A published report takes an interesting look at what it calls the “Great Affordability Crisis” in America, where the unemployment rate has fallen to record lows and wages have risen across the board, but Americans are still struggling to make ends meet.
The report centers on four areas of concern — the price of housing, the price of healthcare, the student loan crisis, and the price of childcare. Each has contributed to a “cost of living crisis” in America, according to the report, even though many of the problems could be fixed through policy solutions, which has happened in many other countries around the world already.
For the credit and collection industry, it is an important step in the process to understand an individual’s financial situation in order to see where there might be opportunities to find money to repay unpaid debts. For many of the people on the other end of the phone when contacted by a collector, it is likely one or more of these four areas that are soaking up any disposable income that could be directed toward an unpaid bill.
Where the federal government has set a benchmark that families should spend less than 7% of their income on childcare, for example, people in California are spending as much as 18%, or 14% in Nebraska. Higher deductibles and co-pays for individuals with health insurance has also taken a chunk of of their wallets and paychecks. Private health insurance premiums rose 28% between 2010 and 2016, while incomes increased 20% during the same span.
Higher home costs are keeping more Americans from buying homes, especially younger Americans. House prices are rising faster than wages in 80% of metropolitan regions across the country, and even the cost of renting has outpaced earnings growth for the past 20 years.
The article points out that solutions — such as public healthcare, public childcare, and subsidized higher education — exist in other countries and help those citizens thrive. But, here in America, the problem is not going to go away anytime soon.
But the Great Affordability Crisis hides in plain sight, obvious to households but unmentioned in the country’s headline economic numbers. It persists even as President Donald Trump rightly praises the country’s growth, low unemployment rate, and rising household incomes. And though there are many nationwide policies that could end the crisis, they all seem unlikely to pass through the country’s broken Congress; the brightest glimmer of hope lies in housing and health-care policy by individual states. But it is still a dim glimmer. This crisis looks sure to stay with us for the coming decade, whatever recessions or expansions it may hold.
