| There is plenty of data beyond the $400 response on the Fed survey to support the argument that income inequality has hurt the American worker. But even the $400 emergency expense story is more complicated that you present it to be. From the Fed survey results: -----
Question EF3. Suppose that you have an emergency expense that costs $400. Based on your current financial situation, how would you pay for this expense? If you would use more than one method to cover this expense, please select all that apply. Put it on my credit card and pay it off in full at
the next statement 33 Put it on my credit card and pay it off over time 16
With the money currently in my checking/savings account
or with cash 45 Using money from a bank loan or line of credit 3 By borrowing from a friend or family member 10 Using a payday loan, deposit advance, or overdraft 2
By selling something 6 I wouldn't be able to pay for the expense right now 12 Other (please specify) 0 Refused 2 -------------- Note that the survey instructions ask the respondent to "select all that apply", hence the numbers don't add up to 100%. The total percentage of people who choses some combination of responses that don't involve paying with cash or an immediately paid-off credit card is up to 49%, perhpas somewhat less depending on the degree of overlap between the buckets. That's a very large percentage considering what small amount $400 is. Even if there were a lot of overlap and the percentage were half, 24.5%, it would still be staggering. And regarding Question EF5B, per the answers to Question EF3, many of those 85% of people who said would pay their bills despite the emergency expense, would be able do so only because they went into some form of debt to pay the emergency expense. |