rising expenditures, rising prices, in health,
housing and education are very real and they've put a tremendous amount of pressure on households
in the middle whose income simply doesn't go as far as it used to. The situation is even worse in cities where the
cost of living is already higher. An analysis in 2018 found that raising a family
and a middle class lifestyle in expensive coastal cities like San Francisco or New York needs an
income of at least $300,000 a year. For reference, just 10% of all households made
$200,000 or over in 2020. I'd recently saw an apartment next to the
building I work in in Plano, and I was like, It'd be great to walk across the street to work. And it was like $2,400 for an efficiency. And I'm like, That's insane. And then it's like for what I have, they call a
townhome, three bed, two bath, $5,500. I'm like, Well, absolutely not. Like I'm going to pay $5,500 and I don't own it,
it's not mine? It's just getting worse. And everyone is like, I
feel like native people are being pushed out into the suburbs and then people from out of state can
come in and enjoy the beautiful fruits of Dallas and have fun and be close to the restaurants. And, you know, I have to live out here and, you
know, it's not bad, but it's not Dallas. I'm from Dallas. I grew up there. That's where I want to be. But how it is now, you
know, it's just not affordable. Policy making might be both the fault and the
solution of the middle class squeeze. There is no help whatsoever. There is no policy in place to assist people, and
I feel like as soon as you get a job or as soon as you're working, they're just like, Oh, that's all
you need is a job. You got it. You know, go forth and have at it. The stagnation of wages and paychecks for people
started in the seventies when productivity started growing more slowly, but really accelerated after
1979 and 80 when there was a huge growth of inequality, when the top 1% took off, when the
stock market grew, but people's paychecks didn't. And that has to do with issues of deregulation,
excessive unemployment, the weakening of unions, the failure to raise the minimum wage,
globalization with low wage countries that really put the kibosh on blue collar job opportunities
in many places. The point is that it's not that the economy got
worse. It was that there were policy decisions made so
that the economic growth did not filter down to the vast majority. The country wasn't built by Wall Street bankers,
CEOs and hedge fund managers. It was built by you. It was built by the great American middle class. In response, the Biden administration came into
office in 2021 with a promise to revitalize the middle class. The $1 trillion bipartisan infrastructure bill
from November 2021 and the upcoming Build Back Better Act both include provisions aimed at
financially supporting middle income families. But as Congress continues to find itself in
stalemate. Only time will tell whether these bills would
really have an impact on the survival of middle income households. I don't see any change effects. My friends that were struggling are still
struggling. I'm still budgeting down to every dollar trying
to get things done. So I just feel like if the changes are happening,
they're not trickling down fast enough for us to see the effects of it. I think that overall, the team with the Biden
administration has done quite well. At the same time, they're up against really
strong headwinds. We're talking about a global pandemic that
persists. We're talking about historic levels of inflation
and labor shortages that are leading to these sorts of supply chain gaps worldwide. So I think that both things are true. They've done a good job, but they also have a lot
of work to do. The fate of the middle class could determine the
future of the American dream. I just think we do need to be concerned because
this has an effect on how people perceive the American experiment working for them. And there are expectations that there should be
this upward growth and mobility. But I think we do have an increasingly precarious
labor market for many Americans. And so it's important to note that this is also a
feature of inequality. It's a shame that we have as much or more poverty
now than we did 40 years ago, that the middle class is earning somewhat higher wages, but not
in proportion to what they've increased their productivity over that time. And what this does is it adds to division. It hurts our democracy. It hurts the upward mobility of the children of
these families. That whole middle class of people is like
teetering on the brink of ruin. One emergency, one catastrophe. And you can see, even COVID showed you how
quickly people who were doing good can just fall off and have nothing. That should have been a wake up call that we need
to change some things. In June 2020, American workers made an average of
$27.45 per hour. In 1972, the same workers earned an average of
$3.88 per hour. A chart like this might make it seem like America
has come a long way in terms of wage growth. But when adjusted for inflation, wages have
remained virtually unchanged over the last 50 years, with workers today earning just $0.12 more
than they did in 1972. When the average American is not seeing his or her
living standards increase over a period of decades, that's something that should concern us
all. With inflation at its highest since 1981,
Americans are feeling the pain of slow wage growth. Two thirds of American workers said that
inflation has outpaced any salary gains made in the past year. Now, because of the inflation, I can't even make
the monthly payments. So I had to pick extra hours with my elderly care
job. But some economists argue that the concept is
merely a myth that politicians use to promote their careers. Politicians win elections by promising to fix
something that is supposedly wrong in people's lives. And so I think there is a bit of a political
cynicism and calculus involved in the wage stagnation debate and promises to fix the
supposed problem. So just how real is wage stagnation in America
today? And what does it mean for American workers? Wages in America have stagnated since the early
1970s, but it was 1979 when the gap between workers' productivity and wage began to
substantially increase. Between 1979 and 2020, workers wages grew by
17.5%, while productivity grew over three times as fast at 61.8%. It's not true that wages haven't grown at all. They have, but they haven't grown as quickly as
they had in the past. Since the eighties, the economy has changed a
lot. We've gone really from an industrial era to a
tech era. When you have these big changes to the economy,
sometimes the gains are not equally felt, but it really has an impact on everyone's lifestyle and
everyone's wages. Wage stagnation is worse for lower and middle
income earners. The bottom 90% of American workers saw their
annual wages increase by 28.2% from 1979 to 2020, while wages for the top 1% increased by
179.3%. Meanwhile, the top 0.1% saw an astonishing growth
of 389.1%. Real wages, which means after adjusting for
inflation, has not risen that much since the late 1970s. We know that, on the other hand,
inequality did rise over most of this period. I've been working about since the nineties when I
came here. That's about 30 years on and off. And there was very little raise for domestic
workers in general. Now, after 2020, with the inflation, I feel like
the incomes stayed the same. People lost some of the jobs, like in my
experience, and we have to struggle to find different or secondary jobs or
second part time jobs just to maintain the monthly expenses of our daily
living. It's very hard. Despite causing severe disruption to the U.S. labor market, the COVID pandemic has led to
surprising wage gains across industries. COVID has actually seen a significant acceleration
in wage growth, particularly for for low wage earners. This reflects a really serious tightness in the
labor market due to excessive U.S. demand, whether it's through the Federal
Reserve or through fiscal stimulus payments, but also restrictions on labor supply, immigration
restrictions, early retirements and of course, illness or deaths. So that has driven substantial wage gains. It's hard to tell whether that's the new reality,
and that's why I want to be cautious. Did it change our life forever and maybe for the
better in terms of labor market and wages? We have to wait and see. Automation is one explanation for wage stagnation
in America. The McKinsey Global Institute predicts that 45.3
million workers will lose their jobs due to advancements in technology by 2030. Automation has been a really big factor so far in
especially manufacturing jobs. So before you build a car, you use machines. But there was a lot of sort of hands on work with
it. Now much more of that is done with machines and
you have to be a lot more skilled to use those machines, which means that a lot of the routine
jobs have disappeared or they're very poorly paid. Over the next two or three decades, a lot of
economists believe that there's going to be a lot of disruption in the labor market because of new
automation. Even college-educated workers, that financial
assistance and accounting and even some parts of medical diagnoses, will be done by machines with
artificial intelligence. So a lot more of us might be facing that
competition from these machines. Globalization is another reason for wage
stagnation, forcing domestic workers to compete against unfair competition. In a lot of countries, workers are paid a lot
less. So now, particularly if you don't have a lot of
very specialized skills, you're competing in that market. And that means that a lot of sort of
routine office work and sort of manufacturing work is going to go overseas. But that isn't all bad news for Americans. It's important to remember that meant goods got a
lot cheaper. It's one of the reasons we've had such low
inflation since the eighties and everyone benefitted from that. But that said, I think
economists like me were a little cavalier, that we saw the economy growing and people doing better,
about the people who were hurt. And we still don't really have good solutions to
help people like that. Economists suggest that labor dynamism also played
a bigger role than expected. American workers today are changing jobs less
frequently than before, even though job switching leads to strong take home pay growth. While some Americans don't switch their jobs out
of a desire for stability, others can't because there is nowhere else to go. In many local markets, companies use the lack of
competition to suppress their workers' wages. The notion of monopsony power is that you have a
local labor market. Let's say that you live in a particular city or a
particular town, and in that town there is one employer. And given that there is only one
employer there, then they set the wages in a way that's lower than what you would otherwise expect
them to pay. This was a fully competitive market. 60% of U.S. labor markets are considered highly concentrated,
meaning a few employers are competing for local workers. Just 10% more workers in an area can
lead to about a 1% reduction in posted wages. I've asked a couple families over the years, that
was still before Corona, for a $10 raise and they just declined. They said they'll find somebody cheaper and we
practically lost the job. In case after case, you see that government
policies were implemented to discourage labor dynamism and to discourage workers from moving to
a better job or moving to a better town or city to improve their job prospects. And this inevitably will weigh on wage growth
over time. Companies can also play a direct role in stifling
the competition with methods like non-compete agreements. Roughly half of private sector U.S. businesses that responded to the EPI survey said
at least some of their employees are in non-compete agreements, meaning some 36 to 60
million private sector workers in America are subject to non-compete agreements. The non-compete clause would lead you to stay with
your current employer, not to move, because the consequences would be that it would be more
difficult for you to find employment. And if you are less likely to leave the job,
you'll be tied in or locked in to the current employer, which means that the likelihood that
that employee would keep getting his or her lower earning is much higher. The rationale for it at the very high end of the
income distribution, of the skill set, but I don't see much of a reason to have it for rank
and file employees. Meanwhile, unions that originally fought for
higher compensation have drastically lost its power over the years. Union membership in the U.S. fell from 20% of American workers in 1983 to just
10.3% in 2021. Workers in unions typically earn higher wages,
about 10.2% more compared to similar nonunion workers, thanks to methods such as collective
bargaining. It's in those industries where unionization stayed
somewhat high, the effect of market power, monopsony, of the employer on wages was muted, so
the unions were able to bargain on behalf of the employees even when they were dealing with large
employers. So wages were less stagnant or didn't decline as
much. But some suggest that wage stagnation is an issue
blown way out of proportion. The issue we have in the wage stagnation debate is
that a lot of researchers have been using a certain inflation metric, the consumer price
index, that really dramatically overstates inflation over time. So if you look at two periods, you see that those
expenses per CPI have gone up far more than they actually have. That means it makes it seem like your wage
increase is much smaller than it really actually is. You're actually able to buy a lot more with
your nominal wage than these researchers say you can. So that's why most researchers, including
the Federal Reserve, like to use a different measure of inflation. The personal consumption expenditures, or PCE. The PCE shows a much more moderate inflation over
the last several decades. When you apply PCE to nominal wage growth, you
discover much higher wage growth for middle income workers. In other words, no wage stagnation at all. And in fact, a pretty nice gain over the last 30
years. Focusing on broad national data over individual
experiences can create another issue. They see the percentage of low wage professions
has increased, therefore we have wage stagnation or decline. What they don't do, is they don't
actually look at the people in those professions and what their wages have done over time. So, for example, you can have someone who is a
janitor who works for 30 years and actually made substantial increases in wages and earnings over
that time. That would be lost if you just look at janitors
overall. I think it is technically a myth, and I think it
is overblown to say that people aren't better off than they were in the seventies. It's just patently absurd. I think everything about our lifestyle and our
living standards are higher and even our real wages are technically higher. But I think there is something to the fact that
we just aren't growing as fast as they used to for most people. So people don't feel like they're
equally sharing the same prosperity. And I think that that is a problem that's leading
to a lot of social unrest. Legislation could help solve some of the biggest
issues causing wage stagnation in America. There is a limited amount that we can do through
policy. When you have big changes in technology,
globalization, forces like that. But policy can matter a lot. For instance, things like those non-competes. I think that's adding to wage stagnation. And you know, you shouldn't have such
non-competes, particularly for low-skilled jobs. We could pass legislation to make it easier for
workers to unionize. There is a bill called the PRO Act, Protect our
Right to Organize, that the House of Representatives has already passed. It's dead in the water in the Senate. I think we also really need to embrace more of the
gig market, which so far I feel like we're trying to sort of pretend doesn't exist and making it
sort of a lower tier part of the labor market. But is it if we sort of allow those platforms to
offer health insurance, then I think it could become better quality jobs that are more dynamic
and let people get more of the upside risk and not just the downsides. The rise of remote work could also be beneficial
to wage growth in local markets. I mean, employers are very happy to have their
employees working remotely. In a way, if you can work remotely, at least, you
know, when you think about monopsony power, you are diminishing the monopsony power of an
employer. Because if you are a talented person, even if you
are in a small town where there's only one or two large employers, you can work for a global firm
that can be based in any other part of the world or the U.S. and work remotely and earn a higher wage. Achieving a fair wage for all Americans is vital
in ensuring the success of the American economy. There's a basic, not just a basic sense of
fairness. There is something historically we have called
the American dream. It attracts immigrants to our shores. It motivates all kinds of people to innovate and
make the economy productive. And wages really, in some ways, are a reflection
of the productivity and skills of the American workers. So if wages are stagnating for a whole
bunch of people, that means that we are not becoming as productive a country as we can be. That means the whole economy is not working as
well as it can be. $16.15 trillion. That is how much debt American households owed by
the second quarter of 2020. A staggering 41.79% increase from $11.39 trillion
just ten years prior. The consumers that have a whole lot of debt really
are struggling to survive. They're struggling to meet rent or mortgage
payments, repay college loans, to repay loans for a car. They're struggling because they've got enormous
credit card debt. 60% of American adults surveyed cited their level
of debt as their main reason for financial anxiety. Debt is rising every single day, and it is
something that I can say is debilitating. For me, even with a master's degree and having
experience out in the field for over ten years, I've had to have at least three jobs in order to
not live paycheck to paycheck. But with inflation at its 40 year high, debt in
America will likely grow. 43% of Americans are expected to add even more
debt within the next six months. Debt is financing asset purchases such as a home,
such as a car. And when the price of these goods goes up, then
it gets reflected in the loans that get taken out. And it's that juggling effect, right. Do I pay off this debt or do I go get groceries
or go get gas, the things that I need to actually live. So why are so many Americans in debt today and
what impact does it have on the U.S. economy? The COVID pandemic gave many Americans a
chance to improve their finances. The total personal savings rate since
the pandemic averaged 12.6%, compared to just 7.25% between the Great Recession and February
2020. Americans also paid off a record $83 billion in
credit card debt in 2020. To help people weather this historic crisis, all
sorts of supports were extended. They offered forbearance on mortgages, on student
loans, other types of debt. When one set of my student loan payments were
paused, I was able to breathe. So even with that $300 that was paused,
specifically in loan payments, that was enough to be able to allow for me to pay off my old car. That was enough for me to be able to save a
substantial amount of money in order to put a deposit down for this beautiful place that I
cohabitate every single day. So all this support led to actually a very
historically good period in the terms of the serious delinquency rate on student loans,
on mortgage debt, on auto debt, across all these different debt types. But concerns over household debt are rising again. Government did a whole lot of things to help
households and help households in debt during COVID. Now, unfortunately, those are all gone. Interest rates are starting to rise again. Federal Reserve has already increased interest
rates a good deal. They've said they're going to increase interest
rates more. I will tell you how much debt I do owe. Student debt from getting my bachelor's as well as
my master's degree. And then I also have debt that I just started
accruing in '22. Purchasing a car, that was unexpected. I have debt there, about $10,000 worth of that. And then obviously my mortgage. I owe a little under $200k on my condo. Most of the debt held by Americans is related to
housing, accounting for 72.5% of the total balance. Nearly half of all Americans today say
that the availability of affordable housing is a significant problem. We've seen phenomenal house price growth during
the pandemic, and some of that's driven by just supply-side constraints. Not enough homes to go around. We also went through a decade where you had to
have a 700 plus credit score to qualify for a mortgage. That means that people whose credit scores were
not in that strong, strong position were competing for lending dollars that were not easily
available and for homes that were not easily available either. So prices just climbed and
climbed. Meanwhile, student and auto loans comprise most of
the non-housing debt, accounting for 35.7% and 33.7% of the total balance. College tuition for public four year institutions
rose by 179.2% between 2000 and 2020, with an average increase of 9% each year. With college education going up and up and up and
up and up, it's the difference between spending a few thousand dollars, right, for your tuition and
borrowing a few thousand dollars, and a few tens of thousands of dollars. You get a law degree. You get a doctor's degree. You get an MBA. You get a PhD. Now, the debt levels are even larger. When it comes to just living and actually
thriving. It's hard for me to say that it was worth it
because almost every single day the stress of money and actually being able to pay off student
loans seems so out of reach. On August 24th, President Biden announced the
cancellation of $10,000 in federal student loans for borrowers making under $125,000 annually. Student debt has received a lot of attention
because the rate of serious delinquency, that's 90 plus days past due, has risen to the highest of
the debt types tracked by Equifax. So it surpassed credit card debt in the
past about ten years. A close majority of people paying student loans
are only paying interest, so they're not actually chipping away at that
principal. And it means that the amount just builds up and
builds up over time. That drives a lot of increases. For new vehicles, the monthly payment for auto
loans climbed past $700 for the first time in August 2022. Median car loan term got a lot longer over the
last ten years. The idea of a five year term is not really the
standard anymore. Six year often is what a lender will offer. And that means that people are paying more in
interest over the life of their loan. And those balances are just higher. Right now, I owe under $10,000 for just my car
payment and it truly does weigh on me. It feels very challenging just on the day to day
of, okay, well, I can start paying off towards my principal and pay off my car quicker or I can,
you know that wrestling of the question, or should I put that money into savings. While inflation pushes up the price of goods and
services, most Americans feel that their wages aren't keeping up with inflation. The average real hourly earnings for all
employees dropped by about 3% over the last year, while inflation increased by 8.5% during the same
period. I wouldn't want to say that wages are not
increasing at all, but given the cost of living that Americans are experiencing, it's not rising
fast enough. Wages start to flatline and people go, Well, I
should have a better standard of living. All of a sudden it's I can't get it out of my
wages or my income, so what do I do? Well, let's put a little bit of money on a credit
card or let's buy a better car and have a little bit more car debt and we'll just pay it off over
a longer period of time. Even just at my age, I want to be able to embrace
and do all the things that I want to do in life. And it's constantly in the back of my head of,
okay, should I pay off debt today or should I go embrace and enjoy the things that my beautiful
city has to offer? No person should have to have that go through
their head on a daily basis. It's not fair. For the American economy. Household debt acts as a double-edged sword. On one hand, it boosts consumer spending, which
contributes almost 70% of the total United States GDP. In order for the economy to keep growing,
everything has to be bought. If stuff doesn't get bought, what's going to
happen? Businesses will see their inventories pile up. They're going to cut back production. They're going to lay off workers. There's also good debt that can help build an
individual's wealth over time, such as student loans, mortgages or business loans. I think that some amount of consumer debt is a
necessity in our economy. It makes sense in a lot of situations for people
earlier in their life cycles to do more borrowing for things like higher education. But household debt that's out of control is
correlated with a recession. Historically, rising household debt has been
associated with lower GDP growth. The fact that households are going into debt in
order to keep the economy going means that the ratio of their debt to their income is going up
and that makes them struggle more and more to be able to repay that debt. And if they can't repay that debt, sometimes they
reach a point where they've got to cut back because nobody will lend them more money. And that's when economies go into recessions. And if the debt to income level gets too great,
then the problems for the economy can be enormous. Living with debt doesn't impact folks equally. We know that the lower income folks also have
higher debt burdens because of that structural discrimination and historical discrimination that
makes it so that they're not having the same access to financial products in the first place. The ratio measuring people's debt to their
physical assets is heavily dependent on the race of the borrower. The ratio is 115.5% for blacks,
65.8% for Latinos, and 98% for other races, compared to just 49.3% for
whites. The lower end of the income spectrum, the lower
end of the credit score spectrum, we find that borrowers have a very hard time accessing
traditional credit like credit cards or a mortgage loan. And the credit that they do have available
can be at higher interest rates and more costly. Some of it can be alternative financial services,
such as a payday loan or a title loan. And these types of credit, though they serve the
credit needs of these communities to some degree, they can be quite expensive. In a lot of cases, the real problems are the
families who are downwardly mobile, the families who were middle class, who
had sort of accumulated debt based on the expectations that they would remain middle class
and then something happens in the economy. You lose your job, but you've still got your
mortgage and your car payments and your college loans. Those become almost impossible to finance. And it's almost impossible for you to keep your
head above water. Despite its record breaking amount, there's no
reason yet to panic about the state of household debt in America. We shouldn't be panicked about the level of
household debt right now. We should keep an eye on it. We should be concerned about it. And I think it's particularly important for
policy leaders and leaders in the financial world to pay attention to who and where we start seeing
greater challenges. Based on what I'm seeing at the Federal Reserve
System's reporting and more broadly than that, is that there are no major warning signs of
disruptions like we saw during the housing crash and the
subsequent financial crisis. Policy plays a vital role in keeping household
debt in check. Experts say outdated procedures such as wage
garnishment, where an individual's earnings are withheld for the payment of a debt, are in dire
need of a policy update. A survey found that about 7% of workers in
America had their wages garnished in 2016. For folks who have high debt loads, they're
actually getting their wages garnished or seized at really high rates. Currently, at the federal level, only $217.50 is
protected in someone's weekly paycheck. And that bill hasn't been updated since
the late sixties. And so what we're proposing is to protect at
least $1,000 in people's paychecks every week so that they have enough in their weekly paycheck to
support their family and pay their bills while managing their debts responsibly. Bringing back the child tax credit program could
also help reduce household debt in America. Child tax credits were expanded under the
American Rescue Plan of 2021 as a response to the COVID pandemic. A survey found that more than 77.8% of child tax
credits were either spent or went to paying down household debt. And that had a huge impact on household finances. If you're behind a couple of hundred dollars
every month and going into debt and now the government is giving you a couple of hundred
dollars because you have children, now you're whole again. You can pay all your bills for a couple of months
and if you can pay all your bills for a couple of months, you can maybe even reduce some of your
prior debts. The government can also play a potential role in
reducing certain kinds of debt, such as medical debt that are owed by roughly 23 million
Americans today. Medical debt is one in particular where the
government, both federal government and state governments, have potential roles to play in
helping households that are really at that individual level struggling with that. There's been a lag in the south eastern states of
expanding Medicaid. Right? And so we know that medical debt is going
to be increasing. But if there's a way to expand Medicaid so that
folks are better supported in terms of their medical expenses, that's going to be a way to
alleviate that burden. Advocates say whether the U.S. can keep the household debt in check depends on
how quickly policymakers can respond to the issue. We really need interventions to help Americans
bring down that debt load and so that they can be able to spend responsibly, save responsibly,
and have those long term goals met of perhaps buying a home or building their wealth and being
able to invest. Americans seem more stressed about money than ever
before. 87% of Americans said that inflation and the
rising costs of everyday goods is what's driving their stress. And that's one of the highest
numbers of stress that we have seen in the Stress in America survey. Four in ten Americans say that money affects them
negatively and the state of their mental health. Money is a universal stressor, regardless of your
financial standing. Poor mental health not only takes a toll on a
person's overall well-being, but it's also bad for the economy. Workers experiencing even one poor
mental health day a month could lead to $53 billion less in total income each year in the
United States. Money touches every part of our lives, and it's
modern day survival. I felt hopeless. I was feeling that depression and
I didn't really know what to do. It's affecting some Americans more than others. Statistics say that 75% of Latinos are stressed
about money. One of the biggest anxieties that we face is how
are we going to build generational wealth? So why is money so stressful in the United States? And what can Americans do to alleviate the
pressure? With the cost of living skyrocketing, many
Americans are experiencing financial stress on a daily basis. Something that comes up time and time again when
we query Americans about their personal finances, essentially, it is the expenses that surprise them
on an ongoing basis. So trying to pay for everyday items, not having
emergency savings and debt. Those three issues are at the top of their list
of concerns. Tawnya Schultz and Lea Landaverde became money
coaches after they experienced their own financial struggles. I was in debt off and on all of my twenties and
early thirties and around when I was 34 is when I had about $20,000 in debt. Even someone who has a masters degree in finance
has their own personal finance issues. I was still figuring out how to adult as well as
how to be in this corporate world, make an income which for sure led to overspending, you know,
lifestyle creep. I was in this debt cycle of trying to get out of
debt, paying off debt, getting back into it. And I was just tired of feeling like I could
never get out of it or feeling like I was always going to have debt. More than 80% of Americans ages 18 to 43 said
money is a significant source of stress for them. Certain individuals are struggling more when it
comes to concerns about inflation and money. Between men and women, there were differences in
the way they processed it. We had more women tell us that it was negatively
affecting their mental health, yet men told us that it affects their mental health more often. I felt like I was at a low point because for my
age and where I wanted to be, where I thought I should be in life, I felt like behind. I didn't have any savings. I was living paycheck to paycheck. In a lot of ways, money is a safety net or a
source of stability, and without it, people feel vulnerable and anxious about the future. Latino and black adults were more likely to say
that money was a significant stressor more frequently than white and Asian respondents. Especially coming from my experience as a first
gen, my parents didn't know how to navigate this financial system. That's why I even myself
entered finance because I saw the stress my parents faced, so then I could learn and help
protect them as well as protect the community and providing them education about finances that are
transparent. Many Americans don't feel hopeful about their
financial future, with 41% saying it's, quote, going to take a miracle to be ready for
retirement. I think the problem in recent years has been that
there has been this so-called risk shift, whereas the risk of being responsible for things has been
shifted from others onto the individual. What can you put on that list? The cost of obtaining a college education. Previously in the public realm borne by taxpayers. We know where that's been going. The burden of saving for retirement was often
more heavily owned by employers when they provided pension benefits. That was shifted to individuals with the changes
in 401Ks. Health care has become increasingly expensive. That's responsible for one fifth of the American
economy, and consumers and employers bear that burden. Americans say they're feeling pressure to cut back
on spending. More than 50% of adults say they've already cut
back on dining out and will consider reducing their spending more if inflation continues to
rise. More than 75% of adults said they're worried
higher prices will force them to rethink their financial choices. Even higher income Americans making at least
$100,000 per year say they either have or are considering cutting back on spending. People need to have a sense of hope. And so when the economy is working for them,
there's a greater likelihood that people will have hope that they can accomplish their
basic personal financial objectives. Americans are making a connection between their
financial stress and worsening mental health. 42% of U.S. adults say that money negatively impacts their
mental health, with 28% saying they worry about their finances daily. Many Americans tell us that some of their sources
of financial stress are as simple as looking at their bank accounts or making purchases or
talking about money. Thinking about money or your finances. It can feel unavoidable with the approaching
summer and travel plans, holidays, gift buying, all these things are really stressful and can
trigger concerns about finances. Sometimes dealing with stress can worsen someone's
financial problems. An April 2020 Credit Karma survey found that 35%
of respondents said that stress from the pandemic made them impulse buy. I was sad, so I would shop and that led to me
accumulating over $30,000 of credit card debt. And I had to figure out how the heck I was going
to pay that off. Things are getting way more expensive and we want
to experience things and we want to live. And so in order to provide some sort of
happiness, I was getting serotonin through shopping. I started drinking more and I feel like
eating more and spending more. So, like, you start doing those coping mechanisms
because you're stressed about money or stressed in life somehow. And so it was leading me down a
road that I didn't want to be on, but I didn't know. I felt stuck. I felt trapped. Mental health issues can have serious consequences
for a person's overall well-being. There is clear evidence that mental illness
affects your physical health. We typically see stress manifest in two ways. One are physical symptoms, so things like teeth
grinding, headaches, stomach discomfort, muscle tension. The second is emotional responses. So that can look like anxiety and stress,
difficulty sleeping, changes in your eating patterns. And so when those come together and
they are unmanaged, that's where we see really negative, physical and emotional consequences. Many people struggle with the shame of their
financial difficulties, and it's often a burden that's carried alone in silence. And in turn people go to great lengths to hide
their financial difficulties, which further entrenches them in their isolation. And that isolation and burden can become so great
that people facing these difficulties are more likely to experience suicidal thoughts and even
make suicide attempts as a way to escape from their problems. While there are many forces at play that are
outside of people's control, such as the rising cost of living, there are steps Americans can
take on their own to help themselves feel more financially secure. Experts say the first step is examining your
mindset around money. I was constantly looking for like, how can I find
hope in this situation? Because you can have fear and scarcity,
especially nowadays it's so easy with the economy and inflation. We're bombarded by it every day. I'm like, There's not enough money. There's not enough money. So it keeps us in a
scarcity mindset and that like fear around money. I faced financial anxieties myself and I had all
the resources to actually take action on my debt or not even get into debt. But yet, because of my mental health, because of
the environment I was in, and because I didn't want to take ownership of my finances, I had to
face the realness of my debt. There are experts such as therapists or money
coaches who can help people deal with overwhelming feelings as well as make a financial plan. A money coach essentially is a partner in crime
that you have someone by your side that helps you hold yourself accountable and provides you
financial education at the same time with guided, actionable steps forward to reaching your
financial goals. I think the biggest reason there is shame tied to
finances is because so much of our self-worth is tied to what we have in a tangible way. So people tend to relate their job or these
external markers of success, numbers in their bank account, with their worth as a person, which is
why it can be so difficult to deal with financial issues and especially seek out help for them. It's also important to monitor your physical
health. What is happening to us mentally, it affects us
physically also. If you're not treating your depression and anxiety
well, you are probably not doing a great job managing blood pressure and diabetes and other
chronic conditions. I always kind of go back to the basics, which is
to make sure you're eating healthy, that you're getting enough sleep, that you're staying active,
and that you're staying socially connected. The concept in mental health recovery is that a
first step is building hope. We need to see that there's a path to recovery
and that things will get better. And they usually do.
Canadians would like a word 🇨🇦
I love the summary at the end where they say to make sure you're eating healthy and getting enough exercise and rest and social time while you're dealing with all that financial stress. So easy to do all of those things while you're working multiple jobs. Oh, and make sure you get that financial coach and some mental health help. That shit's free.
It's because they are poor. Cost of living has exponentially risen and wages have been largely stagnant.
Frequently when Americans feel poor it’s because they’re poor.
Because focusing on culture war issues is a carefully calculated ploy to divide our society. Firstly, it distracts us from larger, more existential crises like growing wealth inequality and the erosion of the middle class. Second, if we are divided the way we are now, we don’t have the ability to form a united front and elect legislators on both sides of the aisle who will work to fight against the mega corporations and mega billionaires who are doing everything they can to siphon all the wealth and power from everyday hardworking Americans.
The super wealthy own the cable news networks and social media platforms. They control the narrative. And they use it to spread fear. People are taught to fear anyone who doesn’t think or act or look like them. That fear gets amplified until it festers and becomes hate. Before you know it, you’re turning against your own neighbors and ignoring the fact that the truly evil among us are ensuring our wages stagnate and our benefits get stripped away a piece at a time.
Meanwhile, they are buying up single family homes all over the country, ensuring that the literal American Dream of owning a home gets more and more out of reach.
They own our hospitals and have caused the cost of healthcare to skyrocket and at the same time, they’ve slashed the number of doctors and nurses to maximize profits.
Higher education costs mean many with a college degree are saddled with debt for the entirety of their working lives.
The line between the middle class and the poor is blurring. And we are conditioned to believe that anyone can become super wealthy if only they work hard enough. We see the very people who exploit us as heroes.
I saw this one recently and it added to my decision to unsub. I feel the long format vids from that channel aren't worth their salt. They set ads to what feels like maximum and I swear I've seen them reuse their segments. Also idk how much value/insight they add to the topics they try to address.
I don't think Americans "feel" poor as much as they actually "are" poor en masse.
Wow, I knew it was bad over there but not as bad as this video shows.
I'm a Norwegian guy living in Sweden (because Norway was too expensive for me, so I moved to another country).
Last time I visited America was in 2014, I spent a whole month on foot there (yes, on foot - because I like to talk to people and get to know the real side of the stories), and I did notice how poor Americans had it, like the little city I visited, a lot of people had teeth missing, and often gave each other health advice on the buses I was taking with them. I was kinda shocked to see how the reality was over there.
But nothing as bad as in this video. 1750-5500$ in RENT per MONTH? Mind blown.
We have an average salary of about 3000$ per month here in Sweden, and that's considered middle income, but we have free health care - well yeah, I say free...because we pay them through national taxes, but the fact that if I moved to America I could stand to lose my entire house in just ONE hospital bill always seemed like a nightmare scenario to me, this video puts these thoughts into reality - and for many Americans this is indeed a reality, scary! Really scary!
But we see the same things happening in Europe, albeit a bit delayed - things are becoming more and more privatized and I can easily see how this could happen in the future here as well, America was always ahead of the crowd in everything - apparantly also in capitalism at its finest.
What makes me wonder sometimes is how you guys don't revolt against this, you're literally letting this happen to you and you become so weak that you don't even have the strenght to revolt against it. It's like the boiling lobster effect - the lobster is cooked alive and feels fine as the water gets gradually hotter until it doesn't feel anything anymore.
I'm not saying we're better than you - if anything we should LEARN from this and not let this happen here either, I mean...we're also humans and act in the same way no matter where we live in the world.
This is truly tragic, you're overworked, pressured into an impossible situation and it's near darn impossible to get out of, because who do you turn to for help? You try to survive the best way you can and that seems like all you can do.
Please - America, don't let this continue, you need to do something before it's too late. I sympathize with your situation and I now understand why the population is so split when it comes to politics and why things have been so "weird" in America the last few years, I didn't quite "get it" before, but I think I do now, and I'm not laughing, I'm crying with you - unfortunately that doesn't help you at all, but for all it's worth - I sincerely hope you do something with the last breath you have, because this will affect us all - no matter where we live in the world.
63% of us are living paycheck to paycheck. 80% of my monthly income goes to just rent and that’s on the low side for my city. People actually tell me how lucky I am when I tell them how much my rent is.Another ~15% to bills. I make $40k a year and my labor alone brings in about $900k to my company that employs about 30 people.
I don’t want another Christmas party. I don’t want another potluck. I don’t want another boat party. I want to not be one medical or auto accident away from being homeless.
Make it make fucking sense.
Edit: if you’re thinking of responding to this with any sort of assumptions outside of the information I’ve given, you are more than welcome to go play in traffic instead. I didn’t post this for advice or be asked for my fucking bank statements (really, how fucking weird and invasive are you people?) I posted it so that everyone else living in the real world and going through these problems knows they aren’t alone.