Nearly Half of Americans Are ‘Financially Fragile’

Wall Street Journal Blogs ^ | May 25, 2011 | Phil Izzo

[rightwingintelligentsia]

Nearly half of Americans say that they definitely or probably couldn’t come up with $2,000 in 30 days, according to new research, raising concerns about the financial fragility of many households.

In a paper published by the National Bureau of Economic Research, Annamaria Lusardi of the George Washington School of Business, Daniel J. Schneider of Princeton University and Peter Tufano of Harvard Business School used data from the 2009 TNS Global Economic Crisis survey to document widespread financial weakness in the U.S. and other countries.

The survey asked a simple question, “If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable. The $2,000 figure “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses, or a home repair,” the authors write. On a more concrete basis, the authors cite $2,000 as the cost of an auto transmission replacement and research that reported low-income families claim to need about $1500 in savings for emergencies.

Financial fragility isn’t limited to low-income groups. “Households with socioeconomic markers of vulnerability (income, wealth, wealth losses, education, women, families with children) are more likely to be financially fragile, and substantially more so,” the authors write. “The more surprising finding is that a material fraction of seemingly ‘middle class’ Americans also judge themselves to be financially fragile, reflecting either a substantially weaker financial position than one would expect, or a very high level of anxiety or pessimism. Both are important in terms of behavior and for public policy.”

[don-o]

Fra-gee-lay. They must be Italian.

It's a major prize!

[Rusty0604]

I work with several people that are overdrawn every day before payday, don’t have taxes taken out of their checks, withdraw money from 401K; yet they make at least 2 trips to starbucks everyday, eat lunch out everyday, and on payday rush out at lunch to purchase something they don’t need.

[don-o]

You get minimum wage which is practically zero dollars.

$7.25 is basically zero? Huh?

[sickoflibs]

RE :"People see the Ryan Medicare deal for what it is, attacking a benefit instead of cutting the size of government. It is past time for congress to put up are shut up . Cut the size of government first, has Ryan offered to cut any department of the government, will he ever?? "

What-a-you a socialist ?? :)

[Rusty0604]

Maybe that used to be true, but not anymore. Governmant wages are as high or higher than private wages, plus they have pensions that are mathematically unsustainable and health care on top of that?
Also when comparing wages, what you do and the requirements for the job has to be in the comparison.

[Windflier]

I knew things were bad but that is such a low amount not to be able to come up with in a month?

You're obviously living in a different world than I am. There's no way I could come up with $2K in 30 days, no matter how dire the emergency was. Thank goodness we're somehow holding it all together.

[Windflier]

ANYONE could come up with 2K in 30 days by delivering pizzas or selling some of their extra “stuff” on e-bay.

Oh? Don't get me started.

[Lurking in Kansas]

That figure seems low, I'm betting more like 75%.

When the crash hits, $2000 will only be work $20.

[Tax-chick]

Get a new sofa this weekend. They’ll probably have a “No payments until ... some months down the road,” and you can pay for it when it’s billed. Or even (don’t tell Dave!) in a couple of installments. You can have zero debt and a million in savings, and DIE. Boy, that was a thrill getting financially fit!

And before everyone jumps on me, I’m not advocating being fiscally feckless. I’ve got in-laws for that. I’m just saying that there’s a time to think about now, and that time is when you’re pregnant and the sofa is poking you in the backside.

[org.whodat]

LOL

[Windflier]

I wonder how many of these people who can’t come up with $2,000 have a large flat screen at home? A cell phone in their pocket? Enjoy their $6.00 Starbucks every day? Play the lottery? Have plenty of cold beer in the fridge?

Of all those things you mentioned, I only have the cell phone, and yes, I'm one of those who couldn't come up with the $2K in 30 days.

Me and mine aren't getting a dime of help from anyone.

[cynwoody]

One of the problems with the private sector is that they pay way too much to their employees.

Now there's a real knee slapper!

Fortunately, there are private businesses that pay well enough that their employees can build up savings. And some of those workers are smart enough not to live in the biggest house and drive the fastest car and take the fanciest vacations. And so, one morning nearing retirement age, they wake up and suddenly realize they make more $$ before they get out of bed than from their well-paying job. Of course, that really pisses the Donks off!

The reason that the government employees can still get pay checks is because they receive such a low amount of money. For example a GS-5 gets 2,100 dollars a month. Who can even live on that?

It's probably true that the worst abuses in government are at the state and local level. However, according to McPaper, The typical federal worker is paid 20% more than a private-sector worker in the same occupation. Here's a table from that article:

Job	Federal	Private	Difference
Airline pilot, copilot, flight engineer	$93,690	$120,012	-$26,322
Broadcast technician	$90,310	$49,265	$41,045
Budget analyst	$73,140	$65,532	$7,608
Chemist	$98,060	$72,120	$25,940
Civil engineer	$85,970	$76,184	$9,786
Clergy	$70,460	$39,247	$31,213
Computer, information systems manager	$122,020	$115,705	$6,315
Computer support specialist	$45,830	$54,875	-$9,045
Cook	$38,400	$23,279	$15,121
Crane, tower operator	$54,900	$44,044	$10,856
Dental assistant	$36,170	$32,069	$4,101
Economist	$101,020	$91,065	$9,955
Editors	$42,210	$54,803	-$12,593
Electrical engineer	$86,400	$84,653	$1,747
Financial analysts	$87,400	$81,232	$6,168
Graphic designer	$70,820	$46,565	$24,255
Highway maintenance worker	$42,720	$31,376	$11,344
Janitor	$30,110	$24,188	$5,922
Landscape architects	$80,830	$58,380	$22,450
Laundry, dry-cleaning worker	$33,100	$19,945	$13,155
Lawyer	$123,660	$126,763	-$3,103
Librarian	$76,110	$63,284	$12,826
Locomotive engineer	$48,440	$63,125	-$14,685
Machinist	$51,530	$44,315	$7,215
Mechanical engineer	$88,690	$77,554	$11,136
Office clerk	$34,260	$29,863	$4,397
Optometrist	$61,530	$106,665	-$45,135
Paralegals	$60,340	$48,890	$11,450
Pest control worker	$48,670	$33,675	$14,995
Physicians, surgeons	$176,050	$177,102	-$1,052
Physician assistant	$77,770	$87,783	-$10,013
Procurement clerk	$40,640	$34,082	$6,558
Public relations manager	$132,410	$88,241	$44,169
Recreation worker	$43,630	$21,671	$21,959
Registered nurse	$74,460	$63,780	$10,680
Respiratory therapist	$46,740	$50,443	-$3,703
Secretary	$44,500	$33,829	$10,671
Sheet metal worker	$49,700	$43,725	$5,975
Statistician	$88,520	$78,065	$10,455
Surveyor	$78,710	$67,336	$11,374

Source: Bureau of Labor Statistics, USA TODAY analysis

What's GS-5 comparable to in the private sector?

[ding_dong_daddy_from_dumas]

I remember in 2009 I posted a few comments that said that many Americans would rather deal with government 'death panels' than have to pay their own medical bills, many replied "NOOOOO, everyone wants freedom just like me" LOL.

This is a quote from the fictional founder of the Sons of Anarchy motorcycle gang (pretty good TV show, at least the first 2 seasons):

"True freedom requires sacrifice and pain. Most human beings only think they want freedom. In truth, they yearn for the bondage of social order, rigid laws, materialism. The only freedom man really wants is the freedom to be comfortable."

[Gabz]

ANYONE could come up with 2K in 30 days by delivering pizzas or selling some of their extra “stuff” on e-bay.

Sorry, my FRiend, but that just isn't true --- I'm speaking from experience.

[AceMineral]

I prefer Close to the Edge.

[Responsibility2nd]

Still.

You have made a CHOICE to live as you do. I don’t know why you chose to live poorly, but - ultimnately - you made the decision to live as you do. Rich? Poor? That’s up to you.

I’m not judging you, but you have made a life-time of choices to get to where - in 2011, you can not come up with $2,000.

I hope you’re happy at least. Better to live happy and poor than unhappy and rich.

[napscoordinator]

look like the list is pretty 50-50. I still believe that government workers (biggest employer in the U.S. except Walmart) pays peanuts for the most part. A GS-5 is the beginning of the middle management. The pay grades go from GS-1 to GS-15. Majority of jobs in the government are GS-5 to GS-7. Basically from 2100 a month to 3300 a month. Hardly living off the hog. By the way a Walmart employee makes around 2500 dollars a month....way more than a GS-5 and below.

[Marie]

I was one of those ‘broke’ people for years. It took a long time and a lot of work, but now we're not.

And we live in a crappy double-wide. We drive used cars. Half of my clothes were bought at goodwill and the other half are from wally world.

I know that people have to look at us and think, “poor;” but we're doing better than most anyone I know. We have money in savings, can handle any unexpected expense, own an investment property and are currently saving for our first real vacation... ever. In a year, we're giving away *everything* we own in the house and getting all new dishes, linens, furniture, curtains, electronics, etc. In three months, we'll have the money set aside for that.

But, from the outside looking in, we're white trash.

I do love being weird!!

[R. Scott]

I hears this on the news this morning. I’m not “rich” by any means – $34,000 a year. If I had to quickly raise $2000 they only problem I’d have would be choosing between savings, checking or credit card.

[org.whodat]

Let's see, ATF, Home land security, can the defense department f 35; border patrol, air port screens, and roll budget back to 2006, change retirement age for all non active duty military to 67, make remains civil service pay the same as the rest of America, close most foreign embassy's reduce all retirement programs, across the board, excluding military. Etc,