PAnews.com, Port Arthur, Texas

News

March 25, 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
News
  • screenshot facebook.jpg Facebook vies with Google to Apple for mobile developers

    Facebook is pushing to change a perception that it's not a tool for developers this week at the F8 developer conference in San Francisco, the company's first major event for app makers since 2011.

    April 29, 2014 1 Photo

  • treadmill-very-fast.jpg Tax deduction for a gym membership?

    April marks another tax season when millions of Americans will deduct expenses related to home ownership, children and education from their annual tax bill. These deductions exist because of their perceived value to society; they encourage behaviors that keep the wheels of the economy turning. So why shouldn't the tax code be revised to reward preventive health?

    April 16, 2014 1 Photo

  • Jamaal Charles' Football Camp

    April 15, 2014

  • Search teams will send unmanned sub to look for missing Malaysian airliner

    Teams searching for a missing Malaysian airliner are planning for the first time to send an unmanned submarine into the depths of the Indian Ocean to look for wreckage, an Australian official leading the multi-nation search said Monday.

    April 15, 2014

  • Teens trading naked selfies for mugshots

    Will teenagers ever learn? You think yours will. Maybe so. But it's likely that was also the hope of the parents of children who were so shamed by nude photos of themselves that went south - how else can they go - that they killed themselves.

    April 11, 2014

  • Boston doctors can now prescribe you a bike

    The City of Boston this week is rolling out a new program that's whimsically known as "Prescribe-a-Bike." Part medicine, part welfare, the initiative allows doctors at Boston Medical Center to write "prescriptions" for low-income patients to get yearlong memberships to Hubway, the city's bike-share system, for only $5.

    April 11, 2014

  • Screen Shot 2014-04-08 at 2.16.35 PM.png Are Americans smart to stop drinking diet sodas?

    Recent data from Beverage Digest suggest many are cutting back on diet sodas. Consumption of diet sodas fell more than that of sugary sodas in 2013. This raises two questions: Why is total consumption declining, and is drinking diet soda harmful to health?

    April 9, 2014 1 Photo

  • Screen Shot 2014-04-08 at 10.43.57 AM.png VIDEO: Amazing dance moves at NCAA title game

    Eye-catching action wasn't confined to the court at AT&T Stadium Monday night during the NCAA Championship game between UConn and Kentucky. This pair -- apparently a father and son -- delighted the crowd during a timeout with some synchronized dance moves.

    April 9, 2014 1 Photo

  • VIDEO: White House may ban selfies

    The White House wasn't too pleased after Red Sox player David Ortiz snapped a selfie with President Obama that was later used promotionally by Samsung.

    April 9, 2014

  • Investing more money in tornado research would be a disaster

    This week, the U.S. House of Representatives passed a bill that would require National Oceanic and Atmospheric Administration funding to focus on improving forecasts of "high impact weather events" like tornadoes and hurricanes "for the protection of life and property and the enhancement of the national economy."

    April 7, 2014