American Consumers Newsletter
by Cheryl Russell, Editorial Director, New Strategist Press
Median Net Worth: $97,300 in 2016
IN THIS ISSUE:
1. Hot Trends:
WHO WE ARE: ASIANS
WHO WE ARE: BLACKS
WHO WE ARE: HISPANICS
To see Cheryl Russell’s Demo Memo blog, click here.
1. Hot Trends
Median Net Worth: $97,300 in 2016
After years of decline, household wealth is growing again, according to the triennial Survey of Consumer Finances. Median household net worth rose to $97,300 in 2016, or 16 percent higher than the $83,700 of 2013, after adjusting for inflation. Net worth is still 30 percent below the 2007 peak…
Median household net worth, 2007 to 2016 (in 2016 dollars)
Behind the rise in net worth are modest increases in the value of household assets. The median value of financial assets ($23,500) grew 7 percent between 2013 and 2016, after adjusting for inflation, but was still 30 percent below the 2007 level. The median value of nonfinancial assets ($158,900) climbed 4 percent during those years, but was still 23 percent below the 2007 peak. Meanwhile, median household debt ($59,800) was 4 percent lower in 2016 than in 2013 and a substantial 23 percent lower than in 2007.
How Does 2016 Net Worth Compare?
Median household net worth climbed to $97,300 in 2016, reports the triennial Federal Reserve Board’s Survey of Consumer Finances. The 2016 figure was 16 percent higher than in 2013, after adjusting for inflation, but fully 30 percent below net worth in 2007.
But comparing today’s net worth with 2007 is perhaps a stretch because the 2007 figure was inflated by the housing bubble. So forget about 2007. Let’s compare today’s median household net worth with earlier years beginning with 1989, after adjusting for inflation…
$97,300 net worth of 2016 was higher than:
$97,300 net worth of 2016 was lower than:
The fact that net worth in 2016 was lower than in the years 1998 to 2004 is troubling. Net worth rises with age and should be at or near an all-time high today because of the aging of the baby-boom generation. Instead, net worth is well below the levels reached when the demographics were far less favorable.
Explaining the Black-White Wealth Gap
The median net worth of non-Hispanic White households was 9.7 times the net worth of Black households in 2016–$171,000 versus $17,600, according to the Federal Reserve Board’s triennial Survey of Consumer Finances. The wealth gap is larger today than it was in the early 2000s, when the average non-Hispanic White household had “only” 6 to 7 times the wealth of the average Black household.
What’s behind the growing wealth gap? Since non-Hispanic White and Black households are equally likely to be in debt (77.5 and 77.1 percent, respectively) and since non-Hispanic Whites owe more (a median of $74,100) than Blacks ($31,100), the wealth gap is not about debt.
Gig workers don’t earn as much as full-time employees, according to a Prudential study, which defines gig workers as those who work for themselves and provide a service or labor. On average gig workers earn $36,500 a year versus the $62,700 earned by full-time employees.
That’s not the only drawback to gig work. There’s also the lack of employer-sponsored benefits such as health insurance and retirement plans. That may be why only 44 percent of gig workers say they are satisfied with their work situation versus 55 percent of full-time employees. But there are differences in attitudes by age of gig worker. Most Millennial (aged 18 to 34) and Boomer (aged 56-plus) gig workers are satisfied with their work–67 and 75 percent, respectively. Many Millennial gig workers say they are using their gig status to move forward on their long-term aspirations. Many Boomer gig workers say they are using it to better prepare for retirement or to supplement their retirement income.
Gen Xers (aged 36 to 55) are the least satisfied with their gig work (45 percent). Most Gen Xers say it’s just a way to pay the bills. They are more interested than younger or older gig workers in switching to traditional work and most likely to say they are struggling financially.
When Americans are asked whether they would ride in a driverless vehicle if given the chance, the naysayers outnumber the yaysayers. The 56 percent majority of Americans aged 18 or older would say no to riding in a driverless vehicle, according to a Pew Research Center survey, and 44 percent would say yes. Here are the not-so-surprising demographics of those who would say yes…
Percent who would want to ride in a driverless vehicle
Under age 50: 51%
Aged 50-plus: 35%
College graduate: 56%
Some college: 44%
High school or less: 33%
Why are so many people hesitant to ride in a driverless vehicle? The single biggest reason, cited by 42 percent according to Pew, is lack of trust in technology/unwillingness to cede control to a machine. Before you wring your hands in despair over America’s Luddite majority, keep in mind that if Pew had been around to survey the public about horseless carriages, the naysayers likely would have been just as numerous and for the same reason.
We might be at the turning point. In 2016, growth in spending on cable/satellite television service came to a halt, according to a Demo Memo analysis of the Bureau of Labor Statistics’ Consumer Expenditure Survey. The average household spent $764 on the service in 2016–the same as in 2015, after adjusting for inflation. This isn’t the first time cable spending has come to a standstill. It stagnated between 2010 and 2011 too, in the aftermath of the Great Recession, then resumed its climb. This time might be different, with spending declines to come.
Evidence of the turning point is in the eroding customer base. The percentage of households that pay for cable/satellite television service has drifted downward since hitting the peak of 74 percent during the average quarter of 2010. A smaller 68 percent of households purchased cable/satellite service during the average quarter of 2016. The drop has been especially steep among younger householders…
Percentage of households spending on cable/satellite service during average quarter of 2016 (and percentage-point change since 2010)
Under age 25: 32% (-17)
Aged 25 to 34: 56% (-12)
Aged 35 to 44: 68% (-7)
Aged 45 to 54: 74% (-3)
Aged 55 to 64: 75% (-3)
Aged 65-plus: 75% (-3)
According to a recent Pew Survey, only about one in four Americans (28 percent) watches television primarily through online streaming. Among people under age 30, however, the 61 percent majority primarily streams.
Grandparents are the second-biggest day care providers in the United States, according to the National Center for Education Statistics. The 2016 Early Childhood Program Participation Survey finds more than 4 million preschoolers being cared for regularly at least once a week by their grandparents.
Of the nation’s 21 million children from ages 0 through 5 and not yet in kindergarten, 13 million (60 percent) are in a regularly scheduled nonparental care arrangement at least once a week. This is who cares for those children…
7.6 million are in center-based care (59%)
4.1 million are cared for by a grandparent (32%)
2.8 million are cared for by nonrelatives (22%)
1.1 million are cared for by other relatives (9%)
Note: Numbers will add to more than 100 percent because children may have more than one type of regularly scheduled nonparental care arrangement.
Most college students take out loans to pay for their education, and many are still paying them back decades later, according to a study by the National Center for Education Statistics. Among first-time beginning postsecondary students who began school in 1995-96, the 55 percent majority took out federal education loans. Among those who began school in 2003-04, a larger 63 percent took out loans.
Those loans never die, apparently. The 1995-96 students still owed 70 percent of the amount of their education loans 12 years later. The 2003-04 students still owed an even larger 78 percent 12 years later. After 20 years (!) the 1994-95 students still owed 22 percent of their education loan amount.
The difficulty in paying back student loans explains why the share of American households with education debt has reached dizzying heights. According to the Federal Reserve Board’s Survey of Consumer Finances, nearly half of householders under age 35 had education loans in 2016, as did one-third of householders aged 35 to 44, one-fourth of householders aged 45 to 54, and one-eighth of householders aged 55 to 64…
Percent of households with education loans in 2016 (and 2001)
Under age 35: 44.8% (26.1%)
Aged 35 to 44: 34.4% (12.5%)
Aged 45 to 54: 23.8% (11.0%)
Aged 55 to 64: 12.9% (5.2%)
First-generation college students face an uphill battle. They are far less likely than their peers with college-educated parents to earn a bachelor’s degree, according to the National Center for Education Statistics’ Education Longitudinal Study of 2002, which is tracking a nationally representative sample of 2002 high school sophomores.
Among first-generation students (defined as those whose parents have no postsecondary education experience) who enrolled in college, only 23 percent had earned at least a bachelor’s degree by 2012–a decade after their sophomore year in high school. Among continuing-generation students (defined as those whose parents have a bachelor’s degree), fully 55 percent had earned at least a bachelor’s degree by 2012.
Fully 47 percent of first-generation students who enrolled in college had no degree or certificate to show for it a decade later. Among continuing-generation students, a smaller 30 percent left school empty-handed. What caused so many first-generation students to drop out before receiving any credentials? The single biggest factor, cited by 54 percent, was affordability–they couldn’t afford to continue in school. Among continuing-generation students, the single biggest reason for dropping out, cited by 49 percent, was a desire to work and make money.
Yet another study has found a widening health gap between rural and urban areas. In an analysis of suicide rates by urban status over the past decade, the CDC finds much higher suicide rates in nonmetropolitan and rural areas than in metropolitan areas. To make matters worse, suicide rates are rising faster in the hinterlands than in the rest of the U.S.
In 2013-15, the suicide rate in nonmetro/rural areas (19.74 suicides per 100,000 population aged 10 or older) was 18 percent higher than the rate in medium/small metro areas (16.77), 32 percent higher than the national average (14.98), and 55 percent higher than the rate in large metropolitan areas (12.72). Since 2001-03, the suicide rate has climbed across the nation, but nowhere more so than in nonmetropolitan/rural areas. Between 2001-03 and 2013-15, the suicide rate climbed 14 percent in the largest metros, 19 percent nationally, 25 percent in medium/small metro areas, and 27 percent in nonmetro/rural areas.
The pattern in the suicide rate is the same for both males and females, in every age group, and for every race and Hispanic origin group except Blacks–whose relatively low suicide rate has not increased much and is highest in medium/small metros.
Suicide rates are “consistently higher in rural communities,” concludes the CDC. “Findings from this study underscore the need to identify protective factors as part of comprehensive suicide prevention efforts, particularly in rural areas.”
Among typical working households with a 401(k)/IRA, the median balance in their plan(s) as they approach retirement is $135,000, according to the Center for Retirement Research’s analysis of the Federal Reserve Board’s 2016 Survey of Consumer Finances. This is not enough to provide much financial support in retirement and is well below what they should have saved over the years, according to Center for Retirement Research calculations.
The CRR’s calculations assume an individual has median earnings and contributes 6 percent of his/her salary to a 401(k)/IRA from age 25 in 1981 to age 60 in 2016, with a 50 percent employer match, a 50/50 stock/bond portfolio, and actual stock market returns over the time period. The accumulated total would be $364,000 in 2016. But after subtracting fees and the average leakage (cashing out) rate, retirement savings falls to $228,000. That’s still a lot more than the actual amount ($135,000) in the 401(k)/IRA accounts of older households. What accounts for the gap? Failure to contribute, say the researchers.
What is the risk of developing dementia among healthy 70-year-olds? A study published in Demography, determined the probability using data from the nationally representative and longitudinal Aging, Demographics, and Memory Study–a subsample of the Health and Retirement Study. Among 70-year-olds born in 1920, men had a 27 percent chance of developing dementia before death. Among their female counterparts, the probability was an even higher 35 percent.
But there’s more. The probability of developing dementia is increasing as mortality rates at older ages decline, allowing more time for dementia to develop. In the 1940 birth cohort, men aged 70 had a 31 percent chance of developing dementia before death, and women 37 percent. For this cohort, the average 70-year-old man could expect to live 1.1 years with dementia, and the average woman 2.0 years.
“These estimates imply a larger need for individuals and families to plan for a life stage with dementia,” concludes the study.
BET YOU DIDN’T KNOW
Percent who spend a social evening with friends at least once a week, by generation…
The 5th edition of Demographics of the U.S. focuses tightly on what has happened since the year 2000. Demographics of the U.S. collects, in one place, the broad range of demographic and socioeconomic trends as we veered off the path of prosperity, and it details where we’ve been ever since. This is a reference tool for those who want perspective on the many ongoing changes in American life–a perspective critical for understanding the future. It includes single-year data on many topics and highlights the most important trends of the 21st century.Demographics of the U.S. explains the increasingly complex, often confusing, and rapidly changing nation we live in today. It makes sense of the recent past and shines a light on our future. The reference is divided into 11 chapters, organized alphabetically: Attitudes, Education, Housing, Income, Labor Force, Living Arrangements, Population, Spending, Time Use, and Wealth.
Click here for more information about the book, including a Look Inside and a List of Trends examined.
Hardcover: $143.00 (978-1-937737-51-1) 585 pages
Paper: $108.95 (978-1-937737-52-8)
PDF with Excel (single user): $108.95 (978-1-937737-53-5)
Multi-user site license: $330.00
Looking for customers? Repositioning your products? Americans are spending again, but only those who are on top of the trends will know who’s spending and what they’re buying. The new 21st edition of the best-selling Household Spending: Who Spends How Much on What reveals who spends and the products and services they buy. Included in the 21st edition is a look at the spending recovery of 2014 as well as the long decline from the peak-spending year of 2006 to the post-Great Recession low of 2013.
Based on unpublished data collected by the Bureau of Labor Statistics’ 2014 Consumer Expenditure Survey, Household Spending examines how much American households spend on hundreds of products and services by the demographics that count: age, income, household type, region of residence, race and Hispanic origin, and educational attainment.
Hardcover: $149.00 (978-1-940308-95-1) 613 pages
Paper: $114.95 (978-1-940308-96-8)
PDF with Excel (single user): $114.95 (978-1-940308-98-2)
PDF with Excel (single user): $103.95 (978-1-937737-29-0)
PDF with Excel (single user): $103.95 (978-1-937737-32-0)
PDF with Excel (single user): $103.95 (978-1-937737-36-8)