Facing unemployment, out-of-pocket medical bills, and a fast-disappearing ladder out of poverty, low- and middle-income Americans are using credit cards to meet basic needs like rent, groceries, and utilities.
Since 2008, working families have done everything they can to get by – changing spending habits, paying down debt, taking on 2nd (or 3rd jobs), digging into savings and retirement funds, and even cutting back on medical care – but they’re still falling behind.
According to a new report released by Demos(opens in new tab), the average credit card debt among Americans who carried a balance on their credit card for at least three months is $7,145, largely driven by unemployment and skyrocketing out of pocket medical bills.
The “plastic safety net” is the final refuge for increasing numbers of families who have seen prices for food, gas and health care increase while wages haven’t kept up(opens in new tab). Economic productivity is up overall(opens in new tab), but median family net worth has dropped(opens in new tab) to levels not seen since the early 90s. Corporate profits have never been higher(opens in new tab) as budgets for state and local public services have been slashed across the country.
But there is a way out. It starts by building economic security from the bottom up – through a stronger minimum wage(opens in new tab), guaranteed health(opens in new tab) and retirement(opens in new tab) benefits, and wide access to affordable education and retraining(opens in new tab).
Sound public policies that support economic opportunity for all – instead of tax breaks for the 1% or wealthy corporations – will allow American families to throw away the plastic crutch, and stand on sound financial footing.
~ By Ashwin Warrior, EOI Intern