The large number of people reporting that they are doing at least okay financially mirrors the results in the prior survey, maintaining the significant gains since the survey began in 2013.2 This generally positive assessment of economic well-being is consistent with the continued economic expansion and the low national unemployment rate. Even so, the rate of improvement in well-being was small relative to some previous years, and disparities persist across education, race, and neighborhoods.
Current Financial Situation
Three-quarters of adults in 2018 indicate they are either "living comfortably" (34 percent) or "doing okay" financially (41 percent), similar to the rate in 2017. The rest are either "just getting by" (18 percent) or "finding it difficult to get by" (7 percent). The 1 percentage point increase in the fraction doing at least okay financially in 2018 is not statistically significant but leaves this fraction substantially higher than the 62 percent in 2013.
Despite the positive trend, notable differences in economic well-being remain among education and racial groups. Adults with a bachelor's degree or higher are significantly more likely to be doing at least okay financially (87 percent) than those with a high school degree or less (64 percent). Two-thirds of blacks and Hispanics report that they are doing at least okay financially, compared to nearly 8 in 10 whites. The racial disparities also exist within each level of educational attainment (figure 1).
Economic well-being also differs by income, family structure, and neighborhood (table 1). Fifty-six percent of adults with family income less than $40,000 say they are doing okay financially, versus 94 percent of adults with income greater than $100,000. Married individuals, in general, are more likely to report that they are doing at least okay financially (82 percent) than unmarried individuals (66 percent). Of those with children (under age 18), unmarried parents are much less likely to report a positive financial situation (52 percent) than married parents (78 percent). Finally, people living in low- and moderate-income communities report lower levels of well-being than those living in middle- or upper-income communities.
Table 1. Share of adults at least doing okay financially (by demographic characteristics)
|Characteristic||Percent in 2018||Change since 2017||Change since 2013|
|Less than $40,000||56||1||14|
|Greater than $100,000||94||0||12|
|Middle or upper income||78||1||n/a|
|Low or moderate income 1||65||2||n/a|
|Married, no children||84||1||10|
|Unmarried, no children||68||2||10|
Note: Census tracts were not included in the 2013 SHED so changes since 2013 are not available. Here and in subsequent tables and figures, percents may not sum to 100 due to rounding and question nonresponse.
1. Low- or moderate-income neighborhoods are defined here as those census tracts with a median family income less than 80 percent of the national median income. Return to table
n/a Not applicable.
To learn more about economic well-being, this year's survey also asked individuals to explain "in their own words" how they are managing financially. Text analysis of these responses highlights some of the nuances in how individuals think about their financial situation (box 1).
Box 1. Text Analysis of Self-Assessed Well-Being and Income
Surveys, like the SHED, pair most questions with a small set of possible answers from which respondents choose. In some cases, the survey complements these structured questions with open-ended questions, to which respondents answer in their own words. Open-ended questions can provide different insights into how individuals are faring, and can inform the creation of new structured questions. Because of the range of possible responses, however, the results from open-ended questions are challenging to interpret. This box describes one example of how to analyze such text responses in a rigorous and systematic way.
In this survey, everyone chooses from four pre-set answers ("finding it difficult to get by," "just getting by," "doing okay," and "living comfortably") to describe their financial situation. Then respondents are asked to explain in a sentence or two why they selected their response. To illustrate the uses of text analytics, consider explanations that include "income"—one of the most commonly used words. One in 10 adults who say that they are "doing okay" or "living comfortably" use the word "income" in their open-ended response. Those who are "just getting by" or "finding it difficult to get by" mention "income" twice as often.1
This text analysis uses word pairs—also referred to as bigrams—that include "income" to unpack these open-ended responses.2 Bigrams are pairs of successive words. For example, the text response "my income covers my expenses" is broken into the following bigrams: "my income," "income covers," "covers my," and "my expenses." 3 Not surprisingly, the words individuals use to describe their income differ substantially across the pre-set choices of "finding it difficult to get by" or "living comfortably."
Descriptions of both the level and variability of income differ by self-assessed well-being. Among adults who say they are at least doing okay financially, common words include "adequate," "sufficient," and "exceeds" to describe their income (figure A).
On the other hand, those just getting by or worse use words like "low," "limited," and "barely" (figure B). Both well-being groups use "enough" and "steady" when talking about income, yet nearly every instance in the lower well-being group is preceded by the word "not," "no," or "need."
The sources of income that individuals use to explain economic well-being also differ. Those who are not doing okay financially often mention "social security" and "disability" along with income, suggesting that social safety net programs are an important source of income for many of these respondents. Among those doing okay financially, "social security" is a common phrase, but they often mention it along with other retirement income sources like pensions or investment income. Those doing better financially are also more likely to point to having "two" incomes, such as from a spouse or partner also working, in their household. In contrast, "one" income is more common among those doing worse financially.
The kind of text analysis in this one example can be applied to other open-ended responses across a range of issues. This analysis often confirms what is understood from structured questions, but sometimes suggests nuances or new developments that merit further inquiry.
1. Unlike the rest of the report, this analysis of open-ended text response questions is unweighted. Return to text
3. Bigrams where either the first or the second word does not provide contextual information, such as "the" and "are," are omitted. Return to textReturn to text
Changes in Financial Situation over Time
The average well-being in a handful of broad categories across survey years could mask the degree of change—both positive and negative—within specific families. When asked directly about changes in their finances, adults in 2018 are twice as likely to report that their finances improved over the prior 12 months (31 percent) than worsened (13 percent). The remainder—55 percent of adults—say their finances are about the same as the prior year.
To get a longer perspective than year-to-year changes, individuals also compared their current economic well-being to their parents' at the same age. Looking across a generation, 56 percent of adults say they are better off financially than their parents were (table 2). One-fifth say they are worse off than their parents were. At all levels of education, blacks and Hispanics are more likely than whites to say that they are better off than their parents were. However, in some education groups, minorities are also more likely than whites to say they are worse off than their parents. On net, this measure shows some evidence of narrowing racial disparities across a generation. In addition, having a bachelor's degree or more is generally associated with greater upward economic mobility than having less education.
Table 2. Financial situation compared to parents (by education and race/ethnicity)
|Characteristic||Better off||About the same||Worse off|
|High school degree or less|
|Some college or associate degree|
|Bachelor's degree or more|
Local Economic Conditions
Along with questions about their own economic well-being, people are asked to assess their local economy. Nearly two-thirds of respondents rated local economic conditions as "good" or "excellent" in 2018, with the rest rating conditions as "poor" or "only fair."
The assessments differ widely by demographics and geography (table 3). Whereas 68 percent of whites view their local economic conditions as good or excellent, 47 percent of blacks and 60 percent of Hispanics rate their local economies favorably. Not surprisingly, adults who live in low- and moderate-income neighborhoods are much less likely to report favorable local economic conditions than those in middle- or upper-income neighborhoods. Looking across geography, more than half of adults living in rural areas rate their economy as at least good, compared to two-thirds of those living in urban areas.
Table 3. Self-assessment of the local economy as good or excellent (by select characteristics)
|Middle or upper income||71|
|Low or moderate income||45|
Note: See table 1 for definitions of low- or moderate-income neighborhoods.
Subjective measures of local economic conditions—like these self-assessments—can add to our understanding of individual experience. As one example, consider the 21 percent of adults in 2018 who personally know someone addicted to opioids or prescription painkillers. Some research has argued that economic decline in certain communities has contributed to the opioid epidemic.3 In 2018, those personally exposed to the opioid epidemic are less likely to view the local economy as good or excellent (60 percent) than those not exposed (65 percent). Even after accounting for race, rural or urban status, and neighborhood income, the modest relationship between opioid exposure and self-assessed local economic conditions remains.
2. The survey was fielded from October 11 to November 12, 2018, so references to "during 2018" in the report text are the 12-month period before the survey (typically from October 2017 through October 2018) rather than the precise calendar year. Return to text
3. See Jeff Larrimore et al., "Shedding Light on Our Economic and Financial Lives?" FEDS Notes (Washington: Board of Governors of the Federal Reserve System, May 22, 2018), https://www.federalreserve.gov/econres/notes/feds-notes/shedding-light-on-our-economic-and-financial-lives-20180522.htm. Return to text