Middle-Class Families in United States At Financial Risk
Two Out of Three Are Financially Shaky
Researchers at Demos, a non-partisan policy center, and IASP reached that conclusion based on a new index they developed to track middle-class security. The security index assesses household stability using data on assets, education, housing costs, budgets and healthcare.
"Much like a common cholesterol test that shows whether someone's cardiovascular health is at risk, the Middle Class Security Index shows that financial health eludes the majority of the American middle class," said Thomas M. Shapiro, a co-author of the study and director of the IASP. "It also points to specific areas -- like lack of assets -- that inhibit financial security."
The study based on the index, "By a Thread: The New Experience of America's Middle Class," reports that more than half of all middle-class families have no net financial assets, and only 31 percent can be considered financially secure. Worse still, the report states, one out of every four middle-class families is at "high risk" of falling out of the middle class.
The study also states that only 13 percent of middle-class families have enough assets to cover most living expenses for nine months if they lose their regular income, while 79 percent don't have enough to cover even three months of living expenses. More than one out of five middle-class families (21 percent) have less than $100 a week left after covering their essential living expenses.
In addition to outlining the threats facing middle-class stability, the "By a Thread" report recommends government policies that would help America's middle-class families build up assets, reduce debt, pay for higher education and meet their healthcare needs.
Among those attending the press conference held to announce the report's release was Henry Cisneros, former U.S. Secretary of Housing and Urban Development and now chairman of CityView, a housing fund manager and developer.
"American families are at risk of falling out of the middle class and never getting back in, and many of those who were excluded from the initial public investment -- Latinos and African Americans -- are among those with the greatest vulnerability," Cisneros said. "It's time for a new public investment to stabilize the household economy and build the future middle class."
Demos and IASP plan to issue a series of reports and briefs based on their Middle Class Security Index. The index itself will be updated every two years as new government data on household finances becomes available.
Brandeis University, "Two Out of Three Middle Class Families on Shaky Financial Ground." URL: (http://my.brandeis.edu/news/item?news%5fitem%5fid=12133&show%5frelease%5fdate=1)
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- Brandeis University at www.brandeis.edu
- Only 31 percent of American middle-class families can be considered financially secure.
- One out of every four middle-class families is at "high risk" of falling out of the middle class.
- 21 percent of middle-class families have less than $100 a week left after essential expenses.
10 Comments
Post a CommentGood information? Well, it's just a recount of statistics and quotes from politicians. So don't kill the messenger. The poster who anonymusly? talked about her experience is right too. I'm guessing she sees the 31% of American who are middle class and doing fine. My mom (80 years) says the only difference between now and 2000 years ago, is that today the slaves can choose their master, namely big business gone global. I'd wager a bet that the long winded poster is Republican and very much in favor of working hard and not accepting any hand outs. I do agree, even if I am not Republican. She sounds convinced that good, consistent financial planning is all you need. True, to an extent, but the reality is with health insurance in a crisis and jobs in jeopardy, middle class Americans are at risk.
. My guess is that the Demos (sounds like Democrats) study is self-serving and takes special liberties with the facts. The middle class will always have special challenges, but with disciplined use of credit cards, making saving a priority and taking advantage of tax-favored retirement plans, the middle class can build wealth like anyone else. My clients did it. Don't believe the hype from the nay-sayers. It is always a thinly-veiled message of brain-washing and misinformation.
The article rather conveniently quotes Henry Cisneros, someone with a political agenda lamenting the financial woes of African-Americans and Latinos. My several hundred middle and upper-middle class black clients certainly did not fit into this mold. They were good savers and realized enormous increases in home ownership in the last ten years. How many successful Latinos have entered the middle class and have realized success as business owners. In the past ten years, the increase is staggering. This type of article is well-timed to play to a susceptible audience. The fact is that the President and congress have enacted a number of laws to allow the middle class to build wealth through tax-deferred savings. The value of middle-class 401k accounts and IRA's have mushroomed. Don't believe that this is all meant to benefit the rich, because the rich still pay the largest percentage of the tax burden. They also employ the folks in the middle class.
After 26 years in financial services and thousand of clients, most of whom were middle class, I can speak to this subject with some confidence. A couple of commenter's have it right. Americans are poor savers compared with the rest of the world. If you think that means we have less disposable income, think again. In Tokyo, where a small apartment will cost you the equivalent of $2000 or more a month, the residents still save about six times more than the average American. I can tell you first hand, from spending time in Tokyo that the cost of everything there is higher, yet the savings rate is still much higher. The article ignores, and some commenter's don't seem to understand, that taxes on the American middle class have been reduced substantially over the past 7 years. The article rather conveniently quotes Henry Cisneros, someone with a political agenda lamenting the financial woes of African-Americans and Latinos. My several hundred middle and upper-middle class black clien
Between credit card debit and the potential for losing one's job many middle class americans are living paycheck to paycheck. And the second one of these families loses the primary caregiver's job the family falls below the poverty line and so deep into debt they can't get out. It's a sick, viscious cycle that the government and credit card companies have used to ensure the financial slavery of the middle class.
I moved to Thailand 4 years ago and have done a lot better financially here than I ever did in the US. You couldn't pay me to live in the US permanently again - it's a nation in decline and a lot of Americans are going to see the financial repurcussions of the Iraq 'war' in the future.
This is very scary and should serve as a wake-up call to all of us about excess consumption and overextension.
Thank you AP. Finally someone taking responsibility for their life! Poor financial planning is key. You don't need the government to teach you how to use common sense. Most people don't know what sacrifice means.
Good information thanks, you might enjoy my story entitled "A Homeless Christmas" Thanks for the read, Cindie M.
I would define myself as "borderline. I'm a Hispanic women, with a BA and last year I became a homeowner. I based my home purchase on my income alone, which is good, since shortly after moving into my new home, my fiance was laid off. What causes families to fall behind or be at risk is poor financial planning. We didn't have 3 months reserves in case the what if's happened. Good article. It made me reflect on my expeerience.