The fiscal crisis in Mass households needs more attention

High cost of housing. High cost of health care. Planning and financial predation are always good topics, but I don't see how you can get past the big two as causes of economic anxiety. - promoted by charley-on-the-mta

A new report out today by the Corporation for Enterprise Development looks at measures of financial security by state, and Massachusetts does not exactly shine. We do get high marks in education, healthcare, and average incomes, compared to other states. Not surprising, given the hard work and high standards of many before us, and many readers here.

But despite having the very high average incomes, relative to other states, many Mass households are financially fragile. Though 12% of Mass residents are considered below poverty –which is likely an underestimate in this high-cost state– 37% of Mass households are one emergency away from financial disaster and 47% have subprime credit scores. 

Why? Low wages are a big part, for sure, as were the disruptions of the recession. But we do need to look at predatory financial products, a culture of consumption, and a lack of financial education and planning.

A statewide non-profit organization, The Midas Collaborative, has been supporting a broad range of programs and policies that support and incentivize increased financial stability, personal savings, and consumer protection, including these. Ideas welcome! @midascollab

 



Discuss

One Comment . Leave a comment below.
  1. As someone involved in the housing industry

    I can point to a number of factors which make housing in the Commonwealth some of the most expensive in the nation.

    One is the absolute slavish devotion to union-only labor. Having built some substantial housing projects, the practical requirement (N.B. it’s illegal for cities to mandate the use of union labor, but try doing it) to build with union shop adds around 20-25% to the cost the average project.

    If you don’t think that’s meaningful, it’s the difference between a $500,000 condo and a $400,000.

    Consider this: someone who makes $50,000 can afford a $400,000 condo with 20% down. For a $500,000 condo, you’ll need income around $63,000 plus an extra $20,000 down payment.

    There’s no mystery why so many families teeter on the brink of financial disaster when so much of their income is allocated to housing.

    Union labor contributes mightily to this, and it’s not the higher union wages, either. It’s the work rules.

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Mon 22 Dec 12:41 PM