Feel Like You’re Working Harder for Less? You Probably Are.

A new report sheds light on the fact that it's hard for many to save a dollar in the United States.

The American job market is making it easier for more people to get by, but many families are still struggling to get ahead. New data on financial security from the nonprofit Prosperity Now, which issues an annual “Scorecard,” suggests a couple of major culprits for the lack of quality of life improvements amid economic growth, including Americans struggle to build wealth through assets and a lack of high-quality jobs.

Prosperity Now acknowledges that the job market has improved to levels not seen since the Great Recession. In fact, unemployment nearly matches the pre-recession low of 4.6 percent with its current rate of 4.9 percent. The problem is that the jobs that have been added are not quality jobs. Those jobs are defined as employment that allows a worker to both meet the demands of daily living, including food housing, transportation, and other necessities, while also saving or investing. What that means is that while more American households are able to meet daily financial needs, they are unable to cultivate the nest egg that could see them through an emergency. The data shows that one in every four American jobs is a low-paid job unable to meet the cost of living for a family of four, much less build a safety net. Data shows that 40 percent of American households are not saving.

And given the volatility in the current job market over the last few years, Americans do not have a sense that their jobs are necessarily safe. The Scorecard suggests that one of every five household experiences a significant amount of income volatility from month to month, meaning what they can bring in is marked by wild swings. So there is an enormous anxiety in households when it comes to the future. What accounts for this volatility? According to people experiencing volatile income, 43 percent attribute the fluctuation to shifting schedules. About 16 percent reported periods of unemployment.

Additionally, the ability to build wealth for many American’s has stalled, according to the data.  Nearly 37 percent of Americans are experiencing what Prosperity Now calls liquid asset poverty. That rate is higher for households of color than whites. A full 50 percent of African American and Latino and Asian households are asset poor compared to 28 percent of white households.

Being poor in liquid assets is largely linked to rates of home ownership. Home ownership is particularly important because it represents an investment that could be liquidated to stave off disaster. The problem is that median home prices have increased at a pace far beyond the rise of the median income. The fact is, if an American does not already own a home it will be increasingly difficult to buy one in the future. This is troublesome for renters, because over 50 percent of those who rent see the cost of housing take over 30 percent of their household income. That puts them in a category known as “cost burdened.”

Prosperity Now also points out that there are policy fixes to these issues. California, for instance, responded to its improving economy by making investments in education, health and safety net programs meant to decrease financial insecurity. Policy suggestions include increasing the Earned Income Tax Credit which many states have boosted above the federal rate of 15 percent. Additionally, matched savings programs for low-income earners increased paid leave policies, minimum wage boosts and better paths to home ownership would make a tremendous difference in letting people get ahead.

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