Today marks day 25 of the partial federal government shutdown, the longest shutdown of the government in recorded history. It is a true statement that the shutdown is not only remarkable for its length but also because it has been completely avoidable. 800,000 federal employees and contractors do not have their pay, and the money they would normally spend is not rippling through the economy effecting many more. It is yet another example of how our elected public servants consistently fail to perform their duties to the standard that would be considered acceptable in the private sector.
As bad as the statistic of 25 days of government shutdown is, there is a far more disturbing statistic that I think should dominate the news cycle more than this current political topic. 78 percent is the number of Americans that live paycheck to paycheck according to a CareerBuilder study from 2017. This means they have little to no savings or access to substantive capital should an emergency occur. When one thinks of how advanced the United States is for almost all measures, it is shocking that missing one paycheck for over three-quarters of our population could cause incredible stress and potentially devastating effects such as not paying rent, an emergency medical bill or even food.
We as a society are aware of the amazing statistic that the vast majority of Americans have no effective savings, yet we have become immune to it, and life goes on for most of us. We simply don’t talk about it often enough, until tragedy strikes, or unforeseen events like the shutdown. Yet most in the media, politics, and business are treating the shutdown like it’s the cause of strife of these 800,000. In reality, it is not the real cause of harm. Lack of budgeting, planning and education is the true problem for these families. Misplacing the blame is not new. People have been blaming the fire, the hurricane, the flood for financial emergencies for a very long time. Reporters state “Americans do not have enough money for a $400 emergency payment” like it is some kind of condition foisted upon them, and quickly opine on the problems the politician, the natural disaster or federal agency seemingly created.
The real problem is that most Americans either do not take the advice that’s given to them, or don’t get the right advice in the first place. Most live beyond their means, buy stuff they do not need, go out to restaurants far too often, and spend what they should otherwise be saving for an emergency. To be fair there are those that regardless of how much budgeting they do, and great advice they get will be one paycheck away from financial ruin. However, that group is small in number. Most people lease a car that’s too expensive, take too many vacations, buy the sneakers and new iphones at the expense of saving.
So what is the solution? People need advice, and all constituencies of business, government, even clergy need to beat the drum for people to get their financial house in order. New Jersey just took a good step with making financial literacy mandatory, but many agree its just a tepid step. Society should be harping more on basic financial education, and less on periodic and inevitable natural and other disasters like the shutdown. A fire, flood or bad politics cannot be controlled, but basic financial behavior can, and should be in this country and this day and age.