One troubling indicator is the rising ranks of “underwater nation,” households with zero or negative wealth. These families have no savings reserves — they owe more than they own.
The percentage of U.S. households that are “underwater” increased from 15.5 percent in 1983 to 21.2 percent today. This experience cuts across race, but is more frequent in black and Latino households — including over 32 percent of Latino families and 37 percent of black families.
The next 20 percent of all U.S. households have positive net worth, but not much. Four in ten families couldn’t come up with $400 cash if they needed it for an emergency, according to the Federal Reserve.
Black families are especially vulnerable to economic downturns or delayed paychecks.
Since 1983, the median wealth for a U.S. family has gone down 3 percent, adjusting for inflation. Over the same period, the median wealth for a black family declined a devastating 50 percent, according to Dreams Deferred, a new study I co-authored for the Institute for Policy Studies. (Meanwhile, the number of households with $10 million or more skyrocketed by 856 percent.)
Unemployment may be low, but it masks a precarious and insecure population. At the root of the problem is growing inequality.
Wages for half the population have been stagnant for over four decades, while expenses such as health care, housing, and other basic necessities have risen. Many families still haven’t fully recovered from the economic meltdown a decade ago.
After going up steadily since World War II, homeownership rates have been falling since 2004. And as with income, homeownership is also heavily skewed towards white families. While the national homeownership rate has virtually remained unchanged between 1983 and 2016, 72 percent of white families owned their home, compared to just 44 percent of black families.
Latino homeownership increased by nearly 40 percent over that time, but it still remains far below the rate for whites, at just 45 percent.
If the partial government shutdown continues for “months or years,” as President Trump threatens, there will be even more stress and hardship on our nation’s most vulnerable families. The bigger challenge is how to ensure our economy enables more people to save and build wealth.