Unmarried Women and the Latino Middle Class Struggle Most with Emergency Expenses

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Algernon Austin
Algernon Austin Dr. Algernon Austin is a Senior Research Fellow at the Center for Global Policy Solutions. Previously, he directed the Economic Policy Institute’s Program on Race, Ethnicity, and the Economy (PREE). As the first director of PREE, Algernon built the program over six years into a nationally-recognized source for expert reports and policy analyses on the economic condition of America’s people of color.

While the official poverty rate is a very useful measure, it misses important dimensions of economic hardship. Earlier this year, an article, “The Secret Shame of Middle-Class Americans,” by Neal Gabler in The Atlantic highlighted the fact that many Americans—including those in the middle class—do not have $400 on hand to cover an emergency expense. But the article did not provide a close look by demographic groups. The latest data from the Federal Reserve shows significant group differences.

Unmarried women have more difficulty paying for a $400 emergency expense than unmarried men, as shown in figure A. Only 34 percent of unmarried women living with a partner could find $400, but 59 percent of men living with a partner could—a difference of 25 percentage points. Just 42 percent of widowed women could meet this expense compared with 66 percent of widowers—a difference of 24 percentage points. These are the biggest disparities for unmarried women.

Never-married women and divorced or separated women also have disparities with men, but much smaller ones. Forty-one percent of never married women could pay for the $400 expense in comparison with 46 percent of never married men. The rate for divorced or separated women is also low—38 percent—but not much lower than for divorced or separated men—42 percent. These findings suggest that men who are stably married (i.e., married men and widowers) have the greatest economic security.

Figure A

Among middle-class respondents, Hispanics with family incomes of $40,000 to $100,000 a year have the greatest difficulty dealing with a $400 emergency expense. Only 46 percent of middle-class Hispanics report that they could completely pay for the expense in cash or its equivalent, as shown in figure B. The rate is 53 percent for middle-class African Americans and 66 percent for middle-class Whites.

Figure B

As Gabler pointed out, it is surprising that so many middle-class Americans would struggle with a $400 expense. As one might expect, finding $400 for an emergency expense is hardest for the poor. Among the low income, those earning less than $40,000, Blacks have the greatest difficulty meeting the emergency expense. Only 20 percent of low-income Blacks have $400 on hand. For Latinos, it is 27 percent and for Whites, 40 percent.

A significant proportion of rich individuals report that they too would not be able to find $400 in an emergency. For rich Latinos and Blacks, those earning more than $100,000, only about two-thirds could immediately pay for the expense. Eighty-three percent of rich Whites have the cash on hand.

It is surprising that so many Americans—including those whose family incomes would classify them as middle class or even as rich—would have difficulty paying off a $400 emergency expense. This startling fact has received a great deal of attention.

On the other hand, the data on meeting a $400 emergency expense is also all too familiar. We again see common, persistent inequalities in American life. Women have worse economic circumstances than men. Day-to-day expenses are a greater challenge for the poor than for the rich. People of color have fewer financial resources than Whites. (See the report “Beyond Broke: Why Closing the Racial Wealth Gap Is a Priority for National Economic Security” for a more general look at liquid wealth by race.) These are deep structural inequalities in American society that we continue to need to address.

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