Income is central to economic well-being. The ability to meet current expenses and also save for the future depends on that income being sufficient and reliable. Frequent changes in the level of family income, referred to here as "income volatility," can also be a source of economic hardship.
Level and Source
Family income in this survey is the income from all sources that the individual respondent and his or her spouse or partner received during the previous year. Income is collected in dollar ranges as opposed to exact amounts. Over one-quarter of adults had less than $25,000 of family income during 2017, and nearly two-fifths had less than $40,000 (figure 4).14
Wages and salaries are the most common source of family income; nearly 70 percent of adults and their spouse or partner received wage income during 2017 (table 5).15 Yet, many families also rely on non-wage income sources. Over 3 in 10 received some income from self-employment or gig work.16
Sources of non-wage income vary with age. Among young adults (ages 18 to 29), gig work was the most common source of non-wage income. Among older people, income from gig work is less prevalent, while interest, dividend, and rental income is more common. Additionally, over three-quarters of adults age 60 and older received Social Security or pension income. (The sources of income among retirees are discussed further in the "Retirement" section of this report.) Both the common sources of income and the distribution of income are largely similar to previous surveys.
Table 5. Family income sources (by age)
|Wages or salaries||77||81||84||80||38||68|
|Interest, dividends, or rental income||16||19||26||30||44||29|
|Gig work (occasional work activities or side jobs)||35||27||24||22||15||24|
|Supplemental Security (SSI)||4||3||5||6||5||5|
|Any other income||7||5||6||7||17||9|
Note: Respondents can select multiple answers.
Some families also depend on financial support from, or provide such support to, their family or friends. This support can be sharing a home to save money (as discussed in the "Housing and Neighborhoods" section of this report), as well as assistance from individuals living elsewhere.
Approximately 1 in 10 adults receive some form of financial support from someone living outside of their home. Nearly one-quarter of young adults received such support during 2017 (table 6). Among young adults with incomes under $40,000, over one-third receive some support from outside their home. Conversely, older adults are more likely to providefinancial support to individuals outside their home--peaking at 23 percent of adults in their 50s.
Table 6. Receiving and providing financial support outside of the home (by age)
|Age||Receive support||Provide support|
This support is mainly between parents and adult children. Parents were among the providers for just over 6 in 10 support recipients, including 8 in 10 of those under age 30. Additionally, adult children are support providers for over half of people over age 60 who are receiving some assistance.
Financial support from family and friends takes many forms. Over half of those receiving financial support received money for general expenses, and about one-third received help with their rent or mortgage (figure 5). In addition, almost one-quarter of all recipients, and over one-third of recipients under age 30, received help with educational expenses or student loan payments.
The level of income during the year as a whole may mask substantial changes in income from month to month. The survey considers how mismatches between the timing of income and expenses lead to financial challenges.
Income in 2017 was roughly the same from month to month for 7 in 10 adults, varied occasionally for 2 in 10, and varied quite often for slightly less than 1 in 10.
Some families can manage frequent changes in income easily, but for others this may cause financial hardship. In fact, one-third of those with varying income, or 10 percent of all adults, say they struggled to pay their bills at least once in the past year due to varying income.
Those with less access to credit are much more likely to report financial hardship due to income volatility. For example, one-fourth of adults who are not confident in their ability to get approved for a credit card have experienced hardship from income volatility in the past year, versus only 6 percent of those who are confident in their credit availability (table 7). (Access to credit is discussed further in the "Banking and Credit" section of this report.)
Individuals may be willing to accept more-volatile income if their income is higher on average as a result. Tolerance for income variability may also differ across individuals. In a hypothetical scenario, the survey asks workers to choose between two new jobs: the first pays their current annual income in stable monthly amounts, and the second pays more for the year but the monthly income varies.17 The increase in the second job's annual income is randomized across "a little" more, "somewhat" more, or "a lot" more.
Table 7. Income volatility and related hardship (by credit confidence)
|Expect credit card application
would be approved
|Stable income||Varying income|
|No hardship||Causes hardship|
Note: "Overall" includes those who don't know if they are confident about credit availability.
Overall, many prefer stable income. Six in 10 workers choose the first job with stable income over the second job with varying income that pays a little or somewhat more annually. Only when the second job pays a lot more does the preference for the stable job fall to 4 in 10 workers. Men and younger workers have a greater tolerance for income volatility and are more willing to accept the variability in exchange for additional income (figure 6 and figure 7).
14. The income distribution in the SHED is largely similar to the 2017 March Current Population Survey, although a higher fraction of adults in the SHED have family incomes between $40,000 and $200,000 and a lower fraction have incomes between $5,000 and $39,999. The higher income may partly reflect the fact that unmarried partners are treated as one family in the SHED, while the Current Population Survey treats them as two separate families. Return to text
15. Since the survey was fielded in November and December of 2017, references to activities in 2017 consider the 12-month period before the survey (typically from November 2016 through November 2017) rather than the precise calendar year. Return to text
16. Gig work in the 2017 survey is asked about as "occasional work activities or side jobs" to be consistent with the phrasing in the employment section of the survey. In the 2015 and 2016 surveys, this was phrased as "freelance work or hobby income." This change may have resulted in the increase in people reporting gig work as an income source in 2017. Return to text
17. Self-employed workers are excluded from this analysis. Return to text