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What Is Driving America's Financial Woes?
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In The Atlantic’s May issue, Neal Gabler explores his own financial troubles for clues as to why so many Americans are struggling to remain financially solvent. We reached out to some of the leading scholars of the American middle class to ask what they make of Gabler’s analysis, and their responses are compiled here. (We also have a popular ongoing series of readers telling their own stories of financial woe.)

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The Ups and Downs of Americans' Finances

In The Atlantic’s May issue, Neal Gabler explores his own financial troubles for clues as to why so many Americans are struggling to remain financially solvent.

When Rachel Schneider, the senior vice president at the Center for Financial Services Innovation, read the cover story, she thought that one piece of the story was missing: volatility. She explains:

Neal Gabler’s beautiful and brave exploration of his financial life captures many of the reasons that millions of Americans live precarious financial lives: stagnating wages, the rising costs of a middle class life, and an overreliance on debt to fund the gap. But, there is another, more hidden cause of financial insecurity: volatility. In the U.S. Financial Diaries project, Jonathan Morduch and I found that, on average, households in our sample experienced more than 5 months a year in which their income was 25 percent more or 25 percent less than the average. The same was true for spending.

We reached out to some of the leading scholars of the American middle class to ask what they make of Neal Gabler’s analysis in our new cover story on financial insecurity. Our first contributor is Edward Wolff, an NYU professor of economics, who points to wage stagnation as the central factor:

The ultimate culprit is wage stagnation, occurring now for over 40 years (average real wages peaked in 1973). This translates into income stagnation. For a while (until about 1990 or so) families compensated for stagnant wages by the increased participation of wives in the labor force. Once this opportunity was exhausted real incomes also stagnated. Indeed, according to Census data, median family income in 2013 was less than it was in 1997.