It is well documented that the financial impact on the 800,000 government workers and the roughly 4 million contractors will be tangible especially for the contractors who are not likely to see any compensation for the loss of business revenue.  We are now on day 25 in the shutdown with no end in sight.  It is estimated that roughly 14% of the government pool are folks making <$50,000 annually.  They, of course, are the most vulnerable in this saga.

Concerted efforts are being made by institutions to provide temporary relief, short-term loans, expedited hardship withdrawals from retirement accounts, companies are reducing fees, banks are breaking CDs, and on and on.  That is all great, BUT we’ve had a significant crisis developing since the Great Financial Crisis (GFC) impacting a significant percentage of our workforce that are living paycheck to paycheck!

Sure, this shutdown impacts a ton of people all at once magnifying the impact, but for many Americans, this situation has been a source of great stress for some time now.  This phenomenon is impacting wide swaths of our workforce and economy from farmers to professors, accountants, real estate agents, small business owners, etc.  Furthermore, they aren’t just Millenials, but include Gen Xers and Baby Boomers, too. They are city dwellers, suburbanites, and occupants of rural communities. As described above, few are immune.

According to a recent Washington Post article which referenced a Federal Reserve report, roughly 4 in 10 Americans couldn’t come up with $400 without sliding into debt or having to sell something.  We’ve reported on this issue before, but it just keeps getting worse. “It’s astronomical what people need just to make it month to month,” said Heidi Shierholz, a former chief economist at the Department of Labor who now studies how middle-class families spend their wages at the Economic Policy Institute, a Washington think tank that is funded by foundations and unions. “Given the high cost of transportation, housing, health care … There is often no wiggle room.”

Add to Heidi’s list the cost of education, insurance, and the funding of one’s retirement today, where is the disposable income? The fact that we could have politicians making statements such as “who’s living that they’re not going to make it to the next paycheck?” speaks volume to how out of touch many of our “leaders” truly are with the economic plight of our citizens.

For many Americans, the last two decades have seen wages stagnate, full-time jobs migrate to the on-call variety, benefits cuts or eliminated, degree inflation enacted, etc. Any wonder why the “Distress Index” is ratcheting higher?

At the same time that Americans have been asked to do much more with less, we are asking them to fund, manage, and then disburse a retirement benefit. Who is kidding who? The loss of defined benefit plans for the masses is exacerbating this trend and it will only get worse. Let’s figure out quickly how to get Americans working and wages growing so that the “average” worker has a chance to survive an economic shock of much more than just $400.