We have occasionally followed new reports on the economic condition of the public and the news is rarely good. After an extremely very poor jobs report, a new study found that twenty-eight percent of Americans have nothing in their savings accounts and another 21 percent have no savings account at all. Only 29 percent has $1,000 or more in their accounts.
The recent survey by America Saves, as part of a campaign from the Consumer Federation of America, surveys 1,000 people three times per year for its Personal Savings Index.
Not surprisingly, top earners continue to sock away savings — 84 percent of people who earn more than $100,000 annually reported to be interested in saving compared with 72 percent of people with annual incomes between $50,000 and $75,000 and 68 percent of people who earn less than $25,000.
The economic situation in this country is far worse than most people appreciate. We live in economically stratified areas where there is little interaction between distant economic classes. These reports are a startling wake up call for policy makers. The goal of everyone having a few months cushion for bad times is clearly not occurring — leaving at least half or more of the population on the razor’s edge of poverty.
128 thoughts on “Report: Half of the Country Has No Savings”
I love all the comments from the Left – the Keynesians. The Blog post is about the lack of savings, but the Left’s solution is that the Country should have borrowed more, even though we have almost $19 trillion in debt. If the Country would have saved, it could solve problems. Instead, despite record tax revenues, is continues to borrow, and the Left isn’t happy that it isn’t borrowing more.
I am one of those small businessmen. Twelve employees (no Obamacare yet), but endless regulations, 65 tax filings per year, letters from the IRS for the smallest of errors, business license requirements in 20 jurisdictions with related filings, and accounting, and filing sales tax returns for 25 different rates and jurisdictions, etc. Trying to be a good employer, we let an employee take off to care for a sick child, then the next week, we incur overtime to make up for it, and that requires time and a half. While growing revenues, we make almost no money because we have 4 administrative/accounting employees and really, only eight workers – because of government. As to Obamacare, we had three employees buy policies last year, and all three dropped them this year because of the large deductibles so they got no benefit – the fine and paying for the limited medical care they need is far cheaper than Obamacare.
God help us as this country is borrowing and regulating its way to a third world hell hole.
Carl Rappted, I agree with you completely. Very well said.
“The economic situation in this country is far worse than most people appreciate.”
There might be a bit of tokenism laced in this post, especially coming from a Chaired Law Professor in D.C., but at least it’s honest.
Well David, if we had kept the minimum wage rising with inflation, it would be in the neighborhood of $20 now anyway. Back when, you could make ends meet working forty hours a week. Not any more. So I say take a couple of years to ramp up so it doesn’t shock the system. But for better or worse, consumers drive the American economy, and a raise in wages would grow this economy like nothing the government has done in the last fifteen years. No one who works full time should have to be on food stamps, or wonder how to make ends meet.
And you and Hobby Lobby? The purpose of the corporate structure is, among other things, to provide a wall of separation, a shield between you and your company, protecting you by limiting your liability. You seem to want it both ways: to have the protection the shield offers you, but to be able to reach around from your side and slap your employees and the public when your beliefs tell you so. I think that is simply wrong.
phillyT wrote: “… consumers drive the American economy, and a raise in wages would grow this economy like nothing the government has done in the last fifteen years. ”
Wages will rise when people work hard and earn their wage. Minimum wage is not about that at all. It is not tied to production at all. It is a fact that minimum wage laws cause unemployment to rise. Minimum wage was introduced in South Africa as a racist policy to take jobs away from blacks. It continues to serve as a racist policy here in the United States where black unemployment is higher because of minimum wage laws.
If we simply abolished minimum wage around the country, job employment would rise, and wages would rise for many people as they proved they were able to earn a larger wage. Entry level jobs would lead to skilled jobs and higher wages. With minimum wage, though, people just can’t get ahead. Businesses can’t grow like they used to.
phillyT wrote: “No one who works full time should have to be on food stamps, or wonder how to make ends meet.”
That depends on what they are doing full time. Every person should and does have the opportunity to make their full time work yield wages that they can live on. Government interference is what keeps that from happening with gimmicks like minimum wage.
phillyT wrote: “The purpose of the corporate structure is, among other things, to provide a wall of separation, a shield between you and your company, protecting you by limiting your liability. You seem to want it both ways: to have the protection the shield offers you, but to be able to reach around from your side and slap your employees and the public when your beliefs tell you so. I think that is simply wrong.”
The limited liability is only one thing because you can get rogue employees that work outside your control. But when a person decides to create a corporation, he doesn’t have to make it all about money. He might just embrace values for his corporation and attract people who also embrace those values. The idea that government should strip a person of this character from his corporation and make it entirely about making money is what I say is simply wrong. If that were the case, we might as well just all work for government and let them call all the shots.
Our own Lee Atwater, quoting Keats.
Does poor old Keats really deserve such cruelty?
“Beauty is truth, truth beauty. That is all we know on earth, and all we need to know.” BFM, The good sisters of St. Joseph made me memorize Ode to a Grecian Urn 50 years ago. I just had those synapses click in and recite the end of the classic Keats poem. Always good talking w/ you, big man.
BFM, I would be willing to listen to a proposal where we fire all the social workers @ different levels of govt. to finance giving people enough money to live on if TRULY unable to work. The payments would be 2-3 times what they currently are, but no monitoring what they do w/ it. They can spend it on food, drugs, prostitutes, whatever. The problem is people w/ kids, but the social workers do a piss poor job making sure kids are in decent homes now.
@Nick: ” I would be willing to listen to a proposal where we fire all the social workers”
As Usual, Nick, another interesting and, may I say, provocative suggestion.
I am not sure I would go that far. My guess is that social workers are much like most other workers. Some of them do a lot of good, despite the bosses, and some of them not so much.
But, I have to admit that I do have questions about any group that commits itself to social justice. I mean, isn’t that the rub – knowing what it is? Why not commit yourself to the good, or truth and beauty.
Well, the best of luck to them on that. Some of us just take it a day at a time and play it as it lays. As for myself, I figure it is a pretty good day as long as I don’t break too much or hurt anybody – but truth and beauty does have an appeal.
Making claims about strangers online is not God’s work.
I have a strong faith in God. I have little or no faith in the lofty claims made by people I don’t know. That’s smart, common sense.
Nick you are a perpetual broken record. For the last time. I owned a small construction business for twenty-five years. New houses, remodeling, kitchens, baths, cabinets. Anywhere between two and twenty employees depending on the year and the economy. I have an MBA from a top twenty school. I have taught business classes at three respected colleges. I coached business students and entrepreneurs on business-plan writing–several of them went on to get funded. I taught business plan writing workshops at three national conferences and multiple state and local ones. If that’s not cred for you then kindly kiss my derriere and leave me alone.
Fat Mike: When you buy a new truck, some of your money goes to pay for the actual truck, some of it goes to the loan company, some of it goes to the shareholders of the loan company and some to the shareholders of the auto manufacturer. This is a transfer of wealth. Call it what you will, it is much more than a simple transaction. We say we don’t control this because it’s a free market, but we control it in a hundred different ways. Try selling bottled water during a disaster for $100 a gallon and see what happens to you.
“Wealth redistribution is taking money from one citizen and then depositing that money into the bank account of another citizen.”
This statement seems to refer to what are sometimes called transfer payments. Roughly transfer payments are transfers of tax revenues to individuals without intervening exchange of goods or services. Examples include welfare, social security and subsidies to businesses but not, for example, payment to a contractor for a good or service.
I think this reasonably raises the question of whether those who object to using government revenue for wealth redistribution/transfer payments also object to taxes used for traditional government services such as maintenance of roads and bridges, water testing and purification, education, emergency planning and preparation to mention only a few.
Spoken like someone who has never owned a business.
Well, David. Thanks for sharing your views. The world you want to live in, and the world I want to live in are very different places. I want to see a VERY regulated free market. I want to see universal healthcare, high taxes on the wealthy, expanded Social Security, strong environmental protections, and very certainly the overturn of Citizen’s United and corporate personhood. I like the idea of STRONGLY encouraging people to save, but they have to have enough to start with, so we should raise the minimum wage to $20 immediately and go from there. The skewed distribution of wealth and income in this country is staggering–to the point that most people have NO idea how much wealth the top 5% control. Oh, and let’s bring back the death tax–play as hard as you want as long as you play fair, and when you die, a little goes to your kids and the rest goes back in the pot. No American Dynasties.
phillyT wrote: “The world you want to live in, and the world I want to live in are very different places. I want to see a VERY regulated free market. I want to see universal healthcare, high taxes on the wealthy, expanded Social Security, strong environmental protections, and very certainly the overturn of Citizen’s United and corporate personhood.”
Yes, we do desire two very different worlds. I agree with Hobby Lobby and Citizen’s United. I don’t think that I should lose my constitutional rights for free speech just because I form a corporation and hire people.
As for raising the minimum wage to $20 an hour, there will be a lot of jobs going away. While a contractor might be able to absorb that cost because of all the skilled labor he hires, it is not so easy on most small businesses. Most people hired just don’t want to work, and you don’t find out until you hire them and realize that they just want to sit in a chair and get paid $20 an hour. Especially when the federal government forces me to pay them for breaks less than 20 minutes in length, a minimum wage of $20 an hour would just stop me from hiring anyone except skilled people. McDonald’s has stepped up to do it, but their solution is to hire less people and put in kiosks for ordering. Watch the black unemployment rate skyrocket when they implement your plan.
What might work with minimum wage is if it only applied after an employee was working for say 3 months or so. The most expensive part of hiring is finding a good worker. You want to give people a chance to prove themselves, but you can’t break your wallet trying to do it. Reaching into my pocket and paying someone $322 a week to give them a shot at a job versus giving them $800 a week, well, that’s a big difference. Now if that employee is working well, and is making money for the company, then by all means, pay that person $40 an hour or $60 an hour or whatever the market will enable them to earn. But just taking someone off the street with no skills and paying them $20 an hour to sit in a chair and do nothing, well, no, I’ll pass on that. If it takes two or three weeks for me to figure out the person lied about their skills and I have to let them go to find someone who will work, and the government forces me to pay them $1600 to $2400 instead of $644 to $966, plus the tax bill on top of that, well, I’m out all that money and just starting over looking for someone new to hire. It won’t take too many tries before I give up and just keep the money I’m losing on hiring people in my own pocket.
No, David. Taxes can be a very effective method of wealth redistribution. Research is advised.
Well, DavidM I trust that when your retirement rolls around, you will forego your Social Security and make up for Ayn Rand’s hypocrisy. I say we go back to the 1950s when the top tier tax rate was over 90%. But that’s just me. As I said, every transaction is a wealth redistribution–we just have to decide which ones we like and which ones we don’t. We fabricated the rules, we can change them.
phillyT wrote: “Well, DavidM I trust that when your retirement rolls around, you will forego your Social Security and make up for Ayn Rand’s hypocrisy.”
Why should I let the government rape and pillage my labors, yet I not freely receive what the government claims they owe to me? If I am forced to participate, I participate also when it benefits me. There is no hypocrisy in that. Now if the government had allowed me to opt out of paying taxes, then yeah, I am all for not receiving any government benefits at all. The problem is that they don’t let me opt out. I have to pay for things like drugs, birth control, abortions, and all kinds of things that I do not believe in. That is immoral.
My biggest bill that I struggle to pay is not housing, nor is it utilities like electric, water, garbage, nor is it food, nor transportation, automobiles, or gasoline. My biggest bill is my tax bill. Something is wrong with a society that takes so much from its citizens and squanders it on pet projects that the politicians want to give for free to the rest of society.
I will say that if there were a vote to end Social Security, Medicare, Medicaid, and Obamacare tomorrow, along with ending minimum wage and the egregious child labor laws that teach children not to work, I would vote for it, even knowing that I would not receive a penny of benefit from the many thousands of dollars that I paid into it. Knowing how much good it would be for all of society to end such programs would be satisfaction enough. Then the country can become self reliant, voluntary charities would flourish, people would get their self respect and honor back. Entrepreneurism would flourish and jobs would be everywhere.
phillyT wrote: “…every transaction is a wealth redistribution…”
Why would you think this? Taxes that pay for security is not wealth redistribution. Taxes that pay for infrastructure like roads, that’s not wealth redistribution.
Wealth redistribution is taking money from one citizen and then depositing that money into the bank account of another citizen.
Dusty laments that the market is making it difficult to live in SF or NYC, thus the suggestion that subsidized housing might remedy that.
Bullhocky. I suggest no such thing. I suggest….no I STATE that the onerous zoning rules, laws, excessive fees, petty bureaucrats who delay delay create a market where there is a shortage of housing. Shortage of housing of any kind that therefore drives up the costs of the remaining housing. This is a market effect and the market is manipulated by the government in this case.
When it costs a developer $50,000 in fees, planning studies, environmental studies, water connection fees, development fees, and it takes months or even a year to get a permit to build, most developers give up and move to Texas. Not only does the developer give up, it adds such a burden to the selling cost of the house or the pro rata rent of the condominium or apartment that most people, who are not in an ultra high income bracket also give up. This isn’t whining. It is stating the facts.
The average square foot cost of building a home in California is over $200 per square foot. That is average in a crappy neighborhood. And that is just the HOUSE not including the land. In Texas the average cost is about $110 a square foot…..AND the land is not as expensive.
Prices of homes in Palo Alto, a suburb community south of SF http://www.trulia.com/home_prices/California/Palo_Alto-heat_map/
San Jose http://www.trulia.com/real_estate/San_Jose-California/
I do NOT suggest that we subsidize the housing industry. This is what happened to create the sub prime mortgage bubble that burst in 2008-2009.
WELFARE housing or tenements or the abomination that existed in Chicago is not subsidized housing. It is welfare and warehousing of poor people who IF given the chance in a freer market were able to rent or even purchase they would jump at that chance rather than be stored in a giant rat house.
We are talking about why the MIDDLE CLASS, not people on welfare, do not have savings.
Housing costs and food and energy take up the majority of their funds leaving no discretionary income for savings.
You don’t need a weatherman, to know which way the wind blows.
“I think that reactionary opinion in America will ensure this gets a lot worse before it gets better.”
“Things” need to get worse. It’s the only thing that will cause Americans to reverse 36 years of economic suicide.
We are in another Gilded Age
From the advent of the New Deal until the 1980s, no such grand financial corruption scandal took place, on either party’s watch. That was partly because regulations were adopted, beginning in the 1930s, to prevent such corruption. The Reagan-Bush-Gingrich counterrevolution severely undermined those protections.
Wealth Polarization- Forty nine percent of Americans have a net worth in the negative
At this point in our history, “twenty-eight percent of Americans have nothing in their savings accounts and another 21 percent have no savings account at all.”
Unions- Only a small percentage of American workers are represented by labor unions, with only 7.6% represented in the private sector. Labor unions brought about the rise of the middle class.
“To understand the rising inequality, you have to understand the devastation in the labor movement,” NYT 2-19-16
Politics: Iran-Contra Affair, Reagan conceded that the U.S. had sold weapons to the Islamic Republic of Iran. Some of the money had been covertly and illegally given to fund to “ the right-wing Contras counter-revolutionary groups seeking to overthrow the socialist Sandinista government of Nicaragua.”
The HUD rigging scandal. The Department of Housing and Urban Development Secretary Samuel Pierce and his associates rigged low income housing bids to favor Republican contributors to Reagan’s campaign as well as rewarding Republican lobbyists.
Multiple scandals “occurred at the Environmental Protection Agency during the Reagan Administration. Over twenty high-level EPA employees were removed from office during Reagan’s first three years as president. Additionally, several Agency officials resigned amidst a variety of charges, ranging from being unduly influenced by industry groups to rewarding or punishing employees based on their political beliefs. Sewergate, the most prominent EPA scandal during this period, involved the targeted release of Superfund grants to enhance the election prospects of local officials aligned with the Republican Party.”
The Inslaw Affair: A protracted legal case that alleged that top-level officials of Reagan’s Department of Justice were involved in software piracy of the Promis program from Inslaw Inc. forcing it into bankruptcy and then failed to appoint an independent counsel to investigate it.
The Savings and loan crisis “in which 747 institutions failed and had to be rescued with $160 billion in taxpayer dollars. Reagan’s “elimination of loopholes” in the tax code included the elimination of the “passive loss” provisions that subsidized rental housing. Because this was removed retroactively, it bankrupted many real estate developments which used this tax break as a premise, which in turn bankrupted 747 Savings and Loans, many of whom were operating more or less as banks, thus requiring the Federal Deposit Insurance Corporation to cover their debts and losses with tax payer money.”
Our only hope is that when the original Gilded Age ended, the Progressive Era started. Can it happen again?
This is exactly why I am gobsmacked by the artificially glowing reports of our economy under 8 years of Obama. So many people have dropped out entirely from the workforce, or content themselves with part time jobs, or jobs well below their skill grade.
The economy has been bad for years. Small business owners and the poor are the canaries in the coal mine. And a lot of businesses have folded, and the welfare rolls have burgeoned.
LOL, ok that was funny.
Whew. What a relief!
That will teach me. I was being sarcastic, too.
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