Middle class families are supposed to have achieved some degree of financial stability, but in America, most are still likely to be left with few options when faced with an emergency. According to the recent Atlantic article, The Secret Shame of Middle-Class Americans, half of respondents a recent Fed survey said that to come up with $400 for an emergency they would have to borrow or sell something, or they would not be able to come up with the money at all. Like the award-winning author of the article referenced above, Neal Gabler, you can be successful in your career, appear reasonably prosperous, and be down to your last $5 in the days before payday. “’If anyone says he’s sailing through, he’s lying.’ That might not be entirely true, but then again, it might not be too far off.”
And it’s not just an issue of liquidity—people not having enough cash in their checking or savings accounts. Edward Wolff, an economist at New York University found that there isn’t much net worth to draw on. Net worth has declined steeply in the past generation—down 85.3% from 1983 to 2013 for the lowest income households, down 63.5% for lower-middle class households, and down 25.8% for the middle and upper-middle class households.
Research funded by the Russell Sage Foundation shows that the inflation-adjusted median net worth of the household was $87,992 in 2003. By 2013, it had declined to $54,500—a massive 38% drop. Though the recession and bursting of the housing bubble in 2008 may have contributed, the decline for the lowest earners began as early as the mid-1980s.
Emergencies and accidents have the potential to combine the loss of income, medical bills, mortgage and miscellaneous costs to rock a family to the core and chip away even further at net worth. If you’ve been in an accident, when you are going through a financial crisis, the long wait for an insurance provider to settle fairly can be impossible to weather alone, even for those who appear successful.
Having financial options like legal funding empowers middle class families and gives them an option. Financial insecurity may not be talked about as much as it should be, but it’s affecting more people than ever. Middle class families need to be empowered, not shamed. They need lifelines. Having $5 left before payday is a reality—and a reality that’s being experienced regularly.