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Over the last 25 years, household debt has grown faster than household assets, particularly among lower and middle-income households. Since 1990, revolving consumer debt has more than tripled, from over $238 billion to $735 billion in 2003-- while America's savings rate has plummeted to a record low.
Demos has organized this resource page to help advocates, service providers, policymakers and journalists develop messages and ideas to address this escalating crisis.
> Publications: Reports, Articles, and Books
> Research and Data Sources
> Organizational Links
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A new report details how slow income growth and rising costs have led to rising debt levels among middle-income Americans. The report finds that a typical middle income family earning around $45,000 a year saw its debt burden grow by 33.1% between 2001 and 2004, even after adjusting for inflation. Debt relative to income rose even more, to 33.9%, during this period for middle income families. Personal bankruptcies among these households are rising steeply.
Seeing Red: Americans Driven into Debt by Medical Bills
(Michelle M. Doty, Ph.D., Jennifer N. Edwards, Dr.P.H., and Alyssa L. Holmgren, The Commonwealth Fund, August 2005)
New analysis of the 2003 Commonwealth Fund Biennial Health Insurance Survey reveals that an estimated 77 million Americans age 19 and older -- nearly two of five (37%) adults -- have difficulty paying medical bills, have accrued medical debt, or both. Working-age adults incur significantly higher rates of medical bill and debt problems than adults 65 and older, with rates highest among the uninsured. Even working-age adults who are continually insured have problems paying their medical bills and have medical debt. Unpaid medical bills and medical debt can limit access to health care: two-thirds of people with a medical bill or debt problem went without needed care because of costnearly three times the rate of those without these financial problems.
Illness and Injury as Contributors to Bankruptcy
(Harvard University Medical School and Law School: February 2005)
Paper investigates the medical contributors to bankruptcy, finding that nearly half of all debtors cite medical causes. Although the overwhelming number of medical debtors had insurance coverage at the start of their illness, medical debtors were more likely to experience lapses in insurance coverage.
Life and Debt: Why American Families are Borrowing to the Hilt (Alex Baker, Century Foundation: July 2004)
Household debt and personal bankruptcies are reaching record highs despite low interest rates and rising real estate values. Median mortgage debt for low-income families has tripled since 1989, while total household debt has risen to over 80 percent of GDP, up from only half in 1980. It appears American families are borrowing more than ever just to make ends meet, buy a house, or educate their children. "Life and Debt" looks at how families are becoming more indebted, and what some of the harmful consequences might be.
"Getting Care But Paying the Price: How Medical Debt Leaves Many in Massachusetts Facing Tough Choices" (The Access Project: February 2004)
Report presents the findings of a survey of clients at two safety net facilities that looked at the impact of the cost of health care and resulting medical debt on individuals and their families. Finds that having medical debt was common -- 41% of responders -- and widespread among income levels, employment status, and even health insurance status. Includes policy recommendations.
"Accessing Affordable and Appropriate Credit"
(Karen Murrell, Annie E. Casey Foundation: September 2003)
Examines key issues and trends in how low-income consumers access credit. In almost all cases, the prices that low-income families pay to access financial products and services are higher than they would pay if they had access to better information, had better credit ratings, or lived in neighborhoods with more banks and credit unions. Key issues addressed in this report include the U.S. credit system, consumer motivations and methods for accessing credit, and the link between individual and community wealth.
"Begging the Chairman's Pardon -- Household Balance Sheets Are Improving?" and "Households: Another Quarter Older And Deeper In Debt"
(Paul Kasriel, The Northern Trust: 2003)
Chief Economist and economic forecaster for Northern Trust, a Chicago-based financial institution, disputes Alan Greenspan's claim that American households are, on the whole, financially secure and well-positioned for spending. In reality, he argues, the debt-to-asset ratio of today's households continues to hover at a dangerous level, not seen since the post-WWII recession. July 17, 2003
The second report shows that lower interest rates do not automatically result in less debt for American families. While the fees accruing on each outstanding debt may be less than in the past, the number of outstanding debts for households has risen. June 06, 2003
"Recent Changes in U.S. Family Finances: Evidence from the 1998 and 2001 Survey of Consumer Finances"
(Ana M. Aizcorbe, Arthur B. Kennickell, and Kevin B. Moore Federal Reserve Bulletin, vol. 89: January 2003)
Federal Reserve Board's Survey of Consumer finance reports a rise in late debt payments for those with relatively low levels of income and wealth between 1998 and 2001, despite an overall growth in individual wealth in America during this period.
"Recent Changes in U.S. Family Finances: Results from the 1998 Survey of Consumer Finances"
(Arthur B. Kennickell, Martha Starr-McCluer, and Brian J. Surette, Federal Reserve Bulletin, vol. 86: January 2000)
A key finding of this report is that while the proportion of families in debt declined over the period from 1995-1998, the median amount owed by the indebted families rose significantly.
"Pulling Apart: A State-by State Analysis of Income Trends"
(Economic Policy Institute & Center on Budget and Policy Priorities: 2002)
The unprecedented economic growth of the 1980s and 1990s leaves the gap between high-income and low- to middle-income families historically large. This report analyzes this shift and how it has impacted individual states.
Is Personal Debt Sustainable?
(The Levy Economics Institute: November 2002)
Private spending, one of the driving forces behind the economic growth of the 1990s, was essentially financed by an increase in credit to households and businesses. Unfortunately, this has resulted in increased debt among the private sector, which, according to this report, has moved America into a fragile economic state.
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Taming the Sharks: Towards a Cure for the High-Cost Credit Market
(Christopher L. Peterson, Univ. of Akron Press: 2004)
The Two-Income Trap: Why Middle-Class Mothers and Fathers are Going Broke
(Elizabeth Warren & Amelia Warren Tyagi, Basic Books: 2003)
The Fragile Middle Class: Americans in Debt
(Teresa A. Sullivan, Yale University Press: 2000)
Economic Apartheid in America: A Primer on Economic Inequality and Insecurity
(Chuck Collins & Felice Veskel, New Press: 2000)
Falling from Grace: Downward Mobility in the Age of Affluence
(Katherine S. Newman, University of California Press: 1999)
The Overspent American: Why We Want What We Don't Need
(Juliet Schor, Perennial: 1999)
The Rich Get Richer: The Rise of Income Inequality in the U.S. and the World
(Dennis D. Braun, Wadsworth: 1997)
Merchants of Misery: How Corporate America Profits from Poverty
(Michael Hudson, Common Courage: 1996)
Declining Fortunes: The Withering of the American Dream
(Katherine S. Newman, Basic Books: 1994)
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National Survey Data:
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National Research and Advocacy Organizations:
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State and Local Advocacy Organizations:
To submit your state or local group, email us!
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(Demos provides these links to facilitate grassroots mobilization on issues of economic security, debt, and assets.)
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ACORN (Association of Community Organizations for Reform Now)
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