Main points:
We came to understand this after analyzing the U.S. Financial Diaries (USFD), an unprecedented study to collect detailed cash flow data for U.S. households. From 2012 to 2014 we set up research sites in 10 communities across the country. The USFD research team engaged 235 households that were willing to let us track their financial lives for a full year.
We tried to record every single dollar the households earned, spent, saved, borrowed, and shared with others
Our first big finding was that the households’ incomes were highly unstable, even for those with full-time workers. We counted spikes and dips in earning, defined as months in which a household’s income was either 25% more or 25% less than the average.
We found that monthly spending was just as volatile as income. On top of regular expenses, emergencies arose frequently: Cars needed repair, roofs needed fixing, tuition bills came due, and people got sick. In addition, the rising relative costs of health care, housing, education, and transportation stretched budgets and cut into the slack available to buffer shocks, especially with the well-documented stagnation of real wages for most workers.
Fundamentally, the instability of households’ cash flows that we saw arises because families bear far more economic risk than they have in the past. Their jobs deliver less-steady income, even when they are full-time. They have less room between their incomes and their spending needs, and less ability to accumulate reserves. And employers and government do less to buffer individual families from the resulting ups and downs.
Employers have been part of the problem, as they have pushed more risk onto workers, and they need to be an important part of the solution. Business practices, such as scheduling policies for hourly workers and benefits programs, need to be reconsidered, with a stronger focus on the resulting financial stability of workers.
Submitted April 12, 2017 at 01:48PM by tamyahuNe2 http://ift.tt/2p6Tk7M
