Will 2017 Be Better than 2016?Blake Skadron
2016 was a bad year on a number of fronts. In particular, a lot of people are having trouble financially. The cost of everything is going up, disposable income is going down, debt is overwhelming, and it seems a lot of Americans simply don’t have enough money. Are things going to turn around in 2017? Given the current state of things, it seems unlikely.
The Income Problem
It’s an old adage that the rich get richer, while the poor get poorer. However, that simple statement doesn’t quite capture just how big the difference is getting to be. According to an annual survey by the Federal Reserve, the gap between those in the 50th percentile of wage earners (i.e. those in the middle) and those in the 95th percentile (those at the top) has increased dramatically in this country. Wages for the rich have gone up by 51.4% since 1973, while for the average worker they’ve gone down by 4.6%.
Moreover, an increasing number of people over the last couple of years, particularly among those who make $40,000 per year or less, are finding their income only barely covers their expenses, if it does at all. Those who never went to college are finding it even harder to make ends meet and are seeing their financial situation deteriorate.
Middle skill jobs are also declining, not just in this country, but all around the world. Since 1990, the number of positions available in the administrative, white collar clerical, and sales sectors has gone down. Without a four-year degree, it’s becoming much more difficult to find employment that allows you to make ends meet.
The Debt vs. Expense Conundrum
Decreasing and stagnating wages are only half the problem. Many of these people who are barely able to make ends meet at their current income level also have to deal with obstacles like rising healthcare costs. Even with Obamacare in place, deductibles have gone up by an average of 49%. For more than half of workers, the money they pay out of pocket is over $1,000. Because of this, an increasing number of people are neglecting to go to the doctor or dentist regularly, and even forgoing prescription medications, as they simply can’t afford it anymore.
In order to cover these increasing expenses, as well as to pay for the college education that’s becoming increasingly indispensable if you want a decent-paying job, many Americans are going into debt. By borrowing the money, they’re able to cover their immediate costs to take care of what they need.
Of course, then the money needs to be repaid. That too is becoming a problem for a lot of people. Nearly 1 in 5 households currently experiencing financial stress believe that they’re likely to default on a loan sometime in the next year. There were a number of reasons given for this, including job loss and reduced income. For many Americans, medical expenses were also an issue.
This is just a small taste of what the financial state of things has been like in this country over the past year. Will things get better in 2017? It’s possible, but given the current trends, it’s wise to proceed with caution.