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Divide Between the Haves and Have-Nots Growing

Tamara E. Holmes
Divide Between the Haves and Have-Nots Growing

While most Americans have seen their finances improve since the days of the Great Recession, new research suggests that the gap is growing between those who thrive and those who struggle.

The Financial Industry Regulatory Authority (FINRA) regularly surveys U.S. consumers to gauge their “financial capability” — including knowledge of money management skills and with the willingness and ability to put those skills to work. FINRA is a body set up by the financial industry to regulate itself, and every three years since 2009, its Investor Education Foundation has polled 25,000 or more Americans for this survey. Its report, out this month, looks at results from its 2018 survey compared to the data from previous surveys.

One of the key measures of financial capability is whether people are able to make ends meet. Since the Great Recession, the percentage of Americans who report no difficulty paying their bills and other expenses has grown from 36% in 2009 to 50% in 2018. During the same time period, the percentage of Americans who have experienced an unexpected decline in income has dropped from 40% in 2009 to 20% in 2018.

However, financial improvements have not been felt uniformly across the board, as African Americans, younger Americans and those with less education have failed to realize the same economic gains since the recession ended.

Since 2009, the percentage of respondents’ ages 55 and older who said they had no difficulty covering their monthly expenses increased by 17%. However, respondents between the ages of 18 to 34, the percentage of those with no difficulty covering monthly expenses has only gone up by only 9%.

Among those 55 and older, 22% fewer respondents reported an unexpected drop in income since 2009, compared to a decrease of just 12% among those between ages 18 to 34.

FINRA also observed a sharp gap in terms of ethnicity, reporting that “the ability to cover monthly expenses has improved by 16 percentage points since 2009 among White respondents, 15 points among Asian Americans, 14 points among Hispanics, and 9 points among African Americans.”

The research also touched on the role of education in financial capability. According to the findings, 64% of college graduates said they had no difficulty paying monthly expenses. However, only 46% of those with some college education and 44% of those with a high school diploma or less felt that way.

Researchers have pointed to a number of factors, such as stagnant wages and rising costs of housing and medical care, to explain why so many middle-class Americans are struggling to pay for basic necessities. If you’re having trouble with your finances, the low unemployment rate may work to your advantage since there may be more opportunities to find a better-paying job. You may also be able to take on a side hustle to bring in more cash and get back on your feet.