Rushville Republican

Community News Network

March 24, 2014

Poor aren't alone in living check to check

When you hear the term "paycheck to paycheck," you probably think of low-income households struggling to make ends meet. That's even the title of a new HBO documentary highlighting the plight of America's working poor.

But a paper released at the Brookings Institution's Brookings Panel on Economic Activity conference Friday finds that a sizable number of wealthier households are living paycheck to paycheck, too.

"The Wealthy Hand-to-Mouth," by economists at Princeton and New York University, finds that roughly one-third of American households — 38 million — are living a paycheck-to-paycheck existence. These are families who hold little to no liquid wealth in cash, savings accounts or checking accounts.

But the paper also finds that two-thirds of these households are not actually poor; although they resemble poor families in their lack of liquid wealth, they own substantial holdings ($50,000, on average) in illiquid assets. Because this money is locked up in things such as their houses, cars and retirement accounts, they can't easily access it when times get tough.

Demographically speaking, the wealthy hand-to-mouth are older, more educated and have substantially higher incomes than their poor counterparts. Perhaps the most striking difference: Although the poor hand-to-mouth tend to stay that way for long periods of time, wealthy hand-to-mouth status is transient, lasting an average of 2 1/2 years.

There is an important policy consideration here: Economic stimulus programs typically target the poor, because they are the most likely to immediately spend cash windfalls on necessities that they otherwise would be unable to buy. But this study implies that wealthier hand-to-mouth households, because they face similar monthly constraints on spending, would also respond positively to economic stimulus.

The paper concludes that "in order to maximize the aggregate consumption response to fiscal stimulus payments, the payments should feature more moderate phasing out with household income."

1
Text Only
Community News Network
  • The Simpsons still going strong

    The groundbreaking animation first hit the air Dec. 17, 1989, but the family first appeared on television in "The Tracey Ullman Show" short "Good Night" on April 19, 1987.

    August 21, 2014

  • Police chief resigns over racial slur repost to Facebook

    A repost on his personal Facebook page of a racially-charged comment by the original poster of a comedy video has forced the police chief of an Oklahoma city to resign his office.

    August 21, 2014

  • Does Twitter need a censor?

    Twitter decided last year to make images more prominent on its site. Now, the social network is finding itself caught between being an open forum and patrolling for inappropriate content.

    August 21, 2014

  • sleepchart.jpg America’s sleep-deprived cities

    Americans might run on sleep, but those living in the country's largest cities don't appear to run on much.

    August 20, 2014 1 Photo

  • Who should pay for your kids ACT?

    Thirteen states paid for 11th-grade students in all public high schools to take the ACT college admission test this year, with several more planning to join them in 2015.

    August 20, 2014

  • Pets.jpg Why do people look like their pets?

    As much as we might quibble over the virtues and vices of Canis domesticus, however, and over whether human nature is any better or worse than dog nature, even dog fanciers don't usually want to look like a dog.

    August 20, 2014 1 Photo

  • Ice bucket challenge trending up

    Internet trends are a dime a dozen these days. Everything from Tebowing to planking to the cinnamon challenge can cause a wave of social media activity that can last for weeks before fizzling out.

    August 19, 2014

  • Africa goes medieval in its fight against Ebola

    As the Ebola epidemic claims new victims at an ever-increasing rate, African governments in Sierra Leone, Guinea and Liberia have instituted a "cordon sanitaire," deploying troops to forcibly isolate the inhabitants in an area containing most of the cases.

    August 18, 2014

  • Democrat? Republican? There's an app for that

    If you're a Republican, you might want to think twice before buying Lipton Iced Tea, and forget about Starbucks coffee. If you're a Democrat, put down that Reese's Peanut Butter Cup, and throw away the cylinder of Quaker Oats in your pantry.

    August 18, 2014

  • Five myths about presidential vacations

    In the nuclear age, presidents may have only minutes to make a decision that could affect the entire world. They don't so much leave the White House as they take a miniature version of it with them wherever they go.

    August 15, 2014