52% of American workers are struggling financially (only 10% are thriving)

More than half of American workers in a recent survey were found to be struggling with financial security. And if you are Black, Latino, or a woman, you are much more likely to be in that group.

These findings were published in the “Research Minute” blog by the Defined Contribution Institutional Investment Association (DCIIA). The blog is a series of short analytical reports on current retirement research and behavioral economics ideas.

The group is currently publishing analysis of a study entitled “Who Is Being Left Behind” which looks at financial security among American workers. The researchers surveyed 2,004 workers ages 21 to 75 via online surveys in the first quarter of 2021. Survey respondents were asked about various financial topics related to their long-term and short-term assets, as well as debt, financial wellness, and financial health questions.

Four segments of financial security

The first DCIAA post on the financial security study outlined the four segments that emerged from the research. These were:

• “Thriving,” which represented 10% of the respondents. These workers had high long-term assets, high short-term assets, and low debt. They were also relatively older and married.
• “Getting Along” represented 30% of workers. These individuals had above-average assets, average short-term assets, and below average debt. The blog noted that this segment is close to the average age of those surveyed, and also more likely to be married.
• “Optimistic with Debt” represented 7% of those surveyed; this group had above-average assets, very high short-term assets, and very high debt. They were younger and also likely to be married with two or more children.
• “Struggling” was the largest group: this represented 52% of workers. They had low long-term assets, low short-term assets, and low debt. This large group is also younger; nearly two-thirds are unmarried, and more women fall into this segment.

The DCIIA researchers concluded that American workers fall into diverse groups, but that more than half are struggling with financial security. “Almost a third of the surveyed population has greater financial security with slightly more than average assets and slightly less than average debt,” the blog post said. “Only one in 10 are truly thriving with higher amounts of long and short-term assets and low amount of debt.”

Ethnicity and gender are key

The second post on the “Who’s Being Left Behind” study discussed the strong correlation that links race and gender to financial insecurity.

“It is notable that just over half of all workers fall into the ‘Struggling’ group’,” the researchers said. “However, when dissected by ethnicity and gender, we found that the “Struggling” segment is much more heavily represented by Black (71%) and Hispanic (73%) workers as compared to white and Asian workers. The latter are relatively more likely to make up the “Thriving” and “Getting Along” groups. Further, women comprised significantly more of the “Struggling” segment than men (59% v. 45%).”

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White workers had a large number of respondents in the “Struggling” group—50% of that ethnicity were struggling. But compared to other ethnicities, Whites were in better shape; 43% were either in “Thriving” categories (11%) or the “Getting Along” group (32%). Blacks had only 21% in those two categories, Hispanics had 23% in the relatively more secure categories.

In the gender categories, 45% of men were either “Thriving” or “Getting Along;” 36% of women were in those two categories.

The DCIIA blog noted it would publish more analysis on the intersection of ethnicity and gender with financial security in coming weeks.