Why Americans Feel So Poor | CNBC Marathon

Being middle class, I

feel

like you're between a rock and a hard place. So there are certain kinds of assumptions about being a middle-class person that have sort of been shattered. And wages, in some ways, are a reflection of the productivity and skills of American workers. Four in ten Americans say money negatively affects them and the state of their mental health. Consumers who have a lot of debt are really struggling to survive. The middle class was once a symbol of the American dream. But the American middle class today paints a quite different picture. Being middle class, I

feel

like you're between a rock and a hard place, you know?

You're in a place where everyone says, Hey, you're doing better than, you know, the lower class. You're doing great. You should be fine. And you are below the people who are really doing well. It was at least a safe category. Your children would go to a school that you would at least feel good about. He probably had one or two cars, owned his own home, and could pay for his children's college education. So there were certain kinds of assumptions about being a middle-class person that have sort of been shattered. A 2018 survey found that one-third of middle-income adults don't have $400 to cover an unexpected expense.

In surveys, when people are asked if they are middle class, they are often less likely to say so. And now more people are urging pollsters to suggest they are working class. So I think a lot of people who maybe in years past would have considered themselves middle class now no longer consider themselves that way. So when we think about economic status, we think of it as a static state of the world. That either you are

poor

or you are not

poor

, you are middle class or you are not. But, in fact, the reality is that many middle-class families will live one or several years in poverty.

In fact, most American families will spend years in which they are poor or near poor. That precariousness, that uncertainty, is now a feature of the middle-class experience for most American families. So what exactly happened to the American middle class? A Pew Research Center study found that the middle class, once made up of the majority of Americans, has steadily shrunk since the 1970s. About 61% of American adults were considered middle class in 1971, compared to just 51% in 2019. However, the topic still remains widely debated. When people think about the state of the middle class and whether or not it's shrinking, it's really a difficult question, and I think the reason is that, as a nation, we haven't really established a formal definition of the middle class.

I was recently at a seminar where someone literally said: there is no middle class anymore. The middle class is gone. And I thought, Oh my God, you know, that's political rhetoric. And I understand that it's kind of a standard to say that people in the middle are suffering, but it's not really accurate. We looked at the size of the middle class in these 16 rich countries in 1985 and again in 2016. And one of the things that surprised me was that the size of the middle class in the United States didn't change. It was about 59% in 1985 and 59% in 2016. Instead, experts prefer the term "squeezed" to describe what is happening to the middle class today.

Even if the middle class hasn't statistically shrunk, I think it faces more pressure to maintain or even improve its position. What it takes to truly live a middle-class life, to have a quality of life, in many American cities is not what it once was. They can't necessarily pay the rent easily. They cannot own property. If they are in their thirties, they may not feel comfortable having children because they realize that having a child would be too expensive. And forget about medical care. If something happens to you physically, often people don't have good enough medical care, they don't have any insurance.

All of this contributes to making someone part of the squeezed middle class. As the middle-class lifestyle becomes more expensive and uncertain, it also moves further out of reach for younger generations. In 2019, only 60% of millennials were part of middle-income households in their twenties, compared to nearly 70% of baby boomers. Meet Chantal Jacob. Chantal lives in the Texas suburbs with her husband and son. And while a family income of just over $100,000 should put her family in the middle-income bracket, she says her family is still struggling to achieve financial stability. She sounds great. Six figures. But once we get married, the taxes that come out of my check even before I get any money, before all my benefits, $500 comes out of my check automatically.

And then you add insurance, life insurance for my spouse, myself and my child. And I also have money set aside for my son's college fund. It's not much because I can't do much, but I want to have something for him. You know, my check that starts at around $3000 goes down to $2200 before I can even touch it. Our rent is about $1,700. Electricity costs about $150. The phone bill is about $280. Internet costs $60. We both have vehicles. They are around $800. Insurance on those vehicles costs about $400. For food, between $400 and $500 a month, but that is increasing. We budget down to the dollar.

And sometimes it's very discouraging to work all week and have people tell you, Oh, you're so lucky, you have a great job. And you say, Hmm, I don't know anything about that. There are several reasons why the middle class feels squeezed. The first reason is stagnant income. Between 1970 and 2018, the middle class's share of aggregate income fell 19% in the U.S. By comparison, the aggregate income share of high-income households saw a 19% increase. Another Brookings Institute study found that middle-class incomes have grown half as fast as the bottom 20% and top 20% of income levels once taxes and transfers were taken into account.

If I stay with a company for a while, my income stagnates. You know, it goes up by a couple thousand. I usually have to change jobs to increase my income, which in itself is not security. Middle-class workers over the past 40 years have not been able to adequately benefit from productivity growth, the expansion of the pie, in the economy. We have measured this and found that the typical worker has fallen 43 percentage points behind in productivity growth. What that means is that the middle-class worker could have gained an extra percentage point per year in compensation growth over the last 40 years, and he didn't because there was an erosion of labor's share of overall income and because to growing inequality. so that the richest 10%, particularly the richest 1%, and even more so the richest 0.1%, absorbed much of the gains from the growth of the economy.

While incomes are stagnating, the cost of living has increased dramatically over the years. To put it in perspective, the median household income in the United States has seen only a 16% increase over the past 50 years. By comparison, housing costs rose 190% and college tuition soared nearly 264% in the same period. I first moved here to these apartments I live in five years ago. My income, my rent was like $1100. Now it costs $1700. That's an increase of $600. I didn't have a $600 increase, nor did my income increase at the same rate. Rising spending and prices on healthcare, housing and education are very real and have put tremendous pressure on middle-class households whose incomes simply do not stretch as far as they once did.

The situation is even worse in cities where the cost of living is already higher. A 2018 analysis found that raising a family and a middle-class lifestyle in expensive coastal cities like San Francisco or New York requires an income of at least $300,000 a year. For reference, only 10% of all households made $200,000 or more in 2020. I recently saw an apartment next to the building I work in in Plano and thought, It would be cool to walk across the street to work. . And it was like $2,400 for one performance. And I say: That's crazy. And then it's like what I have, they call it a townhouse, three bedrooms, two bathrooms, $5,500.

I say, well, absolutely not. Like I'm going to pay $5,500 and it doesn't belong to me, it's not mine? It is getting worse. And everyone says: I feel like the natives are being pushed out to the suburbs and then people from out of state can come and enjoy the beautiful fruits of Dallas, have fun and be close to the restaurants. And, you know, I get to live here and, you know, it's not bad, but it's not Dallas. I'm from Dallas. I grew up there. That's where I want to be. But the way things are now, you know, it's just not affordable.

Policymaking could be both the blame and the solution to middle class pressure. There is no help whatsoever. There's no policy to help people, and I feel like as soon as you get a job or as soon as you're working, they just say, Oh, that's all you need is a job. You understood it. You know, go ahead and do it. The stagnation of people's wages and salaries began in the 1970s, when productivity began to grow more slowly, but it really accelerated after 1979 and 1980, when there was enormous growth in inequality, when the top 1% took off, when the stock market grew, but people's paychecks did not.

And that has to do with issues of deregulation, excessive unemployment, the weakening of unions, the lack of raising the minimum wage, globalization with low-wage countries really putting a damper on blue-collar employment opportunities in many places. The thing is, it's not that the economy has gotten worse. Political decisions were made so that economic growth did not reach the vast majority. The country was not built by Wall Street bankers, CEOs and hedge fund managers. It was built by you. It was built by the great American middle class. In response, the Biden administration took office in 2021 with a promise to revitalize the middle class.

The bipartisan $1 trillion November 2021 infrastructure bill and the upcoming Build Back Better Act include provisions aimed at financially supporting middle-income families. But Congress remains deadlocked. Only time will tell if these bills will actually have an impact on the survival of middle-income households. I don't see any effect of change. My friends who were struggling are still struggling. I'm still budgeting every dollar trying to get things done. So I feel that if changes are happening, they are not coming fast enough for us to see their effects. I think overall the Biden administration team has done quite well. At the same time, they face really strong headwinds.

We are talking about a global pandemic that persists. We're talking about historic levels of inflation and labor shortages that are causing these types of gaps in supply chains around the world. So I think both things are true. They have done a good job, but they also have a lot of work to do. The fate of the middle class could determine the future of the American dream. I just think we should be concerned because this has an effect on how people perceive the American experiment is working for them. And there are expectations that there should be this upward growth and mobility.

But I think we have an increasingly precarious job market for many Americans. That is why it is important to note that this is also a characteristic of inequality. It is a shame that we have as much or more poverty now than 40 years ago, that the middle class earns somewhat higher salaries, but not in proportion to how much they have increased their productivity during that time. And what this does is increase the division. It damages our democracy. It harms the upward mobility of the children of these families. That whole middle class of people is on the brink of ruin.

An emergency, a catastrophe. And you can see, even COVID showed you how quickly people who were doing good can fall and be left with nothing. That should have been a wake-up call that we need to change some things. In June 2020, American workers earned an average of $27.45 per hour. In 1972, the same workers earned an average of $3.88 per hour. A graph like this could give the impression that the United States has come a long way in terms of wage growth. But when adjusted for inflation, wages have remained virtually unchanged over the past 50 years, and workers today earn just $0.12 more than they did in 1972.

When the average American doesn't see his standard of living rise for a period of decades, that is something that should concern us all. WithWith inflation at its highest level since 1981, Americans are feeling the pain of slow wage growth. Two-thirds of American workers said inflation has outpaced any wage increases achieved in the past year. Now, due to inflation, I can't even make the monthly payments. So I had to choose overtime at my senior care job. But some economists argue that the concept is simply a myth that politicians use to promote their careers. Politicians win elections by promising to fix something that is supposedly wrong in people's lives.

That's why I think there's a bit of political cynicism and calculation involved in the debate over wage stagnation and promises to fix the supposed problem. So how real is wage stagnation in America today? And what does it mean for American workers? Wages in the United States have stagnated since the early 1970s, but it was in 1979 that the gap between worker productivity and wages began to increase substantially. Between 1979 and 2020, workers' wages grew by 17.5%, while productivity grew three times as fast, at 61.8%. It is not true that wages have not increased at all. They have, but they have not grown as fast as in the past.

Since the 1980s, the economy has changed a lot. We have truly moved from an industrial era to a technological era. When these big changes occur in the economy, sometimes the gains are not felt equally, but they really have an impact on everyone's lifestyle and wages. Wage stagnation is worse for low- and middle-income people. The bottom 90% of American workers saw their annual wages increase by 28.2% between 1979 and 2020, while the wages of the top 1% increased by 179.3%. Meanwhile, the top 0.1% saw a staggering 389.1% growth. Real wages, that is, after adjusting for inflation, have not increased that much since the late 1970s.

We know that, on the other hand, inequality increased during most of this period. I've been working since the '90s when I got here. That's about 30 years on and off. And there were very few raises for domestic workers overall. Now after 2020, with inflation, I feel like the income is still the same. People lost some of their jobs, as in my experience, and we have to scramble to find different or side jobs or second part-time jobs just to maintain the monthly expenses of our daily living. It is very hard. Despite causing severe disruptions to the American labor market, the COVID pandemic has led to surprising wage increases across industries.

In fact, COVID has seen a significant acceleration in wage growth, especially for low-wage workers. This reflects a really serious tightness in the labor market due to excessive US demand, whether through the Federal Reserve or through fiscal stimulus payments, but also restrictions on labor supply, restrictions on immigration, early retirements and, therefore, of course, illnesses or deaths. That has driven substantial wage increases. It's hard to say if that's the new reality and that's why I want to be cautious. Has it changed our lives forever and maybe for the better in terms of the job market and salaries? We have to wait and see.

Automation is one explanation for wage stagnation in the United States. The McKinsey Global Institute predicts that 45.3 million workers will lose their jobs due to technological advances by 2030. Automation has been a really big factor so far, especially in manufacturing jobs. So before building a car, machines are used. But there was a lot of practical work with it. Now much more of that is done with machines and you have to be much more skilled at using those machines, which means that many of the routine jobs have disappeared or are very poorly paid. Over the next two to three decades, many economists believe there will be many disruptions in the labor market due to new automation.

Even college-educated workers, financial aid and accounting, and even some parts of medical diagnoses will be performed by machines with artificial intelligence. Therefore, many more of us could face competition from these machines. Globalization is another reason for wage stagnation, forcing domestic workers to compete against unfair competition. In many countries, workers are paid much less. So now, especially if you don't have a lot of very specialized skills, you're competing in that market. And that means much of the routine office and manufacturing work will go overseas. But it's not all bad news for Americans. It is important to remember that this meant that products became much cheaper.

It's one of the reasons we've had such low inflation since the 1980s and everyone has benefited from it. But having said that, I think economists like me were a little arrogant, seeing how the economy was growing and people were doing better, compared to the people who were hurt. And we still don't have good solutions to help people like that. Economists suggest that labor dynamism also played a larger role than expected. Today, American workers change jobs less frequently than before, even though job switching leads to strong take-home pay growth. While some Americans don't change jobs out of a desire for stability, others can't because they have nowhere else to go.

In many local markets, companies take advantage of the lack of competition to reduce the wages of their workers. The notion of monopsony power is that you have a local labor market. Let's say you live in a particular city or town, and in that town there is an employer. And since there is only one employer there, they set wages lower than what they would be expected to pay. This was a totally competitive market. 60% of US labor markets are considered highly concentrated, meaning that a few employers compete for local workers. Just 10% more workers in an area can result in a reduction of around 1% in published wages.

Over the years I've asked a couple of families, still before Corona, for a $10 increase and they just turned it down. They said they would find someone cheaper and we pretty much lost our job. In case after case, it is seen that government policies were implemented to discourage job dynamism and discourage workers from looking for a better job or moving to a better town or city to improve their job prospects. And this will inevitably affect wage growth over time. Companies can also play a direct role in stifling competition with methods such as non-compete agreements. About half of U.S. private-sector companies that responded to the EPI survey said at least some of their employees have non-compete agreements, meaning that between 36 million and 60 million private-sector workers in the United States are subject to to non-compete agreements.

The non-compete clause would lead you to stay with your current employer, not move, because the consequences would be that it would be more difficult for you to find employment. And if you're less likely to leave your job, you'll be tied or locked into your current employer, meaning the likelihood of that employee continuing to receive your lower income is much higher. The rationale for this is at the higher end of the income distribution, of the skill set, but I don't see much reason to have it for rank-and-file employees. Meanwhile, unions that originally fought for higher compensation have dramatically lost their power over the years.

Union membership in the United States fell from 20% of American workers in 1983 to just 10.3% in 2021. Union workers typically earn higher wages, about 10.2% more compared to similar non-union workers , thanks to methods such as collective bargaining. It is in those industries where unionization remained somewhat high, the effect of the employer's market power, monopsony, on wages was attenuated, so that unions were able to negotiate on behalf of employees even when dealing with large employers. So wages were less stagnant or didn't decline as much. But some suggest that wage stagnation is a disproportionate issue. The problem we have in the wage stagnation debate is that many researchers have been using a certain inflation metric, the consumer price index, which actually dramatically overstates inflation over time.

So if we look at two periods, we will see that those CPI expenses have increased much more than they actually increased. That means it looks like your pay increase is much less than it really is. You can actually buy a lot more with your nominal salary than these researchers say you can. That's why most researchers, including the Federal Reserve, like to use a different measure of inflation. Personal consumption expenses, or PCE. The PCE shows much more moderate inflation in recent decades. When PCE is applied to nominal wage growth, much higher wage growth is found for middle-income workers.

In other words, there is no wage stagnation. And actually a pretty good profit over the last 30 years. Focusing on broad national data rather than individual experiences can create another problem. They see that the percentage of low-wage professions has increased, therefore we have stagnation or decline in wages. What they don't do is not look at the people in those professions and what their salaries have made over time. So, for example, there may be someone who is a janitor and has worked for 30 years and has actually seen substantial increases in their wages and income over that time. That would be lost if we look only at janitors in general.

I think it's technically a myth, and I think it's a stretch to say that people aren't better off than they were in the '70s. It's simply absurd. I think everything about our lifestyle and our standard of living is higher and even our real salaries are technically higher. But I think there's something to the fact that we're just not growing as fast as we used to for most people. So people do not feel that they share equally in the same prosperity. And I think that is a problem that is generating a lot of social unrest. The legislation could help solve some of the biggest problems causing wage stagnation in the United States.

There is a limited amount we can do through the policy. When there are big changes in technology, globalization, forces like that. But politics can matter a lot. For example, non-compete stuff like that. I think that adds to wage stagnation. And you know, you shouldn't have this kind of non-compete, especially in low-skilled jobs. We could pass legislation to make it easier for workers to unionize. There is a bill called the PRO Act, Protect our Right to Organize, that the House of Representatives has already passed. He's dead in the water in the Senate. I think we also need to be more encompassing of the gig market, which so far I think we are trying to pretend doesn't exist and make it an inferior part of the labor market.

But if we allow those platforms to offer health insurance, then I think they could become better quality jobs that are more dynamic and allow people to take more positive risks and not just disadvantages. Increased remote work could also be beneficial for wage growth in local markets. I mean, employers are very happy for their employees to work remotely. In a way, if you can work remotely, at least, you know, when you think about monopsony power, you're decreasing the monopsony power of an employer. Because if you are a talented person, even if you are in a small town where there are only one or two large employers, you can work for a global company that can be based anywhere else in the world or in the US and work from remotely and earn a higher salary.

Achieving a fair wage for all Americans is vital to ensuring the success of the American economy. There is a basic, not just basic, sense of justice. There is something that we have historically called the American dream. It attracts immigrants to our shores. It motivates all types of people to innovate and make the economy productive. And wages really, in some ways, are a reflection of the productivity and skills of American workers. So if wages are stagnating for a lot of people, that means we're not becoming as productive a country as we can be. That meansThe entire economy is not working as well as it should. 16.15 billion dollars.

That's how much debt American households were carrying in the second quarter of 2020. A staggering 41.79% increase from $11.39 trillion just ten years earlier. Consumers who have a lot of debt are really struggling to survive. They are struggling to make rent or mortgage payments, pay off college loans, and pay off car loans. They are struggling because they have a huge amount of credit card debt. 60% of American adults surveyed cited their level of debt as the main reason for financial anxiety. The debt increases every day and I can say that it is debilitating. For me, even with a master's degree and experience in the field for over ten years, I have had to work at least three jobs to not live paycheck to paycheck.

But with inflation at its highest level in 40 years, debt in the United States will likely increase. 43% of Americans are expected to add even more debt in the next six months. Debt finances the purchase of assets such as a house, such as a car. And when the price of these goods rises, that is reflected in the loans that are obtained. And it's that juggling effect, right? Do I pay this debt or do I go shopping or get gas, the things I really need to live? So why are so many Americans in debt today and what impact does that have on the American economy?

The COVID pandemic gave many Americans the opportunity to improve their finances. The total personal savings rate since the pandemic has averaged 12.6%, compared to just 7.25% between the Great Recession and February 2020. Americans also paid off a record $83 billion in card debt of credit in 2020. To help people weather this historic crisis, all kinds of savings have been implemented. of supports were expanded. They offered forbearance on mortgages, student loans and other types of debt. When a series of payments on my student loan stopped, I was able to breathe. So even with that $300 that was suspended, specifically in loan payments, it was enough to be able to pay for my old car.

That was enough for me to be able to save a substantial amount of money to be able to make a deposit for this beautiful place where I live every day. So all of this support led to a historically very good period in terms of the serious delinquency rate on student loans, mortgage debt, auto debt, on all of these different types of debt. But concerns about household debt are rising again. The government did a lot of things to help households and help households in debt during COVID. Now, unfortunately, all that no longer exists. Interest rates are starting to rise again.

The Federal Reserve has already raised interest rates a lot. They have said that they are going to increase interest rates further. I'll tell you how much debt I have. Student debt from getting my bachelor's and master's degrees. And then I also have a debt that I started accumulating in '22. Buying a car was unexpected. I have a debt there, worth about $10,000. And then, obviously, my mortgage. I owe a little less than $200k on my condo. Most of Americans' debt is related to housing, accounting for 72.5% of the total balance. Nearly half of all Americans today say the availability of affordable housing is a major problem.

We've seen phenomenal growth in home prices during the pandemic, and part of that is solely due to supply-side constraints. There are not enough houses for everyone. We also went through a decade where it was necessary to have a credit score above 700 to qualify for a mortgage. That means people whose credit scores were not in that strong position were competing for dollar loans that were not readily available and for housing that was also not readily available. So prices just went up and up. Meanwhile, student and auto loans comprise the majority of non-housing debt, accounting for 35.7% and 33.7% of the total balance.

College tuition for public four-year institutions increased 179.2% between 2000 and 2020, with an average increase of 9% each year. With college education going up and up and up and up, it's the difference between spending a few thousand dollars, right, for tuition and borrowing a few thousand dollars, and a few tens of thousands of dollars. You get a law degree. You get a medical degree. You get an MBA. You get a Ph.D. Now, debt levels are even higher. When it comes to simply living and thriving. It's hard for me to say it was worth it because almost every day the stress of money and being able to pay off student loans seems to be out of my reach.

On August 24, President Biden announced the cancellation of $10,000 in federal student loans for borrowers earning less than $125,000 a year. Student debt has received a lot of attention because the rate of serious delinquencies, meaning more than 90 days past due, has risen to the highest of the types of debt tracked by Equifax. So you overcame credit card debt in the last ten years. A vast majority of people who pay off student loans only pay interest, so they aren't actually reducing that principal. And it means that the amount just increases and increases over time. That generates many increases. For new vehicles, the monthly auto loan payment exceeded $700 for the first time in August 2022.

The average auto loan term has lengthened significantly over the past ten years. The idea of ​​a five-year term is no longer the norm. Six years is often what a lender will offer. And that means people are paying more interest over the life of their loan. And those balances are simply higher. Right now, I owe less than $10,000 on my car payment alone and it's really weighing on me. It feels very challenging on a day-to-day basis, well, well, can I start paying down my principal and pay off my car faster or can I, you know, that question is, or should I put that money into savings? .

While inflation drives up the price of goods and services, most Americans feel that their wages are not keeping up with inflation. The real average hourly wage for all employees fell by about 3% over the past year, while inflation rose by 8.5% over the same period. I wouldn't want to say that wages aren't rising at all, but given the cost of living Americans are experiencing, it's not rising fast enough. Wages start to stagnate and people say: Well, I should have a better standard of living. Suddenly I can't take it out of my salary or income anymore, so what do I do?

Well, let's put some money on a credit card or buy a nicer car and have a little more debt and we'll pay it off over a longer period of time. Even at my age, I want to be able to embrace and do all the things I want to do in life. And it's constantly on my mind: should I pay my debt today or should I embrace and enjoy the things my beautiful city has to offer? No person should have that in their head every day. It's not fair. For the American economy. Household debt acts as a double-edged sword.

On the one hand, it boosts consumer spending, which contributes almost 70% of the total GDP of the United States. For the economy to continue growing you have to buy everything. If things are not bought, what will happen? Companies will see their inventories accumulate. They are going to reduce production. They are going to lay off workers. There are also good debts that can help build a person's wealth over time, such as student loans, mortgages, or business loans. I believe that a certain amount of consumer debt is a necessity in our economy. In many situations it makes sense for people earlier in their life cycle to borrow more for things like higher education.

But household debt that is out of control correlates with a recession. Historically, rising household debt has been associated with lower GDP growth. The fact that households are going into debt to keep the economy going means that their debt-to-income ratio is increasing, making them increasingly struggle to pay off that debt. And if they can't pay that debt, sometimes they reach a point where they have to cut it because no one will lend them any more money. And that's when economies go into recession. And if the debt-to-income ratio rises too much, then the problems for the economy can be enormous.

Living with debt does not affect people equally. We know that people with lower incomes also have higher debt loads due to that structural and historical discrimination that means they do not have the same access to financial products in the first place. The ratio that measures people's debt to their physical assets depends largely on the race of the borrower. The proportion is 115.5% for blacks, 65.8% for Latinos and 98% for other races, compared to just 49.3% for whites. At the lower end of the income spectrum, at the lower end of the credit score spectrum, we find that borrowers find it very difficult to access traditional credit, such as credit cards or mortgage loans.

And the credit they have available may have higher interest rates and be more expensive. Some of them may be alternative financial services, such as a payday loan or a title loan. And these types of credit, while meeting the credit needs of these communities to some extent, can be quite expensive. In many cases, the real problems are families that are downwardly mobile, families that were middle class, that had accumulated a kind of debt based on the expectations that they would remain middle class and then something happens in the economy. You lose your job, but you still have your mortgage, your car payments, and your college loans.

These become almost impossible to finance. And it's almost impossible for you to keep your head above water. Despite its record amount, there is still no reason to panic about the state of household debt in the United States. We should not panic about the level of household debt right now. We should be attentive to it. We should worry about that. And I think it's particularly important for political leaders and leaders in the financial world to pay attention to who and where we're starting to see the biggest challenges. From what I see in the Federal Reserve System's reports and more generally, there are no major warning signs of disruptions like we saw during the housing crisis and subsequent financial crisis.

Policies play a vital role in keeping household debt under control. Experts say outdated procedures, such as wage garnishment, where an individual's income is withheld for debt repayment, are in urgent need of a policy update. One survey found that about 7% of workers in the United States experienced wage garnishment in 2016. For people who have high debt loads, their wages are actually garnished or garnished at really high rates. Currently, at the federal level, only $217.50 is protected in a person's weekly paycheck. And that bill hasn't been updated since the late 1960s. So what we're proposing is to protect at least $1,000 in people's paychecks each week so that they have enough in their weekly paycheck to support their family and pay their bills while managing their debt responsibly.

Bringing back the child tax credit program could also help reduce household debt in the United States. Child tax credits were expanded under the 2021 American Rescue Plan in response to the COVID pandemic. One survey found that more than 77.8% of child tax credits were spent or earmarked to pay off household debt. And that had a huge impact on household finances. If you're a couple hundred dollars behind every month and you go into debt and now the government gives you a couple hundred dollars because you have kids, now you're whole again. You can pay all your bills for a couple of months, and if you can pay all your bills for a couple of months, you may even be able to reduce some of your old debt.

The government can also potentially play a role in reducing certain types of debt, such as medical debt currently owed by approximately 23 million Americans. Medical debt is a particular debt that the government, both the federal government and the state governments, have potential roles to play in helping households that are really at that individual level struggling with that. There has been a delay in Southeastern states in Medicaid expansion. Good? And then we know that the debtmedical is going to increase. But if there is a way to expand Medicaid so that people are better supported in terms of their medical expenses, that will be a way to alleviate that burden.

Advocates say whether the United States can keep household debt under control depends on how quickly authorities can respond to the problem. We really need interventions to help Americans reduce that debt burden and so they can spend responsibly, save responsibly, and achieve those long-term goals, maybe buying a home or building wealth and being able to invest. Americans seem more stressed than ever about money. 87% of Americans said inflation and rising costs of everyday goods are what cause their stress. And that's one of the highest stress numbers we've seen in the Stress in America survey. Four in ten Americans say money negatively affects them and the state of their mental health.

Money is a universal stressor, regardless of your financial situation. Poor mental health not only affects a person's overall well-being, but it is also bad for the economy. Workers who experience even one day of poor mental health per month could generate $53 billion less in total income each year in the United States. Money affects every aspect of our lives and is modern survival. I felt desperate. I was feeling that depression and I didn't really know what to do. It is affecting some Americans more than others. Statistics say that 75% of Latinos are stressed about money. One of the biggest anxieties we face is how are we going to generate generational wealth?

So why is money so stressful in America? And what can Americans do to relieve the pressure? With the cost of living skyrocketing, many Americans experience financial stress on a daily basis. Something that comes up time and time again when we ask Americans about their personal finances, essentially, is the expenses that constantly surprise them. Therefore, try to pay for everyday items, without having savings or emergency debts. Those three issues top his list of concerns. Tawnya Schultz and Lea Landaverde became financial advisors after experiencing their own financial difficulties. I was in debt off and on when I was in my twenties and thirties and around age 34 is when I had about $20,000 in debt.

Even someone who has a master's degree in finance has their own personal finance problems. I was still figuring out how to be an adult and how to be in this corporate world, how to generate income that probably led to overspending, you know, a lifestyle change. I was in this cycle of debt where I was trying to get out of it, pay it off, and go back into debt. And I was just tired of feeling like I could never get out of this or feeling like I was always going to be in debt. More than 80% of Americans ages 18 to 43 said money is a major source of stress for them.

Certain people have a harder time when it comes to worries about inflation and money. There were differences between men and women in the way they processed it. More women told us it was negatively affecting their mental health, but men told us it affects their mental health more often. I felt like I was at a low point because for my age and where I wanted to be, where I thought I should be in life, I felt behind. I had no savings. He lived paycheck to paycheck. In many ways, money is a safety net or a source of stability, and without it, people feel vulnerable and anxious about the future.

Latino and black adults were more likely to say money was a significant stressor more frequently than white and Asian respondents. Especially given my experience as a first generation, my parents didn't know how to navigate this financial system. That's why even I got into finance myself because I saw the stress that my parents faced, so I could learn and help protect them, as well as protect the community and provide them with education on transparent finances. Many Americans are hopeless about their financial future, with 41% saying that, quote, it will take a miracle to be ready for retirement. I think the problem in recent years has been that a so-called risk shift has occurred, while the risk of being responsible for things has shifted from others to the individual.

What can you put on that list? The cost of obtaining a college education. Previously in the public sphere at the expense of taxpayers. We know where that has gone. The burden of saving for retirement often fell most heavily on employers when they provided pension benefits. That was passed on to people with the changes to 401Ks. Healthcare has become increasingly expensive. This is responsible for one-fifth of the American economy, and consumers and employers bear that burden. Americans say they feel pressure to cut spending. MoreMore than 50% of adults say they have already reduced their eating out and will consider reducing their spending further if inflation continues to rise.

More than 75% of adults said they are worried that higher prices will force them to reconsider their financial decisions. Even higher-income Americans who earn at least $100,000 a year say they have or are considering cutting spending. People need to have a sense of hope. And so, when the economy works in your favor, there is a greater likelihood that people will be hopeful that they can achieve their basic personal financial goals. Americans are making a connection between their financial stress and worsening mental health. 42% of American adults say money negatively affects their mental health, and 28% say they worry about their finances daily.

Many Americans tell us that some of their sources of financial stress are as simple as looking at their bank accounts, shopping, or talking about money. Thinking about money or your finances. It may seem inevitable with summer approaching and travel plans, vacations, gift buying, all of these things are really stressful and can lead to worries about finances. Sometimes dealing with stress can make a person's financial problems worse. An April 2020 Credit Karma survey found that 35% of respondents said the stress of the pandemic led them to impulse buy. I was sad, so I went shopping and that led to me racking up over $30,000 in credit card debt.

And I had to figure out how the hell I was going to pay for that. Things are getting a lot more expensive and we want to experience things and we want to live. And so, to provide some kind of happiness, I would get serotonin by shopping. I started drinking more and I feel like eating more and spending more. So you start using those coping mechanisms because you're stressed about money or life in some way. And so it was taking me down a path that I didn't want to be on, but that I didn't know. I felt stuck.

I felt trapped. Mental health problems can have serious consequences for a person's overall well-being. There is clear evidence that mental illness affects physical health. We typically see stress manifest itself in two ways. One of them is physical symptoms, such as teeth grinding, headaches, upset stomach, muscle tension. The second is emotional responses. That can manifest as anxiety and stress, difficulty sleeping, changes in eating patterns. And so when they come together and are not controlled, that's where we see really negative physical and emotional consequences. Many people struggle with the shame of their financial difficulties, and it is often a burden they bear alone and in silence.

And in turn, people go to great lengths to hide their financial difficulties, further entrenching them in their isolation. And that isolation and burden can become so great that people facing these difficulties are more likely to experience suicidal thoughts and even attempt suicide as a way to escape their problems. While there are many forces at play that are beyond people's control, such as the rising cost of living, there are steps Americans can take on their own to feel more financially secure. Experts say the first step is to examine your thinking around money. I was constantly searching, how can I find hope in this situation?

Because you can have fear and scarcity, especially today it's so easy with the economy and inflation. It bombards us every day. I say: There is not enough money. There is not enough money. Therefore, it keeps us in a scarcity mentality and fear of money. I myself faced financial anxieties and had all the resources to take action on my debt or not go into debt at all. But still, because of my mental health, the environment I was in, and not wanting to take ownership of my finances, I had to face the reality of my debt. There are experts, such as therapists or financial counselors, who can help people deal with overwhelming feelings and make a financial plan.

Basically, a financial advisor is an accomplice where you have someone by your side who helps you stay accountable and provides you with financial education at the same time, with guided and practical steps to achieve your financial goals. I think the main reason there is shame tied to finances is because so much of our self-esteem is tied to what we tangibly have. So people tend to relate their job or these external markers of success, the numbers in their bank account, to their value as a person, which is why it can be so difficult to deal with financial problems and, especially, to seek help for them. .

It is also important to monitor your physical health. What happens to us mentally also affects us physically. If you're not treating your depression and anxiety well, you're probably not doing a good job controlling blood pressure, diabetes, and other chronic conditions. I always go back to the basics, which is making sure you eat healthy, get enough sleep, stay active, and stay socially connected. The concept in mental health recovery is that a first step is to generate hope. We need to see that there is a path to recovery and that things will get better. And they usually do.