When 43% of Americans Can’t Pay for Food and Rent, We Can Safely Say the Economic Collapse Is HERE

You know all those reports about how lots of Americans can’t afford a $1000 surprise expense like a medical bill or a car repair? Well, forget additional expenses. It turns out that nearly half of the families in America are struggling to pay for food and rent. And that means that the economic collapse isn’t just “coming.” It’s HERE.

United Way has done a study on a group of Americans they call ALICE: Asset Limited, Income Constrained, Employed. The study found that this group does not make the money needed “to survive in the modern economy.”

ALICE is your child care worker, your parent on Social Security, the cashier at your supermarket, the gas attendant, the salesperson at your big box store, your waitress, a home health aide, an office clerk. ALICE cannot always pay the bills, has little or nothing in savings, and is forced to make tough choices such as deciding between quality child care or paying the rent. One unexpected car repair or medical bill can push these financially strapped families over the edge.

ALICE is a hardworking member of the community who is employed yet does not earn enough to afford the basic necessities of life.

ALICE earns above the federal poverty level but does not earn enough to afford a bare-bones household budget of housing, child care, food, transportation, and healthcare. (source)

Between families living below the poverty line due to unemployment or disability and ALICEs, the study discovered that 43% of Americans were struggling to cover basic necessities like rent and food.

Where are families struggling the most?

Some states have more families living in ALICE levels than others. The 3 states with the most families barely surviving paycheck to paycheck are California, New Mexico, and Hawaii. Each of these states saw 49% of families struggling. North Dakota had the lowest ALICE percentage with 32%. You can check how your state fares right here. Despite the lowest unemployment rate since 2000, families all over the country are barely getting by.

The media page of the ALICE website is jammed with headlines that are all too familiar for many Americans:

• Report: Michigan makes little progress in lifting working poor to financial stability
• After a decade of tax cuts — Ohioans in financial hardship
• Louisiana families work hard, but still can’t cover necessities
• 44 percent of Florida households, mostly working poor, struggling to meet basic needs
• Third of New Jersey households can’t afford basic necessities
• 42 percent of Wisconsin households struggle to pay bills

And on and on and on…

The economic collapse of America is here.

While many families are still doing okay, the specter of poverty looms over many of us. Many of us know that we’re one personal financial catastrophe away from disaster. I wrote recently about my own family’s struggle with a large medical bill.

Obviously, I’m not telling you about our financial saga to make myself look bad. I’m telling you because I want you to know that no matter how much you try to do everything right, financial problems can happen to anyone, at any time. Whether you have $100 in the bank or $100,000 in the bank, something can happen that wipes out your emergency fund just like it did mine.

This doesn’t mean that you failed financially – it means that circumstances can affect you, just like they do everyone else, no matter how careful you are.

Before my daughter’s illness, I was doing everything “right.”

• I had enough money in my emergency fund to carry me through 3 lean months
• I had numerous credit cards with zero balances
• My only debt was my car
• My kids are going to school without student loans
• I opted out of health insurance because it was more financially practical to pay cash (and I still agree with that decision)

Everything was great.

Until it wasn’t. (source)

This is a story that probably rings true to more and more familiar to a growing number of families every week.

While my income hasn’t dropped – it’s grown – I am still struggling to pay off those bills and recover. I’ve taken on a significant amount of extra work to get things back under control, and still, I worry it won’t be enough.

Sound familiar?

If it does, it’s because – and of this, I am quite certain – the long-heralded economic collapse of America is upon us. When hard-working families who should be “middle class” can barely afford to eat and keep a roof over their heads, things are only going to devolve further.

Look at other examples of economic collapse

This is just the beginning of a looming collapse in America.

Remember back when Greece began to collapse? It was the same thing – no one could afford the basics and things went downhill pretty quickly from there. It really hit the papers when a strict austerity program was instituted and culminated when a “bank holiday” shut down the financial system for an entire week.

There are similar stories in the UK (where the taxpayers can still fund a 45 million dollar weddingbut poor families can’t afford to eat every day), Argentina, and Cyprus.

Jose wrote for us about the warning signs that the collapse of Venezuela was approaching and they’re eerily familiar. Food rationing began, the cost of medical care became prohibitive, the health insurance system began to fail, and people began to make difficult choices about rent versus food.

I don’t know how it could be any more clear than the fact that nearly half of the American population is also making that decision each month.

What’s the answer?

While the United Way hopes to boost the minimum wage, I don’t feel that is the answer because it will drive businesses to let employees go when they can’t afford to pay them. We have seen this happen in fast food establishments in which humans are on their way to being replaced by self-service kiosks and burger-flipping robots.

I believe the only answer is to begin to produce more than we consume. Currently, Americans are like a horde of locusts, working at jobs that produce nothing, but consuming rabidly the imports that feed us, clothe us, and entertain us. We’re looking at economic tariffs on imports that may increase their price up to 40% and our own exports will be subject to tariffs in return.

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