Today, 44% of all U.S. workers are low-wage, earning a median hourly wage of $10.22, with Black and Latinx workers most likely to earn low-wages. As many as 60% experience unpredictable hourly schedules, leading to volatile incomes.
To cover the cost of household essentials, low-income workers are often forced to borrow from credit cards, their future paycheck, their retirement account or from family. Many turn to expensive and predatory short-term services—nearly 12 million Americans take out payday loans each year. As of early 2021, U.S. households carry a cumulative $14.64 trillion in debt and 29% of them have debt in default or collections.
For workers, financial insecurity has real impacts on quality of life. Carrying overwhelming debt can inhibit their economic mobility, educational attainment, psychological well-being, and even physical safety by preventing access to secure housing.
We, as a society, are faced with an opportunity to fundamentally re-think and re-shape how workplaces and financial services operate so that they prioritize worker financial security and debt reduction. There is a need for effective, scalable solutions that get workers out of debt in the short term, guided by the realities of what got them into debt in the first place. Neighborhood Trust is prepared to take on that challenge.