Executive Summary
This report describes the responses to the fifth annual Survey of Household Economics and
Decisionmaking (SHED). The survey is designed to enhance our understanding of how adults in the United States are faring financially.1 The findings show many signs of growth and improvement
along with remaining pockets of distress and fragility. They also reveal new insights into how households approach their financial lives and decisions.
In many ways, the latest findings underscore the overall economic recovery and expansion over the five years of the survey. Not surprisingly, the improvement in individuals' own assessment of their finances largely parallels other measures, such as the falling national unemployment rate. And in 2017, more people say they are managing okay financially and would be able to handle a small, unexpected expense than in previous years since at least 2013.
The survey also highlights some aspects of subjective well-being and emerging issues that can be missed in long-standing measures of objective outcomes. Our understanding of full employment and how to measure it is a key example. Many workers in the survey have a full-time job with regular hours, pay raises, and good benefits. Others who are also employed describe a very different experience: fewer hours than they want to work, only a few days' notice on work schedules, and little in benefits or pay increases. Still others supplement their income through odd jobs and gig work.
Additionally, alongside the improvements in the years following the Great Recession, several areas of concern remain. Disparities in economic well-being and outcomes are common among minorities, those with less education, and those living in lower-income neighborhoods. Small emergency expenses would still challenge a troubling number of households, and the opioid crisis appears to have touched many families. Individuals also point to financial struggles across a lifetime--from repaying college loans to managing retirement savings.
Altogether, the survey findings provide a snapshot of people's financial lives in late 2017. It is a story of overall improvement consistent with the national economic expansion. It is also a complex story of variation among different groups in the country and remaining areas of economic vulnerability.
Economic Well-Being
A large majority of individuals report that financially they are doing okay or living comfortably, and overall economic well-being has improved over the past five years. Even so, notable differences remain across various subpopulations, including those of race, ethnicity, and educational attainment.
- When asked about their finances, 74 percent of adults said they were either doing okay or living comfortably in 2017--over 10 percentage points more than in the first survey in 2013.
- Individuals of all education levels have shared in the improvement over the past five years, though the more educated still report greater well-being than those less educated.
- Over three-fourths of whites were at least doing okay financially in 2017 versus less than two-thirds of blacks and Hispanics.
- Three in five urban residents describe the economy in their local community as good or excellent versus two in five rural residents who offer this positive of an assessment of local conditions.
- In an effort to understand how the opioid crisis may relate to economic well-being, the survey asked questions related to opioids for the first time. About one-fifth of adults (and one-quarter of white adults) personally know someone who has been addicted to opioids. Exposure to opioid addiction was much more common among whites--at all education levels--than minorities. Those who have been exposed to addiction have somewhat less favorable assessments of economic conditions than those who have not been exposed.
Income
Changes in family income from month to month remain a source of financial strain for some individuals. Financial support from family or friends is also common, particularly among young adults.
- Three in 10 adults have family income that varies from month to month, and 1 in 10 adults experienced hardship because of monthly changes in income.
- Nearly 25 percent of young adults under age 30, and 10 percent of all adults, receive some form of financial support from someone living outside their home.
Employment
Most workers are satisfied with the wages and benefits from their current job and are optimistic about their future job opportunities. Even so, challenges, such as irregular job scheduling, remain for some. Three in 10 adults work in the "gig economy," though generally as a supplemental source of income.
- Less than one-fifth of non-retired adults are pessimistic about their future employment opportunities, although pessimism is greater among those looking for work or working part time for economic reasons.
- One-sixth of workers have irregular work schedules imposed by their employer, and one-tenth of workers receive their work schedule less than a week in advance.
- For many, stability of income is valued highly. Three-fifths of workers would prefer a hypothetical job with stable pay over one with varying but somewhat higher pay. Those who work an irregular schedule in their actual job are somewhat more likely to prefer varying pay in the hypothetical choice than those who work a set schedule.
- Three in 10 adults participated in the gig economy in 2017. This is up slightly from 2016 due to an increase in gig activities that are not computer-
or internet-based, such as child care or house cleaning.
Dealing with Unexpected Expenses
While self-reported financial preparedness has improved substantially over the past five years, a sizeable share of adults nonetheless say that they would struggle with a modest unexpected expense.
- Four in 10 adults, if faced with an unexpected expense of $400, would either not be able to cover it or would cover it by selling something or borrowing money. This is an improvement from half of adults in 2013 being ill-prepared for such an expense.
- Over one-fifth of adults are not able to pay all of their current month's bills in full.
- Over one-fourth of adults skipped necessary medical care in 2017 due to being unable to afford the cost.
Banking and Credit
Access to bank accounts expanded further in 2017. However, substantial gaps in banking and credit services exist among minorities and those with low incomes.
- Nearly 95 percent of all adults have a bank or credit union account. However, this varies by race and ethnicity. One in 10 blacks and Hispanics lack a bank account, and an additional 3 in 10 have an account but also utilize alternative financial services, such as money orders and check cashing services.
- One-fourth of blacks are not confident that a
new credit card application for them would be approved--twice the rate among whites.
Housing and Neighborhoods
Satisfaction with one's housing and neighborhood is generally high, although notably less so in lower-income communities. Renters face varying degrees of housing strain, including some who report difficulty getting repairs done or being forced to move due to a threat of eviction.
- While 8 in 10 adults living in middle- and upper-income neighborhoods are satisfied with the overall quality of their community, only 6 in 10 living in low- and moderate-income neighborhoods are satisfied.
- Nearly half of adults age 22 and older currently live within 10 miles of where they lived in high school, but those who have moved farther from home are more likely to be satisfied with the overall quality of their neighborhood.
- Three percent of renters were evicted or moved because of the threat of eviction in the past two years.
Higher Education
Economic well-being rises with education, and most of those holding a postsecondary degree think that attending college paid off. The net benefits of education are less evident among those who started college but did not complete their degree; the same is true among those who attended for-profit institutions.
- Two-thirds of graduates from bachelor's degree programs feel that their educational investment paid off, but less than one-third of those who started but did not complete a degree share this view.
- Just over half of those who attended a for-profit institution say that they would attend a different school if they had a chance to go back and make their college choices again. By comparison, less than one-quarter of those who attended not-for-profit institutions would want to attend a different school.
Student Loans
Over half of college attendees under age 30 took on some debt to pay for their education. Most borrowers are current on their payments or have successfully paid off their loans, although those who failed to complete a degree and those who attended for-profit institutions are more likely to have fallen behind on their payments.
- Among those making payments on their student loans, the typical monthly payment is between $200 and $300 per month.
- Nearly one-fourth of borrowers who went to for-profit schools are behind on their loan payments, versus less than one-tenth of borrowers who went to public or private not-for-profit institutions.
Retirement
Many adults feel behind in their savings for retirement. Even among those who have some savings, people commonly lack financial knowledge and are uncomfortable making investment decisions.
- Less than two-fifths of non-retired adults think that their retirement savings are on track, and one-fourth have no retirement savings or pension whatsoever.
- Three-fifths of non-retirees with self-directed retirement savings accounts, such as a 401(k) or IRA, have little or no comfort in managing their investments.
- On average, people answer fewer than three out of five basic financial literacy questions correctly, with lower scores among those who are less comfortable managing their retirement savings.
References
1. The latest SHED interviewed a sample of over 12,000 individuals--roughly twice the number in prior years--with an online survey in November and December 2017. The anonymized data, as well as a supplement containing the complete SHED questionnaire and responses to responses to all questions in the order asked, are also available at www.federalreserve.gov/consumerscommunities/shed.htm. Return to text