MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT
A recent study by the for-profit website GOBankingRates.com found that just under 50 percent of Americans have no savings socked away. Worse yet, another 13 percent in the US have savings that total under $1000, and 9 percent have just a "minimum [savings] account" balance requirement. Minimum balance requirements vary, but GOBankingRates cites ranges of $500 - $1500.
If you add these three figures together, a dismaying number of Americans - approximately 70 percent - have either no savings or less than around $1500 set aside.
Commenting on the survey, blogger Jonathan Turley cuts to the chase:
The economic situation in this country is far worse than most people appreciate. We live in economically stratified areas where there is little interaction between distant economic classes. These reports are a startling wake up call for policy makers. The goal of everyone having a few months of cushion for bad times is clearly not occurring - leaving at least half or more of the population on the razor’s edge of poverty.
Another analysis, conducted by America Saves, is more optimistic, but the America Saves survey is based on the desire to save, not the reality of whether or not an individual has the financial ability to set aside money for the future.
America Saves admits that the wealthy are primarily the ones socking away money:
The extent to which various factors including perception of one’s own financial condition and that of the whole economy, as well as one’s actual income and ability to save, affect the [Personal Savings Interest survey] PSI numbers is unclear. However, the PSI surveys clearly show that income is critically important: In general, the higher one’s income, the higher one’s savings interest, effort, and effectiveness.
A spokesman for the Consumer Federation of America, which oversees America Saves, states the obvious: "Our surveys are consistent with other research showing that those with low incomes are more likely to struggle financially in the present, and be less likely to focus on saving for the future, than are those with high incomes."
It is simply basic math that if you are living from paycheck to paycheck - and often in debt - you literally have no money to set aside.
Moreover, the wealthy - many of whom are even wealthier these days, given the redistribution of income upward in the last few decades - have many options to invest savings in relatively high-yield financial options. Those with small amounts of money in banks or credit unions are losing value every year (adjusted for inflation) because interest rates are virtually zero for those using traditional savings accounts.
According to the Bank of America website, for example, what the bank categorizes as its "regular savings account" earns 0.01 percent interest - or basically one cent on a thousand dollars in savings per year. According to The US Inflation Calculator website, "The latest inflation rate for the United States is 0.2% through the 12 months ended August 2015 as published by the US government on September 16, 2015." Small savings accounts - for those who can spare any money to have them - decrease in purchasing power every year because the banks pay interest that is less than the rate of inflation.
As dismaying as it is that people with small savings accounts are effectively losing money annually, the fact that nearly half of the US population has no money to be used in times of emergency is even more distressing. Together, these realities represent a tsunami of economic injustice.
Not to be reposted without permission of Truthout.