Does work provide a pathway to financial security?

While the long answer involves a lot of systems and complexities, the short answer for many Americans is no, it does not. This year, HFLA will take a look at this issue and how it affects the lives of working Americans. Many of our borrowers find themselves in this position–they have regular jobs and receive an income, but are still not able to financially handle emergencies or have to make decisions that leave them in a worse financial situation.

According to the Consumer Financial Protection Bureau, financial security is defined as, “a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life.”

Nearly half of all US workers earn wages too low to cover basic living expenses- having seen stagnating wages since the 70s. Work has become unpredictable–the number of hours worked by hourly employees is inconsistent. Finally, employment itself is precarious.

Most households in America need a combination of at least two of the following to be financially secure:
  1. Routinely positive cash flow (income that typically exceeds monthly expenses).
    1. Nearly 45% of all U.S. workers do not have wages that cover their basic needs. Median hourly wages of $10.22 and median annual earnings of $17,950. Wages have stagnated for low- and middle-wage earners for the past 40 years. (AI)
    2. During the pandemic: Many Ohioans had to turn to stop-gap measures to meet living costs. According to real-time surveys conducted by the Census Bureau between April and June 2021, nearly 25% of Ohioans used credit cards to meet basic costs. (PM)
  2. Personal financial resources (savings and a financial cushion to cover emergencies).
    1. Routine positive cash flow is the necessary first step to one’s ability to save.
    2. 40% of Ohioans have no money saved in case of an emergency and 32% do not have a savings account.
  3. Public & private benefits (this includes Social Security, Medicare, TANF as well as employer-backed insurance).
    1. Almost all forms of assistance/benefits saw a significant increase during the pandemic. The survey was given to people already utilizing at least one benefit program during the pandemic, which often included those who had not utilized public benefits previously.

There is only one type of worker in this country that is likely to reach true financial security and that is higher income, full-time employees receiving workplace benefits. Only those earning upwards of $105,000 a year can withstand the monthly swings of income and expenses.

Join HFLA on June 8th to kick off this conversation.

We will start our exploration of these topics with a conversation about the financial position of the American worker. We hope to have further conversations about the ripple effects this situation has on people’s lives and how people are making financial decisions today that will impact their future financial lives.

Join us, June 8, 2022 at 11:30AM on Zoom, with Sheida Elmi of The Aspen Institute and Hannah Halbert of Policy Matters Ohio. Together we will discuss the state of the American worker and how people are coping.

Registration for this free virtual event is available below.

Register Now