WEBVTT - Why Millions of Americans Still Live Paycheck-to-Paycheck 0:00:00.280 --> 0:00:02.599 So down. Before we get started today, we just wanted 0:00:02.600 --> 0:00:05.320 to take a moment to let everyone know about something 0:00:05.440 --> 0:00:07.400 new from Bloomberg. Do you want to hear what it is? 0:00:07.680 --> 0:00:11.520 Go for it? Well. Starting now, you can actually use 0:00:11.560 --> 0:00:15.320 our Io s app or Bloomberg's Google Chrome extension to 0:00:15.480 --> 0:00:20.640 scan any news story on any website, instantly revealing relevant 0:00:20.640 --> 0:00:24.280 news and market data from Bloomberg and other sources related 0:00:24.320 --> 0:00:28.160 to the companies and the people you're reading about. So really, 0:00:28.320 --> 0:00:30.680 no matter where you're reading the news, you can bring 0:00:30.720 --> 0:00:33.680 the power of Bloomberg's news and data with you. It's 0:00:33.720 --> 0:00:37.440 pretty amazing. Download our Io s app or search for 0:00:37.440 --> 0:00:40.599 the Bloomberg Extension on the Chrome Store to try it out. 0:00:41.240 --> 0:00:49.000 Learn more at Bloomberg dot com. Backslash lands. On the surface, 0:00:49.000 --> 0:00:51.559 America's economy is in pretty good shape. You've got an 0:00:51.640 --> 0:00:56.480 unemployment rate of four point four percent, jobless claims around 0:00:56.560 --> 0:01:01.520 the lowest in three decades, wage is US starting to rise, 0:01:02.160 --> 0:01:05.080 and g d P is growing about as fast as 0:01:05.120 --> 0:01:09.039 economists ps I can go. Right now, That's right, Dan, 0:01:09.120 --> 0:01:13.959 But underneath that veneer of a decent economy, millions of 0:01:14.040 --> 0:01:18.319 middle class Americans face a stressful reality, even if they 0:01:18.319 --> 0:01:23.160 have steady jobs. Their paychecks increasingly have pretty big swings 0:01:23.160 --> 0:01:26.360 for month to month, making it challenging to pay bills, 0:01:26.959 --> 0:01:30.800 not to mention, build up savings, to deal with unexpected expenses, 0:01:30.880 --> 0:01:34.039 and things like that. Today on Benchmark, we're going to 0:01:34.120 --> 0:01:37.199 talk with the two authors of a new book who 0:01:37.280 --> 0:01:40.640 studied the financial habits of more than two hundred families 0:01:40.680 --> 0:01:43.840 for a year. If you think that hard work is 0:01:43.880 --> 0:01:46.479 all you need to achieve the American dream, you are 0:01:46.600 --> 0:01:59.680 in for a surprise. I'm Scott Landman, an economics editor 0:01:59.760 --> 0:02:03.480 with Boomberg in Washington, and I'm Daniel Moss, executive editor 0:02:03.560 --> 0:02:07.320 for Global Economics with Bloomberg in New York. So, Dan, 0:02:07.440 --> 0:02:09.720 I think we've we've both worked at Bloomberg for a 0:02:09.720 --> 0:02:13.960 pretty long time. Uh, eighteen years for me and how 0:02:13.960 --> 0:02:17.600 many is it for you now? Twenty three? Wow? Well, 0:02:18.040 --> 0:02:20.680 I suspect we're both grateful for many of the things 0:02:20.760 --> 0:02:24.880 that Bloomberg provides. But after reading this book, I realized 0:02:24.919 --> 0:02:27.600 that I take something for granted that lots of people 0:02:27.800 --> 0:02:32.880 just don't have, and that's a steady paycheck, which really 0:02:32.960 --> 0:02:36.520 isn't what people who have hourly jobs get, or if 0:02:36.520 --> 0:02:39.480 they work on commissions or get paid by the gig, 0:02:40.040 --> 0:02:42.600 so on and so forth. But hang on, I thought 0:02:42.639 --> 0:02:45.600 the gig economy was the trendy, buzzy thing to do 0:02:45.639 --> 0:02:49.040 these days. It might be trendy and buzzy, but it 0:02:49.120 --> 0:02:52.320 doesn't necessarily help people get a steady income. It just 0:02:52.480 --> 0:02:55.960 kind of maybe works for other kinds of work. Is 0:02:55.960 --> 0:02:57.960 that another way of putting it. Well, I mean the 0:02:58.120 --> 0:03:03.959 idea that as a section of the American workforce that's 0:03:04.120 --> 0:03:07.359 not having such a great time, is that a particularly 0:03:07.480 --> 0:03:12.119 new thing, or is it that posts the global financial crisis, 0:03:12.639 --> 0:03:15.080 all of a sudden, it's getting a level of attention 0:03:15.200 --> 0:03:17.880 it didn't get before. Well, it could be both of 0:03:17.919 --> 0:03:21.160 those things, or it could really be that the situation 0:03:21.280 --> 0:03:24.760 is changing. But these kinds of issues are at the 0:03:24.840 --> 0:03:28.360 heart of the new book by our guests. It's called 0:03:28.560 --> 0:03:32.239 The Financial Diaries, How American Families Cope in a World 0:03:32.280 --> 0:03:35.960 of Uncertainty. Jonathan more Duck is a professor of public 0:03:36.000 --> 0:03:39.680 policy and economics at New York University, and Rachel Schneider 0:03:39.800 --> 0:03:43.160 is senior vice president at the Center for Financial Services 0:03:43.200 --> 0:03:46.840 Innovation in Chicago, a group that seeks to improve banking 0:03:46.880 --> 0:03:50.480 for low and middle income Americans and full disclosure get 0:03:50.560 --> 0:03:53.880 some funding from companies in the industry, including Bank of 0:03:53.920 --> 0:03:57.800 America and City Group. Jonathan and Rachel, thanks for joining 0:03:57.840 --> 0:04:01.440 us today. Thank you. You just start out and tell 0:04:01.520 --> 0:04:04.320 us a little bit of how this project came about 0:04:04.520 --> 0:04:08.880 and what you set out to accomplish. The project started, 0:04:09.520 --> 0:04:13.120 um we started thinking about around in the wake of 0:04:13.160 --> 0:04:16.680 the Great Recession, and there's a sense that something huge, 0:04:16.720 --> 0:04:20.280 of course, had happened in the American economy, but it 0:04:20.320 --> 0:04:23.840 was hard to see how the pieces were all landing, 0:04:24.120 --> 0:04:28.240 how American families were really doing after the recession, and 0:04:28.960 --> 0:04:32.760 we didn't really have data to sort it out. And 0:04:32.760 --> 0:04:35.200 we figured that the only real way to get to 0:04:35.200 --> 0:04:37.880 know how families were doing was to go out and 0:04:37.960 --> 0:04:40.320 spend a lot of time getting to know them and 0:04:41.120 --> 0:04:45.800 figuring out how families were coping after the crisis, And 0:04:45.880 --> 0:04:51.120 so the project eventually involved getting to know families. We 0:04:51.200 --> 0:04:55.279 spent a full year trying to track every single dollar 0:04:55.520 --> 0:04:58.520 that the families earned and spend and borrowed and saved, 0:04:59.080 --> 0:05:01.920 really their entire financial lives, so we could get a 0:05:02.000 --> 0:05:04.919 lens on what was really happening um to the families 0:05:04.920 --> 0:05:08.720 after the crisis. Well, what's intriguing about this is you've 0:05:08.839 --> 0:05:12.560 based your findings on hard data. I mean you've just 0:05:12.640 --> 0:05:17.400 described this excruciating process of gathering the information rather than 0:05:17.440 --> 0:05:19.680 a lot of these sorts of books which tend to 0:05:19.720 --> 0:05:23.240 be more impressionistic. Would that be a fair comment. Yeah, 0:05:23.400 --> 0:05:25.919 I think that is their right. So those field researchers 0:05:25.920 --> 0:05:29.680 who gathered the data or visiting families every few weeks 0:05:29.800 --> 0:05:33.599 and really trying to gather information about every single dollar 0:05:33.720 --> 0:05:37.480 that the families earned, spent, borrow and saved. And so 0:05:37.640 --> 0:05:40.880 while the heart of our book is really the family stories, 0:05:41.600 --> 0:05:45.919 the heart of our findings is a lot of data. 0:05:46.200 --> 0:05:49.840 And it's worth pointing out the data we gathered, UM, 0:05:49.880 --> 0:05:52.160 and the way we thought about it really changed in 0:05:52.200 --> 0:05:54.280 some ways over time, or at least for some of us. 0:05:54.279 --> 0:05:58.160 I mean, this was a complicated research project where um, 0:05:58.240 --> 0:06:00.839 of course Jonathan and I and a team of researchers 0:06:00.839 --> 0:06:04.800 were working together, but also, as you mentioned, UM, there 0:06:04.839 --> 0:06:07.719 were other funding partners in this case, the City Foundation 0:06:08.440 --> 0:06:10.680 and the Ford Foundation, and then ultimately do a MIDI 0:06:10.720 --> 0:06:14.400 our network. And I pointed out only because you know, 0:06:14.400 --> 0:06:18.040 in describing CSI, you rightly pointed out that TVs I 0:06:18.279 --> 0:06:22.240 has a focus where I work on um on financial services, 0:06:22.279 --> 0:06:24.760 and we do often get funding for financial services, and 0:06:24.800 --> 0:06:28.159 in this case we started out at cbs I anyway, 0:06:28.320 --> 0:06:32.040 and probably the City Foundation did two in their funding 0:06:32.040 --> 0:06:35.840 of this work, thinking that it would really help us 0:06:35.839 --> 0:06:40.440 to better understand what financial services people needed. The reality 0:06:40.520 --> 0:06:42.360 is that and I think Jonathan saw this from the 0:06:42.400 --> 0:06:46.640 get go, that what we were doing in fact gave 0:06:46.720 --> 0:06:48.960 us a broader lens, that it was less about financial 0:06:48.960 --> 0:06:52.120 services and more about the economic ups and downs economic 0:06:52.240 --> 0:06:55.520 lives as people in a broader way, and so we 0:06:55.600 --> 0:06:58.359 really needed the detailed data we gather it over of 0:06:58.360 --> 0:07:00.640 course the course of the year to do that piece 0:07:00.640 --> 0:07:05.400 and to understand what people were experiencing in a holistic 0:07:05.440 --> 0:07:08.280 sense in their financial lives. Tell us a little bit 0:07:08.279 --> 0:07:12.440 more about these regular financial or economic ups and downs 0:07:12.480 --> 0:07:15.080 that people are experiencing. You you write a lot in 0:07:15.120 --> 0:07:18.600 the book about how people's income would would vary a 0:07:18.600 --> 0:07:21.240 lot from month to month. Uh, you know, one month 0:07:21.240 --> 0:07:24.400 it would be above average, and then next month it 0:07:24.480 --> 0:07:27.600 could be below that by the same amount. And I 0:07:27.640 --> 0:07:30.080 found really fascinating one of the stories you tell in 0:07:30.120 --> 0:07:33.440 the book about the family where the father actually quits 0:07:33.520 --> 0:07:37.960 his job fixing trucks on commission for one that's lower 0:07:38.040 --> 0:07:43.160 paying but steady. Uh, you're providing a steady paycheck. How 0:07:43.240 --> 0:07:46.440 common is that? What kinds of forces are at work here? 0:07:46.560 --> 0:07:49.000 And you know, to go back to our broader question, 0:07:49.280 --> 0:07:52.360 is this a new phenomenon or is this just something 0:07:52.400 --> 0:07:57.440 that we're discovering more that's always been there. Yeah, our 0:07:57.480 --> 0:08:00.880 sense is said, what's been in play is a process 0:08:00.920 --> 0:08:04.680 that started around the nies with a shift in jobs. 0:08:04.760 --> 0:08:07.400 And so Jeremy, who was a truck driver in a 0:08:07.400 --> 0:08:11.880 truck mechanic in Ohio, UM, you know, used to be 0:08:12.080 --> 0:08:13.920 in a situation in the context where there were a 0:08:13.920 --> 0:08:16.880 lot of factory jobs. When he was growing up, maybe 0:08:16.920 --> 0:08:20.480 a quarter of us jobs were in manufacturing. UM. But 0:08:20.520 --> 0:08:24.360 of course union jobs and manufacturing jobs has been sliced 0:08:24.560 --> 0:08:27.480 over time. You know, today about ten percent of jobs 0:08:27.520 --> 0:08:31.480 are manufacturing. So Jeremy has fewer choices and he ends 0:08:31.560 --> 0:08:34.679 up as a truck mechanic and he's working on commission. 0:08:35.240 --> 0:08:39.679 And when we first met him, his weekly paychecks were 0:08:39.840 --> 0:08:43.200 very variable because it wasn't clear how many trucks there 0:08:43.200 --> 0:08:46.040 would be to fix, and he was bearing all of 0:08:46.080 --> 0:08:49.640 that risk. And that you're saying at the end of 0:08:49.679 --> 0:08:52.520 the year he just quit his job for a lower 0:08:52.559 --> 0:08:56.400 paying job that was more steady, And we are seeing 0:08:56.440 --> 0:09:00.400 that pretty broadly in our sample. On average, were seeing 0:09:00.440 --> 0:09:04.320 the households spent about five months of the year where 0:09:04.360 --> 0:09:09.240 their income was above their average or below their average. 0:09:09.800 --> 0:09:12.960 So economic and security in many ways, it wasn't about 0:09:12.960 --> 0:09:15.360 I'm going to lose my job. It was about how 0:09:15.400 --> 0:09:17.680 am I going to navigate the ups and downs that 0:09:17.720 --> 0:09:21.280 are going on in my given job? And how did 0:09:21.320 --> 0:09:25.080 you identify the particular families that you would study. Were 0:09:25.080 --> 0:09:29.160 you after a certain income group, a certain demographic group, 0:09:29.320 --> 0:09:34.480 a certain geographical group. Yeah, our goal was to understand 0:09:34.600 --> 0:09:37.240 a broad cross section of the American experience. So we 0:09:37.320 --> 0:09:40.120 knew that with the level of the depth of the 0:09:40.200 --> 0:09:42.840 data we wanted to collect, we couldn't do a nasting 0:09:42.920 --> 0:09:48.280 representative statistically significant sample, right um, But we could scatter 0:09:48.320 --> 0:09:51.640 our field researchers across the country, and so we gathered 0:09:51.679 --> 0:09:56.240 information from people in California along the Ohio Kentucky border, 0:09:56.760 --> 0:10:00.199 in Mississippi, and in New York. And our goal was 0:10:00.240 --> 0:10:03.760 to understand what it was like for working Americans. So 0:10:04.080 --> 0:10:07.640 about a quarter of the sample is around the area 0:10:07.720 --> 0:10:12.800 meeting income around around middle class in their region, about 0:10:12.800 --> 0:10:15.319 a quarter is close to the poverty line, and then 0:10:16.000 --> 0:10:19.760 the remaining half is in between those two. But the 0:10:19.840 --> 0:10:23.800 common threat is that when we recruited households to join 0:10:23.880 --> 0:10:28.120 the study, every household had somebody in the family who 0:10:28.200 --> 0:10:31.720 was working. And what gave you the idea to pursue 0:10:31.840 --> 0:10:34.560 this study? Well, I feel like I should ask that 0:10:34.600 --> 0:10:36.839 one sinceince it gives me a chance to um to 0:10:37.000 --> 0:10:40.120 Jonathan's horn for prior work. You know, this is really 0:10:40.600 --> 0:10:43.480 um a follow up study to work that was done 0:10:43.480 --> 0:10:47.200 internationally that was also called financial Diaries and as a 0:10:47.280 --> 0:10:51.480 resource methodology that was innovated in the developing world in 0:10:51.480 --> 0:10:55.360 India and South Africa and Bangladesh, and Jonathan and the 0:10:55.440 --> 0:10:57.680 researchers who had done that work wrote a book called 0:10:57.720 --> 0:11:01.480 Portfolios of the Poor and and what was fascinating and 0:11:01.520 --> 0:11:07.280 I first learned about that work maybe um not quite 0:11:07.280 --> 0:11:09.400 ten years ago, on a study trip to South Africa. 0:11:09.600 --> 0:11:11.560 And what was fascinating to me about it when I 0:11:11.640 --> 0:11:15.520 learned about it was that in the US we had 0:11:15.559 --> 0:11:18.280 so much data, right we collect reams and reads of 0:11:18.320 --> 0:11:21.200 financial that you rattled off some of the statistics we 0:11:21.280 --> 0:11:25.520 capture on a regular basic unemployment rate jobless um. Right. 0:11:25.559 --> 0:11:29.480 We we capture all kinds of quantitative data about spending 0:11:29.520 --> 0:11:33.199 and about earning and about savings, and yet this international 0:11:33.280 --> 0:11:38.640 work gave a deeper intuition, a more visceral understanding of 0:11:38.640 --> 0:11:42.160 what was happening in people's financial lives than we had 0:11:42.200 --> 0:11:45.199 in the US, even though we have so much more information, really, 0:11:45.960 --> 0:11:48.679 and so that was a big part of the genesis 0:11:48.720 --> 0:11:54.439 of and inspiration for this project. Our funders, we're really 0:11:54.480 --> 0:12:01.200 interested in replicating that exercise in deepening intuition, opening understanding 0:12:01.960 --> 0:12:05.800 through work that was both quantitative and qualitative. Now, when 0:12:05.800 --> 0:12:09.960 you talk about the ins and outs of people's daily 0:12:10.160 --> 0:12:15.520 monthly finances and the interplay with the broader economy, UH, 0:12:15.559 --> 0:12:18.120 you know, it brings me to think about some of 0:12:18.160 --> 0:12:22.040 the articles we've been recently recently writing I edit our 0:12:22.160 --> 0:12:27.880 u S economy coverage, and a major story for recent months, 0:12:27.960 --> 0:12:32.600 at least from an economic standpoint, has been a slowdown 0:12:32.720 --> 0:12:35.680 in consumer spending in the first quarter. And there have 0:12:35.720 --> 0:12:39.040 been various reasons given for that, but some analysts are 0:12:39.040 --> 0:12:43.200 attributing part of that slow down to UH delays in 0:12:43.320 --> 0:12:47.360 people getting their tax refunds. And it's interesting for me 0:12:47.440 --> 0:12:50.920 to read in your book exactly how important tax refunds 0:12:50.960 --> 0:12:55.120 are for so many families in terms of their annual spending. 0:12:56.200 --> 0:13:00.920 Why do people intentionally make that decision and to have 0:13:01.200 --> 0:13:04.960 that big lump of money each year instead of kind 0:13:04.960 --> 0:13:08.719 of smoothing it out so they have more stability. It's 0:13:08.760 --> 0:13:13.800 a really interesting question, and the answered the the households 0:13:13.800 --> 0:13:16.160 we met really tried to do both right. They know 0:13:16.320 --> 0:13:19.520 that their lives can be pretty rocky and that they 0:13:19.520 --> 0:13:22.160 ought to save up and borrow to smooth things out. 0:13:23.040 --> 0:13:26.280 But there are also lots of times when they need 0:13:26.320 --> 0:13:27.720 a big chunk of money or they want a big 0:13:27.800 --> 0:13:30.320 chunk of money to do some big things, and so 0:13:30.360 --> 0:13:33.360 they're these sort of competing goals. One is something that 0:13:33.400 --> 0:13:36.120 requires a spike of money and another is something that 0:13:36.120 --> 0:13:40.040 requires smoothing. And so, you know, for example, Jeremy the 0:13:40.040 --> 0:13:43.960 truck driver we were just talking about the truck mechanic UM, 0:13:44.000 --> 0:13:51.040 he over withheld his UM you know, monthly tax withholdings, 0:13:51.200 --> 0:13:53.960 so that by the time tax time came around, he 0:13:54.080 --> 0:13:58.160 got a seven thousand dollar refund, which was big, and 0:13:58.200 --> 0:14:01.600 it allowed them to pay off some debt, pay for 0:14:01.640 --> 0:14:05.280 some Christmas bills, UM and do a bunch of things 0:14:05.280 --> 0:14:07.800 for the home and for their children that wouldn't have 0:14:07.840 --> 0:14:12.600 been possible, um if they just used you know, whatever 0:14:12.600 --> 0:14:15.960 they had each month. So sometimes you need a big 0:14:16.040 --> 0:14:20.440 chunk to do some big things. This increase in income 0:14:20.560 --> 0:14:25.400 volatility that you're describing, how much of that is technology? 0:14:25.680 --> 0:14:29.600 Why do you ask? You know? Um, it's something to 0:14:29.680 --> 0:14:33.520 think this is really a result of the gig economy 0:14:34.480 --> 0:14:38.440 or that it you know, we can blame just technology 0:14:38.560 --> 0:14:42.280 or just globalization. I think it's a combination of factors. 0:14:42.320 --> 0:14:46.120 It's really a broad shift in how work functions. So 0:14:46.240 --> 0:14:49.400 some of it is definitely technology. Um, for a lot 0:14:49.440 --> 0:14:53.920 of people who work hourly, and more than half of 0:14:54.000 --> 0:14:58.720 American workers work hourly, technology makes it far easier to 0:14:59.720 --> 0:15:03.160 si as your workforce to demand for your products and services. 0:15:03.240 --> 0:15:06.160 So a retailer or a restaurant knows what demand is 0:15:06.160 --> 0:15:08.440 going to be on a Wednesday at two and can 0:15:08.520 --> 0:15:11.640 have exactly the right number of workers on site. But 0:15:11.720 --> 0:15:14.280 some of that would happen even with that Without technology, 0:15:14.560 --> 0:15:18.040 restaurants have always noticed low demand and sent waiters home. 0:15:18.680 --> 0:15:22.280 So it's not only technology, it's really a broader phenomenon. 0:15:22.720 --> 0:15:26.880 I think. Let me talk about some of the policy 0:15:26.960 --> 0:15:30.400 prescriptions here. I was struck a little bit how you're 0:15:30.480 --> 0:15:35.280 you're talking about at the beginning, Rachel, about the funding 0:15:35.360 --> 0:15:38.480 behind the project, and you know how in general your 0:15:38.560 --> 0:15:43.120 your group looks for ways to uh improve financial services 0:15:43.160 --> 0:15:46.160 for you know, kinds of lower income, middle income people. 0:15:46.280 --> 0:15:49.920 And yet you know, the people in your book struck 0:15:50.040 --> 0:15:55.200 me as being reasonably savvy about the financial services and 0:15:55.240 --> 0:15:58.840 banking services that are offered, and kind of on top 0:15:58.880 --> 0:16:04.200 of things, how how can financial services be improved for 0:16:04.680 --> 0:16:07.440 the kinds of people that were the research subjects in 0:16:07.440 --> 0:16:10.200 your book or do you think they're kind of at 0:16:10.480 --> 0:16:13.160 their you know, at a sort of optimal stage and 0:16:13.200 --> 0:16:18.240 it's really you know, the broader government policy uh prescriptions 0:16:18.280 --> 0:16:22.720 that would need to be modified somewhat to help deal 0:16:22.760 --> 0:16:25.880 with some of these situations. Yeah, I have a guess 0:16:25.960 --> 0:16:28.440 and respond to that. You know, I'm really glad that 0:16:28.440 --> 0:16:30.320 the people we wrote about seem to you like they 0:16:30.320 --> 0:16:34.200 were financially savvy. That to me says we accurately represented 0:16:34.240 --> 0:16:37.720 them because they were right. People are, especially when they 0:16:37.720 --> 0:16:41.400 have less money, really smart and thoughtful often about how 0:16:41.400 --> 0:16:44.920 to make that money stretch. But I think often the 0:16:45.000 --> 0:16:48.240 strategies they were using to make that money stretch show 0:16:48.320 --> 0:16:52.080 us gaps in how financial services are are not serving them. So, 0:16:52.160 --> 0:16:55.240 for example, we tell a story in the book about 0:16:55.320 --> 0:16:58.880 a woman we call Janice who had the savings account 0:16:59.040 --> 0:17:02.880 and a checking account, but she cut up her check 0:17:02.920 --> 0:17:05.439 book from her checking account, right, she cut up her 0:17:05.480 --> 0:17:08.520 ATM card from her savings account. She intentionally has those 0:17:08.520 --> 0:17:11.240 two accounts in different institutions, and the savings account is 0:17:11.280 --> 0:17:14.040 an hour's drive away from her home and has hours 0:17:14.119 --> 0:17:17.160 that she thinks, you know, are not so convenient relative 0:17:17.200 --> 0:17:20.639 to when she works. And she does all that on purpose. 0:17:20.720 --> 0:17:23.160 And now it would be easy to say, hey, that's 0:17:23.160 --> 0:17:26.119 a mistake. She's not using those products right. She's paying 0:17:26.119 --> 0:17:28.960 seas at check cashers and fees to get money orders 0:17:29.000 --> 0:17:32.200 to pay her bills instead of using her checking feature. 0:17:32.680 --> 0:17:35.600 So she's doing it wrong. But I think you have 0:17:35.640 --> 0:17:37.280 to look at it the other way and say, okay, well, 0:17:37.320 --> 0:17:40.960 what's broken about that product design for her? What's broken 0:17:40.960 --> 0:17:44.040 about that product design is she actually wants some wall 0:17:44.240 --> 0:17:47.280 between herself and her spending and her savings, So she 0:17:47.359 --> 0:17:50.960 actually wants it to be hard to withdraw. She actually 0:17:51.000 --> 0:17:54.320 wants it to be hard to um. She's cut up 0:17:54.320 --> 0:17:56.560 her checkbook in particular because she didn't want to have 0:17:56.560 --> 0:17:59.200 any temptation to use payday loans, but she'd had trouble 0:17:59.280 --> 0:18:01.480 within the past, and to get it paid a long 0:18:01.520 --> 0:18:04.080 you've got to turn over assigned to check, post stated 0:18:04.119 --> 0:18:09.320 signed check. So she's you know, you could say she's 0:18:09.520 --> 0:18:11.760 using their products wrong. Where you could say, all right, 0:18:11.880 --> 0:18:16.000 how do you adjust UM transactional services that are available 0:18:16.040 --> 0:18:19.800 to enable her to still pay her bills conveniently electronically 0:18:20.359 --> 0:18:24.600 but not have any risk of using payday or shaves, 0:18:24.920 --> 0:18:28.280 but not have be able to access her funds when 0:18:28.320 --> 0:18:30.960 she needs them. So how do you do how do 0:18:31.040 --> 0:18:35.120 you do that? Well? UM? One thing you could think 0:18:35.160 --> 0:18:39.840 about is UM savings products that have a commitment feature 0:18:40.040 --> 0:18:43.600 or it's harder to withdraw the money. In a funny way, 0:18:43.720 --> 0:18:46.479 UM savings products make it really easy to get your 0:18:46.480 --> 0:18:50.879 money worse of optimizing our financial products for spend, not 0:18:51.000 --> 0:18:55.399 for safe and so I've been encouraged to see if this. 0:18:55.480 --> 0:18:59.919 I in general have been encouraged by financial technology products 0:19:00.280 --> 0:19:04.400 that are more greered towards helping people to save flexibly, 0:19:04.560 --> 0:19:08.320 helping people to identify the goal they're saving for UM 0:19:08.400 --> 0:19:11.719 and walling that savings off in a creative way, so 0:19:11.760 --> 0:19:15.440 it makes it easier for people to their objectives. Yeah, 0:19:15.480 --> 0:19:19.560 there's kind of a fundamental opposition which is really interesting 0:19:19.560 --> 0:19:22.760 and difficult, and families are dealing with in different ways, 0:19:23.000 --> 0:19:29.960 and that is distension between needing structure structured financial products. Um. 0:19:30.000 --> 0:19:33.159 You know, like a savings account where all the money 0:19:33.359 --> 0:19:37.119 gets put into an account which you can't access for 0:19:37.119 --> 0:19:39.359 a long time. It's like a retirement account or a 0:19:39.400 --> 0:19:42.240 Christmas club or something like that. But at the same time, 0:19:42.359 --> 0:19:46.320 in a world of volatility and instability, you need some flexibility, 0:19:46.400 --> 0:19:50.240 and so getting the balance between flexibility and structure is 0:19:50.320 --> 0:19:54.080 really hard with the available products. And that's why Janice, 0:19:53.960 --> 0:19:56.840 you know, open this account an hour away. Um, that 0:19:57.000 --> 0:20:00.960 was her way of getting that balance, But it's hard 0:20:01.000 --> 0:20:06.640 to get that in the commercial marketplace. Now. The working class, 0:20:06.800 --> 0:20:11.600 particularly the white working class in certain geographic areas of 0:20:11.600 --> 0:20:14.480 the country, has had a lot of attention paid to 0:20:14.560 --> 0:20:19.959 it since last November. Is there or what kind of 0:20:20.080 --> 0:20:24.800 intersection did you find between the politics of the moment 0:20:25.320 --> 0:20:30.520 in the respective groups that you've studied and wage volatility. 0:20:30.880 --> 0:20:34.160 I guess what I'm asking is, does the phenomenon that 0:20:34.200 --> 0:20:40.040 you've detailed describe the Trump effect. One of the things 0:20:40.119 --> 0:20:46.920 that we see is that today workers without college degrees 0:20:47.880 --> 0:20:50.359 are struggling in lots of ways, and we see that 0:20:50.400 --> 0:20:53.320 in the labor market in terms of wages. What our 0:20:53.480 --> 0:20:55.760 data and related data are showing is that it's not 0:20:55.880 --> 0:21:00.880 just average wages. They also are facing much more instability 0:21:01.320 --> 0:21:04.920 than other workers. And so there's a group of workers 0:21:04.920 --> 0:21:08.920 out there, white, black, Hispanic black and Hispanic workers actually 0:21:09.720 --> 0:21:13.240 have a harder time, but white workers as well, um, 0:21:13.960 --> 0:21:18.280 who are living fairly precarious lives even though they have jobs. 0:21:19.000 --> 0:21:23.240 So there's economic anxiety even for people with jobs. And 0:21:23.280 --> 0:21:25.520 that's the great puzzle in America that people have been 0:21:25.520 --> 0:21:27.560 trying to sort out. I think the answer is that 0:21:27.640 --> 0:21:31.160 once you spend time and followed people a month by month, 0:21:31.240 --> 0:21:34.840 you can see exactly why there's so much anxiety in 0:21:34.840 --> 0:21:38.560 the sense that the system really isn't working for them. 0:21:38.600 --> 0:21:42.880 So I'm trying to figure out if that's a year's well, 0:21:42.920 --> 0:21:46.520 I'll take a crack at it too. I think, um, 0:21:46.760 --> 0:21:49.320 you know, there's lots of explanations for Trump. I don't 0:21:49.320 --> 0:21:53.080 think we're the best positions to explain everything that happened there. 0:21:53.200 --> 0:21:55.959 I do think what what our data suggests is that 0:21:56.000 --> 0:21:58.199 when you look at or not just suggest what our 0:21:58.320 --> 0:22:01.399 data shows you with when you look us at unemployment rates, 0:22:01.480 --> 0:22:05.760 just the GDP growth, just at big picture numbers for 0:22:05.840 --> 0:22:09.760 what's happening economically in our country, you miss a huge 0:22:09.760 --> 0:22:13.480 amount of economic insecurity that people feel. Now, is that 0:22:13.520 --> 0:22:16.399 the economic insecurity that drove people to vote for Trump? 0:22:16.480 --> 0:22:19.000 I don't know. I do know it is the kind 0:22:19.000 --> 0:22:22.439 of economic insecurity it's easy for us to miss and 0:22:22.480 --> 0:22:26.960 therefore easy to fail to address. But if the big 0:22:27.000 --> 0:22:33.120 picture is improving economically, does that reduce this kind of 0:22:33.200 --> 0:22:37.000 income volatility on the micro level that you're seeing or 0:22:37.160 --> 0:22:40.320 do we need to do more research to really determine 0:22:40.840 --> 0:22:44.400 if that's the case. I'm certain that this kind of 0:22:44.480 --> 0:22:48.719 economic insecurity deserves its own responses. So it's not going 0:22:48.760 --> 0:22:51.639 to be enough just to expect wages to rise or 0:22:51.720 --> 0:22:55.760 productivity to grow fast enough and then magically people won't 0:22:55.840 --> 0:23:00.480 have this kind of insecurity. I think that the volatility 0:23:00.520 --> 0:23:04.320 is a distinct issue on its own. Um. You know, 0:23:04.440 --> 0:23:06.920 you could argue that if incomes right to a certain level, 0:23:06.960 --> 0:23:08.960 then you don't need to worry about faltility. People will 0:23:09.000 --> 0:23:11.080 just manage it on their own, but at the pretty 0:23:11.119 --> 0:23:14.400 high income level before that's going to be the case. Yeah, 0:23:14.440 --> 0:23:16.280 I think you know, what we've seen has been a 0:23:16.280 --> 0:23:20.199 real shift in bargaining power toward management away from labor. 0:23:21.080 --> 0:23:26.720 And if that fundamental bargaining balance doesn't change, then I 0:23:26.760 --> 0:23:31.640 don't see any reason why. Yeah, this pattern would change, 0:23:32.240 --> 0:23:36.160 all right. Well, many issues that we continue to explore 0:23:36.200 --> 0:23:40.040 in our economic coverage on our Benchmark podcast. Jonathan Morduck 0:23:40.080 --> 0:23:42.639 f n y U and Rachel Schneider from the Center 0:23:42.720 --> 0:23:46.280 for Financial Services Innovation, thank you so much for coming 0:23:46.320 --> 0:23:49.159 on the program with us to discuss your book. Thank you, 0:23:49.720 --> 0:23:53.040 thank you, and we hope you'll keep coming back to 0:23:53.200 --> 0:23:55.760 describe the data that you collect. I gather this is 0:23:55.800 --> 0:23:58.840 an ongoing project, or at least you're doing more work 0:23:58.960 --> 0:24:03.760 based on the result some face. Oh, I have to say, actually, um, yes, 0:24:03.840 --> 0:24:05.919 both of us are continue to think about these issues. 0:24:05.960 --> 0:24:10.040 But the data gathering from the diaries, um is concluded 0:24:10.080 --> 0:24:13.080 for the moment. But I think there's still more learning 0:24:13.119 --> 0:24:15.439 from even the data we collected, and so yes, you 0:24:15.480 --> 0:24:19.399 will see more ideas from each of us over time. Well, 0:24:19.440 --> 0:24:22.439 look forward to the financial Diaries to the Revenge of 0:24:22.520 --> 0:24:26.560 Income Volatility. Yeah, really, thank you so much. We really 0:24:26.560 --> 0:24:29.920 appreciate the conversation. Benchmark will be back next week and 0:24:30.000 --> 0:24:32.200 until then, you can find us on the Bloomberg terminal, 0:24:32.240 --> 0:24:35.040 Bloomberg dot com, or Bloomberg App, as well as on 0:24:35.119 --> 0:24:39.160 Apple Podcasts, Podetcast, Stitcher, or wherever you prefer to listen 0:24:39.160 --> 0:24:41.880