The Not So Secret Reality for Millions of Americans

The Atlantic’s May
cover story, “The Secret Shame of Middle-Class
Americans,” explores how financial insecurity can be felt on every rung of
the income ladder, through the financial struggles of the author, Neil Gabler.

With the admission that he
is among the 47
percent of Americans unable to put their
fingers on $400 in an emergency, Gabler chronicled a series of financial
mistakes and misfortunes that led him to his own financial distress. His story
is meant to highlight that financial turmoil is fairly ubiquitous,
“striking across every demographic divide.”

Gabler’s account is laid
out honestly, showing the shock of how one American family just can’t seem to
live out the American Dream. But his portrayal of his experience as being
broadly shared, and his giving only casual acknowledgment to the truly
exceptional nature of this “ubiquitous” story has generated some
pretty predictable pushback.

For starters, as Dedrick Asante-Muhammad, director of the
Racial Wealth Divide Project at the Corporation for Enterprise Development
(CFED) writes in The Atlantic, the
“distant reality” of the American dream is “not news” to
millions of Americans: people of color and/or low-income people.

Just this past month, the Center for Global Policy
Solutions released a paper and hosted a summit on the racial wealth gap. The oft-cited
statistics of this gap: Asian Americans on
average have 80 percent of the wealth of white Americans. African Americans and
Hispanics, a mere 10 percent.

Gabler’s piece was centered on how many Americans don’t
have even $400 saved. But in an emergency, “many white families could
instead turn to liquid assets, such as stocks or bonds or other savings,” wrote Gillian White of The Atlantic, responding
to Gabler’s piece. Since comparable assets are often unavailable to people of
color, the commonality of Gabler’s story is called into question. Indeed,
Gabler discusses his ability to empty a 401k, which whites are more likely to
hold—note that on average, white families have $100,000
more in liquid retirement savings than
African-American and Hispanic families. He also owns his home, which is located
in the Hamptons; homeownership is more
common among white families, and they’re
more likely to live in areas where their homes will accumulate significant
equity. When people of color do own homes, their mortgages tend to
be much more expensive—even if all other variables besides race are held
equal.

Gabler does briefly mention race and class—before
diverting back to a generalist lens: “Certain groups—African Americans,
Hispanics, lower-income people—have fewer financial resources than others. But
just so the point isn’t lost: Financial impotence is an equal-opportunity
malady.” The problem here is that African Americans, Hispanics, and lower-income
people are not groups to mention just once in an article to give the impression
that race- and class-based nuances have been considered. Especially when all
evidence tells us, in the words of White, “[financial insecurity is] in no
way an equal-opportunity offender.”

Gabler does admit that he
“has it better than many Americans, probably most.” It’s good that
Gabler recognizes this, but—once again—one sentence alone doesn’t begin to
describe how devastatingly true this is.

For many Americans who
have little savings, “just getting by” can be difficult. As research
by the Urban Institute shows, “low-income families who are liquid-asset
poor are twice as likely to report increased hardship, such as food insecurity
or inability to pay bills, compared to similar families with sufficient liquid
assets.” And the solutions available may sometimes make things worse.
While higher-income people may be able to rely on family members, lines of
credit, or other assets during tough times, low-income people often
turn to predatory services like
payday lenders for short-term loans. As it’s well-known,
these lenders often charge exorbitant interest rates upwards of 1000 percent,
trapping families in cycles of debt. This makes it more likely that individuals
will have trouble paying bills and rent, adding housing
instability as another obstacle to financial
security—eviction then becomes a real possibility.

The issue here is not to
say that Gabler’s plight isn’t important—financial distress is certainly
terrible for anyone affected. Financial insecurity does affect all demographics
and races—just not equally.

But we don’t often hear about this.

What Gabler’s story
clearly demonstrates is the surprising extent that financial insecurity climbs
up the income scale. What’s less understood, however, is the extent to which
existing policy responses to building financial security serve households like
his, rather than families throughout the spectrum. It’s a disservice to the
people most impacted by financial insecurity to ignore the ways that public
policy has buffered Gabler’s experience, through tax subsidies for
homeownership, retirement, and others, but ignored theirs. A better policy
approach would address the most ubiquitous need first—that for emergency
savings.

There are myriad stories,
each with a unique plot twist. Not everyone has parents who can share their
wealth. Not everyone has access to a financial advisor. Not everyone has a bank
account. As a response to Gabler’s piece, Helaine
Olen wrote in Slate on how we tend to conflate the stories
of popular writers with financial troubles, who tend to come from more
privileged backgrounds, “with the financial firestorm facing the truly
poverty-struck, not to mention the pressures felt daily by the increasingly
squeezed middle class.”

When constructing policy,
all stories need to be considered—not just those of the ones publishing them.