CJ SPEAR, BYLINE: Ladies and gentlemen, welcome back to another episode of Overrated, Underrated. I'm your host, CJ Spear (ph). And our first topic today is Planet Money, THE INDICATOR. And our expert says underrated. Well done, Planet Money, THE INDICATOR. All right, our next topic is hosts Stacey Vanek Smith and Cardiff Garcia. And the expert says underrated. Very nice, Stacey and Cardiff. OK, our final topic is the yield curve. And the expert says - ooh - overrated. I'm sorry, Cardiff. That has got to hurt.
That's all the time we have today. Today's episode was brought to you by you. You can donate to your local member station at donate.npr.org/indicator. Thank you very much. Bye-bye.
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CARDIFF GARCIA, HOST:
Hey, everyone. It's Cardiff and Stacey. We spend a lot of time looking at the big macroeconomic indicators on this show. That's kind of our purpose in life. That's why we exist. And this year, the macro-indicators in the U.S. have mostly been pretty good.
STACEY VANEK SMITH, HOST:
The economy has grown. More jobs have been created each month, and wages have grown faster. And these are really important indicators. But, you know, they only capture the really broad trends. There are of course people in the economy who are still really struggling.
GARCIA: To understand what they're going through, it's not enough just to point out whether they have a job or even if they're making more money this year than they made last year. It's also important to have a sense of how economically secure they are.
VANEK SMITH: Economic security - this has to do with questions like, if you suddenly get sick, can you afford to go to the doctor? Do you ever worry you'll run out of money and not have enough to feed your kids before your next paycheck? Is your paycheck steady enough that you can plan and budget for future expenses? And if you needed to fix your car, would you still have enough money left over to afford that month's rent?
GARCIA: These are questions that even people with jobs, maybe even people with better jobs than they had last year, still struggle to answer. This is THE INDICATOR FROM PLANET MONEY. Today on the show, we look at some indicators that shed light on economic insecurity in the U.S.
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GARCIA: OK, we're going to look at three measures that help us understand economic insecurity in the U.S. And we'll start with the basics, with food, specifically with food insecurity. According to the Department of Agriculture, a household experiences food insecurity if there are times during the year when it does not have consistent, dependable access to enough food for active, healthy living.
VANEK SMITH: And the Agriculture Department determines whether a household is food-insecure from this survey, which asks a bunch of questions like how often a household is worried that its food will run out before it gets money to buy more, or whether a household can afford to eat balanced meals, or whether anyone in the household has had to cut down on how much they were eating because they did not have money to afford more food.
GARCIA: And what the USDA found was that roughly 12 percent of U.S. households were food-insecure last year. That number has been getting better in recent years as the economy has strengthened. But what's really surprising is that more households are food-insecure now than before the big recession of 2008. In other words, this is an indicator that has not fully recovered in the time since that recession ended. And, remember, it ended in the middle of 2009. That's more than nine years ago.
VANEK SMITH: Not only that, but it's also important to look specifically at which households are more likely to be food-insecure. For example, about 1 out of every 10 households without children is food-insecure. But when there are kids in the household, it's closer to about 1 out of every 6 households.
Mathematically, this makes sense. I mean, kids mean more people who need to be fed in a household. And, of course, most kids don't work and pay for their meals. But that is still a really big difference.
GARCIA: The second measure of economic insecurity that we're going to look at is income volatility. Now, this is the idea that the amount of money you make at work could swing up or down by a lot in a given month or in a given year, that your income is inconsistent or volatile. And in fact, economists have found that incomes have become more volatile in roughly the last half-century.
VANEK SMITH: Now, there are some obvious reasons that your income might swing really sharply, for instance, if you suddenly get sick and have to take unpaid time off work, or if you're a freelance worker, and suddenly you score this big contract and get a big bump in pay. But according to a survey of households from the Federal Reserve, the reason people most often give for their income swinging up and down is an irregular work schedule.
GARCIA: An irregular work schedule is when you don't work the same hours each day or each week. And sometimes a company doesn't even tell you which hours you have to work that day or that week until almost literally the last minute.
VANEK SMITH: According to a survey from 2015 from Pew Charitable Trusts, more than 1 out of every 3 American households experiences income volatility from year to year. What this means is that their incomes go either up or down by at least 25 percent in a given year.
GARCIA: And why does it matter if someone's income fluctuates up or down by a lot? Well, the obvious reason is that if your income suddenly drops, then you might not be able to pay your bills. But that's not the only problem.
VANEK SMITH: Let's say one year your income goes up by a lot instead of down. That is obviously great for that year. But if you're not confident that your income will stay at that higher level, it could be really hard to budget and plan for the future because you don't know if next year you'll be able to afford the same amount of stuff you're buying this year. And that alone can be really stressful.
GARCIA: And in fact, what the Pew researchers found was that people whose incomes are volatile also tend to have less savings. They're also more likely to be unable to afford something they feel they need, like medical care or prescription drugs. And they are less prepared to pay for a sudden emergency.
VANEK SMITH: Which brings us to our third measure of economic insecurity, the ability to pay your bills. The Federal Reserve has a couple of really amazing statistics on this from a survey of U.S. households. The first one, 22 percent of adults expected to miss a payment on one of their bills in the month the survey was taken. The credit card bill was the most common one people were going to miss, followed by phone bills and utility bills.
GARCIA: And if an unexpected $400 emergency comes up, like if someone gets sick or has to get their car fixed, then 1 out of every 3 American adults would be unable to pay all their bills in a given month. Again, that number has gotten better along with the economy. But it is still staggeringly high. There are just a lot of American adults who are unprepared to pay their bills.
VANEK SMITH: Put all these measures of economic insecurity together, and you can see that a lot of Americans still really struggle financially. And to get a window into what they're going through, it can be really helpful to look at economic indicators that don't always get that much attention.
GARCIA: Maybe they should.
VANEK SMITH: Maybe they should.
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GARCIA: Finally, a big shout-out to Bloomberg writer Noah Smith and Barron's writer Matt Klein, both friends of THE INDICATOR and both of whom recently published great pieces on these topics which we referred to for this episode. We're going to link to those pieces on our website at npr.org/money.
This episode is produced by Darius Rafieyan and edited by Paddy Hirsch. THE INDICATOR is a production of NPR.
VANEK SMITH: And one last thing, for all the ladies out there, we'd love to know if you feel safe reporting Me Too issues at work or not. We'd love to hear your experiences. Send us an email, email@example.com, or a voice memo.
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