Nearly 51 Million Households In The United States "Can't Afford Basics Like Rent And Food"

Authored by Michael Snyder via The Economic Collapse blog,

If the U.S. economy is performing so well, then why can’t 51 million households in the United States “afford basics like rent and food”?

A stunning new report that was just put out by the United Way ALICE Project shows that the gap between the wealthy and the poor in this country is perhaps the biggest that it has been in any of our lifetimes.  In some of the wealthiest areas of the nation, homes are now selling for up to 100 million dollars, but meanwhile tens of millions of families are barely scraping by from month to month.  Many believe that this growing “inequality gap” is setting the stage for major societal problems.

In general, the U.S. economy seems to be performing better than expected so far in 2018, but the ranks of the poor and the working poor just continue to grow.  The following comes from CNN

Nearly 51 million households don’t earn enough to afford a monthly budget that includes housing, food, child care, health care, transportation and a cell phone, according to a studyreleased Thursday by the United Way ALICE Project. That’s 43% of households in the United States.

The figure includes the 16.1 million households living in poverty, as well as the 34.7 million families that the United Way has dubbed ALICE — Asset Limited, Income Constrained, Employed. This group makes less than what’s needed “to survive in the modern economy.”

If 43 percent of all Americans cannot even afford “the basics”, what does that say about the true state of the U.S. economy?

Of course the biggest reason why so many American families are struggling is the lack of good jobs.

In America today, 66 percent of all jobs pay less than 20 dollars an hour.

66 percent.

Just let that sink in for a minute.

You cannot support a middle class family on 20 dollars an hour.  As a result, many Americans are working more than one job, and in many households both the mother and the father are working more than one job.

Housing costs account for the biggest item in most family budgets, and the fact that housing costs have just continued to soar is putting a huge amount of financial stress on hard working families.  Just today we learned that there is a tremendous rush to buy homes as mortgage rates rise rapidly

Today, according to the latest Freddie Mac mortgage rates report, after plateauing in recent weeks, mortgage rates reversed course and reached a new high last seen eight years ago as the 30-year fixed mortgage rate edged up to 4.61% matching the highest level since May 19, 2011.

But while the highest mortgage rates in 8 years are predictably crushing mortgage refinance activity, they appears to be having the opposite effect on home purchases, where there is a sheer scramble to buy, and sell, houses. As Bloomberg notes, citing brokerage Redfin, the average home across the US that sold last month went into contract after a median of 36 only days on the market – a record speed in data going back to 2010.

If you will remember, we witnessed a very similar pattern just before the subprime mortgage meltdown in 2008.

History is repeating itself, and we never seem to learn from our past mistakes.

Housing prices in some cities are absolutely obscene right now, and many working families find themselves completely priced out of the market.  That has some people asking one very simple question

Many San Francisco renters I met while reporting an article on affordable housing lotteries had responded to the region’s housing crisis by putting up with great discomfort: They crammed in with family; they split apartments with strangers. Some even lived out of their cars.

Why, lots of readers wanted to know, didn’t they simply move away instead?

Yes, some people are moving, and this is something that I plan to do an article about very soon.

But for most hard working families, moving across the country simply is not an option.  Moving out of state is very expensive, it can be very difficult to find a similar job in an entirely new area, and many families are very dependent on the social networks where they currently live…

People who struggle financially often have valuable social networks — family to help with child care, acquaintances who know of jobs. The prospect of dropping into, say, Oklahoma or Georgia would mean doing without the good income and the social support. Those intangible connections that keep people in places with bad economies also keep people in booming regions where the rent is too high.

In the end, moving is just not an option for a lot of people.

We need to structure our economic system so that it works for all Americans – not just a few.  Unfortunately, it is probably going to take another major crisis before people are ready for such a restructuring.

And such a crisis may not be that far away.  In fact, even Pope Francis is now warning about the dangers of derivatives

In a sweeping critique of global finance released by the Vatican on Thursday, the Holy See singled out derivatives including credit-default swaps for particular scorn. “A ticking time bomb,” the Vatican called them. The unusual rebuke — derivatives rarely reach the level of religious doctrine — is in keeping with Francis’s skeptical view of unbridled global capitalism.

“The market of CDS, in the wake of the economic crisis of 2007, was imposing enough to represent almost the equivalent of the GDP of the entire world. The spread of such a kind of contract without proper limits has encouraged the growth of a finance of chance, and of gambling on the failure of others, which is unacceptable from the ethical point of view,” the Vatican said in the document.

I have written about derivatives extensively in the past, and Pope Francis is 100 percent correct when he says that they are a ticking time bomb which could absolutely devastate the global financial system at any moment.

We don’t know exactly when it will happen, but we do know that such a crisis is coming at some point.

Sadly, most of the population is completely asleep, and they will be completely blindsided by the coming crisis when it does finally arrive.

Comments

JohnG Stuck on Zero Fri, 05/18/2018 - 21:49 Permalink

Rent, transportation, and health care are not necessities.

But that cell phone, it is a MUST HAVE.

You can live outdoors (many urban outdoorsmen do just fine), you can walk, and why would one need health care if you eat right and exercise.

Living outdoors provides exercise, welfare provides plenty of good food, and walking is good for you.

So the only problem here is lack of a cell phone.  Must play candy crush.

But then there's always the obamaphone for the truly needy.

In reply to by Stuck on Zero

RAT005 kikrlbs Sat, 05/19/2018 - 00:35 Permalink

I call BS on the story.  I would like to see the percents with Health Insurance not included.  And if half of a couple is making $20 and the other half is making $10, I think $60K is living.  `$5k/mo gross is more than most of my apartment applicants and they are living fine (maybe without health insurance.)  Or on average, $30K for one person is manageable.

In reply to by kikrlbs

Give Me Some Truth RAT005 Sat, 05/19/2018 - 02:13 Permalink

$30k for one person is manageable ...”

No way. I don’t think it is. Net take home if you gross $30k might be $24k. That gives you a budget of $2k/month.

Rent:$700 to $1000. Utilities, including phone, TV/Internet $500. Car payment and insurance: $375. Gas: $130. Food and sundries: $500

We are already at $2,200 to $2500, and we haven’t even listed many other categories of spending. Very few people can live on a gross salary of $30k/year. 

P.S. A gross income of $30,000/year = $14.42/hour (40 hours/week x 52 weeks)

In reply to by RAT005

cheech_wizard Give Me Some Truth Sat, 05/19/2018 - 05:36 Permalink

Depends on where you live but to me your numbers are bullshit.

Let me give you what I live on working out of state.

I rent an apartment, $775/month (that includes water and the bullshit that goes with it). Electric $85 - $150 (summer vs. winter) Gas $10/month - I live within walking distance of work. Phone/Internet $100/month Gym membership - $40 month.  Food/sundries - $200/month    Car paid for (in cash) - Insurance $50/month

About $1350/month... You obviously can't budget worth shit or live in the wrong part of the country.

Currently I make ~100K/yr before taxes. Now where do you think the rest of what I earn goes?

Standard Disclaimer: TV? WTF? Anything you want to watch, you can find it on the Internet. Cut that cord immediately.

In reply to by Give Me Some Truth

Give Me Some Truth cheech_wizard Sat, 05/19/2018 - 06:59 Permalink

 

You, sir, are far from typical.

1. You have a paid-off car.

2. you walk to work.

3. You buy only 3 gallons of gas/month

4. Your average electric bill is $115

5. You don’t watch cable TV

6. Your car insurance is only $50

7. You spend $6.80/day on food AND sundries (napkins, coffee filters, tooth pate, soap, cleaning supplies, shampoo, deodorant, AC filters, razor blades, etc)

... My example was for the average person. if your situation is average, the world is full of people walking to work, who never or seldom use a car (and have paid off their car),  who can eat 3 meals a day for $6, who don’t watch TV, and who never have a utility payment of more than $150.

The average person also has medical and health expenses, miscellaneous expenses like tag renewals, gift expenses, fees and fines, probably goes to a bar or movies every now and then, services or repairs their car, has to get other things fixed, needs to buy some clothes or shoes, has to get haircuts, maybe goes on a date, pays interest on credit card debt or other loans, etc.

No, I stand by my statement  - The average person who lives by himself is going to struggle mightily to pay all his expenses on income of only $2,000/month.

In reply to by cheech_wizard

Rentier88 cheech_wizard Sat, 05/19/2018 - 12:47 Permalink

Guess you never have your teeth cleaned, ever go to the Dr. for anything including colds/flu.  $10 month for gas isn't even close to realistic for many.  Neither is $200 month for food and sundries, if you only spend $6 on food a day you're eating processed crap.  Because you can't buy 'real' food for that.  Most places $775 rent is for a dump in crime area. 

 

I do agree with car insurance if you have good driving record and area.  Also, totally agree with paying for TV.  There is so much entertainment IP out there that there is zero reason to be paying for any of it period!  Bit torrent and over the air.

In reply to by cheech_wizard

new game Give Me Some Truth Sat, 05/19/2018 - 07:03 Permalink

20/hour is the majik number for minimalist living.

but once 20/hr is achieved the wealth nig-rich effect takes hold and off to the mall or amazon searching for goodies glitz and useless shit from china. then the debt cycle starts with that plastic thingy called visa or mastercard. these medium iq livin the dreamers start racking up balances well off to debt serf middlers that never dig out...

10/hr=dumb fuks workin for peanuts, broker than shit, food stampers, no skills cept 10 finger and 2 legs. down and outers.

15/hr=wharehouse worker and menagerie of half ass semi skilled jobs that keep the dream alive, just barely.

20/hr= skilled of some sort. pimping the dream but almost always fuk it up with debt. rarely do these types live minimally and save and forge ahead.

25 and up is a case of moar debt, shinny f-150ers and very skilled people that "have their shit together" but fall in the livin the dream and doin shit, burning both ends and get en er done...these jobs  require work and millennials don't want to work as a general rule. plenty of xers  and older workers. construction. small business owners and gettin a taste of econ freedom but just out of reach. maybe some moar ot will do it-lol.

30-50/hr=small business owners gaming the 15/ hour debt surfed worker bees and making a good livin. hard drivers that plow ahead. some fail some win by expanding and growing, but sacrifice life and slave away 80+ hours a week to grow and scramble against other doin the same.

50-100/hr. lawyers real estate agent/brokers, upper management. basic assholes we must put up with every now and again...

101plus, fuk heads that think they are special, goin gods work leveraging labor money and cheating the system every which way possible. these fuks buy favor, scam gov.org for contracts, buy injustic and are the 1 percents i detest as they are corrupt immoral fuks.

 

In reply to by Give Me Some Truth

DemandSider Give Me Some Truth Sun, 05/20/2018 - 08:34 Permalink

Rent/mortgage for decent housing here in The Twin Cities is around $900-$1400. I have MagicJack @ $100/5years, although other VOIP services are completely free. Internet runs $50.00/month. This is going to sound blasphemous, but very few actually need a cell phone, and you'll be better informed without cable or TV. There's far better entertainment on the web, also, than what I had as a kid in the 1970s and 80s. A decent, Saturn S series @30+MPG can be had in decent shape for around $500-$1500 and will last 5 years+ with simple, cheap maintenance. (If something major goes wrong, junk it and buy another.) Gas is around $80/month. Milk is $1.69-$1.99 at Aldi. Bread is $1.00 at DollarTree. 

 

Try to do without Wall Street products and services to the extent you can, as they need to constantly raise profits every quarter by basically taxing the consumer. Aldi and DollarTree for example, although public companies, carry few name brands. Most electric devices and electronics are made in The PRC, anyway, so order them from eBay or other internet service and save up to 80% over physical retail. I eat at only local restaurants, and buy Minnesota made food and American made when possible, so I pay a premium for this.

This isn't the 1960s, when a single earner household can have a new car, new appliances, new clothes, a pension, and college education for the kids. Remember, neoliberalism sacrifices long term prosperity for all, for short term hoarding for a few. Even the wealthy running this scam have to realize they are slowly cutting their own throats.

Anyway, maybe consider a move to the frozen tundra. A family can do OK for now, for $2500/month, insurance included.

In reply to by Give Me Some Truth

johnQpublic JohnG Sat, 05/19/2018 - 07:00 Permalink

When we were poor, we bought a house. A cheap house which we worked on. No cel phones, no cable, no internet, no healthcare, 2 older paid for beater cars. Interest was 8.75% on the loan. We had 1000 less in bills because we lacked the nescessity of healthcare. A hundred less in cel. 200 less in cable, internet. People need to drop some of those nescessities to afford the basics.

In reply to by JohnG

Last of the Mi… Giant Meteor Sat, 05/19/2018 - 07:09 Permalink

$200 for a 16 oz bottle of KCl 10%. Yup Obamacare is percolating along nicely. Bought an 1/8 oz tube of gentamicin opth oint from the wholesaler the other day. Price went up from $4 to $115. There is no patient on this product and obviously there is no generic competition. It's whatever the market will bear these days. Or more importantly whatever you can get away with without a congressional investigation ( not that that changes much)

Obamacare simply brought the financial destruction of the middle class through outrageous medical expenses behind a congressional curtain where you're not allowed to see it's dealings.

Classic government overreach and liberal agenda for the wealth creation of a few.

In reply to by Giant Meteor

VoteSmarts tmosley Fri, 05/18/2018 - 22:25 Permalink

O Pshaw. Where's the critical thinking with the responses to this article, eh. United Way is a *Charity which depends on donations. CNN is a Nuze entity. Perhaps one could detect an agenda of sorts. Also, What are the actual stats on the number of Illegal Aliens among that ~51mn count, hm. Calling BS.

In reply to by tmosley

CheapBastard Totin Fri, 05/18/2018 - 22:57 Permalink

<< The USA is crumbling apart while the rest of the world (except Venezuela and Syria and Yemen) are improving nicely.  >>

True dat.

Been to Asia recently? Brand new modern airports all over, even in far out places like Luang Prabang and Phnom Penh ... while USA airports (like Newark, LAX, etc) look like third world Somali Sh*tholes.

24 years of destruction and leftism --- Bill Clinton, Bush and Obozo --- have consequences.

In reply to by Totin

r0mulus JimmyJones Fri, 05/18/2018 - 20:15 Permalink

Gotta protect that protected class of professionals!
You know, the ones that ennable structural control of the most important institutions in society!
The rich absolutely love getting richer without having to work for it.
And the poor shall be grateful for the food stamps they subsist on while the government mandates prosperity out of their grasp.

In reply to by JimmyJones

DemandSider r0mulus Sun, 05/20/2018 - 09:27 Permalink

"...the ones that enable(sic) structural control of the most important institutions in society! "

The wealthiest professionals tend to be in finance, insurance, and real estate, and are  parasitic. FIRE sector professionals should be heavily regulated and taxed, but they bribe politicians so that they may sink their probosces deep into their host:  Useful members of society. 

In reply to by r0mulus