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US households struggle to make ends meet

A large number of US families are still struggling to make ends meet despite favorable employment and economic trends. A study by the United Way ALICE Project points out that around 43% of American households are unable to afford many essential amenities like food, healthcare, housing, and transportation.

This comprises 51 million families which include more than 16 million families in the poverty group along with more than 34 million households that have been categorized under the term ALICE which means Asset Limited, Income Constrained, Employed.

This is despite reports that unemployment rates have come down to the most favorable levels seen over the past 18 years. Last month, the unemployment rate hit 3.9%. Despite jobs being added at a steady pace, more than half of the jobs do not have an hourly wage of $20 or more. Those working in stores or in childcare bear most of the brunt as they seldom manage to get savings from their income.

Around 43% of American households are unable to afford many essential amenities like food and healthcare

For both job growth and retention, an increase in wages is necessary. Experts believe an increase in wages is likely if the tightness in the labor market continues to grow. According to the Bureau of Economic Analysis, personal income increased 0.3% in March 2018 from February. Disposable personal income grew 0.2% while personal consumption expenditure rose 0.4%.

 

US personal income quarterly trend
(Data Courtesy : Bureau of Economic Analysis)
US disposable income quarterly trend
(Data Courtesy: Bureau of Economic Analysis)

Looking at the state of poverty in the country, the number of citizens living below the poverty level has increased during the six-year period from 2010 to 2016. In addition to this, there has also been an increase in the number of poor neighborhoods, meaning ones in which 40% or more residents live in poverty.

Fresno in California leads in terms of concentrated poverty rate at 42.2% while Toledo, Ohio stands at 34%. Neighborhoods with a high poverty rate tend to see high levels of crime and people from these areas generally have low chances to improve their economic status.

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