Many Americans are getting poorer while they work longer.
Large debts are more common here than in Australia. The US medical system has bankrupted many people, and many are burdened by student loan debt that some will owe (at compounding interest) until they die. According to a 2013 Federal Reserve report, fewer than half of all Americans said they’d be able to come up with as little as $400 on short notice to deal with unexpected expenses, such as a car repair or medical bill, without selling something or borrowing money. As well, millions of Americans are still grappling with debt they accumulated since the recession.
In the US and Australia there are legal provisions for debtors to recover what they owe through wage garnishment. In Australia, the garnishee must be left with a minimum amount of money to live on (currently $458.40 per week as at April 2014). In the US Federal law limits the amount to 25% after tax.
An astonishing one in ten working Americans between the ages of 35 and 44 are getting their wages garnished and most garnishments are at the upper percentage limit. On a $7.50 per hour wage, $400 is about 54 work hours.
In the past, the vast majority of wage garnishments recovered child support payments or unpaid taxes. Consumer debt has taken the lead in garnishments since the recession for workers earning $25,000 to $40,000 a year.
Poverty in America has infected many more people and risen up the ‘income ladder’.
For many Americans, life has been broken.