Nearly half of households headed up by a single mom don't regularly use a bank account and rely on pricey alternative financial services, according to the surprising findings released by the Federal Deposit Insurance Corporation on Wednesday.
In 2011, more than 8 percent of all American households conducted all of their financial transactions somewhere other than a bank. That’s an addition of more than 800,000 households who went off the banking grid since 2009, according to the FDIC.
But for single moms, the percentage of unbanked households totaled over 19 percent in 2011. Including those households with only a marginal banking relationship, that number increased to more than 48 percent of households headed by a single mom.
"[Unmarried female head of households] are twice as likely to be unbanked as the general population, and they report that they would like to open a bank account...and are using alternative financial services," Keith Ernst, associate director of Depositor and Consumer Protection at the FDIC, said. "You have all the ingredients that this population is more likely to join the banking the system."
Ernst, who was involved with the research, said unbanked households don't use a traditional financial institution for two common reasons: a lack of money or a lack of interest in being part of the banking system. This comes as banks are hiking fees and prices, making services more expensive all around. A basic checking account costs more than $144 per year on average, according to a recent survey from MoneyRate.
These latest FDIC figures underscore how disproportionately single mothers face conditions that lead to poverty. According to the FDIC, single moms are also more likely to use alternative financial services, which tend to come with high fees and don't typically offer services like savings accounts. In short -- financial services that don't usually offer a steady path to getting out of poverty.
The FDIC's position, which is supported by consumer groups, is that access to a bank account provides a building block to economic opportunity, opening the door to building credit, financial security and the ability to get loans. Bank accounts also create a pathway to savings accounts and other savings programs.
"The [banking] relationship offers an account as a gateway to other products to help consumers meet financial needs and goals, whether it is to borrow money to buy a car or house," said Mark Pearce, director of Depositor and Consumer Protection at the FDIC.
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Workers are not reaping the gains of their extra productivity.
Worker productivity grew 11 times more quickly than worker pay between 1979 and 2011: While <a href="http://stateofworkingamerica.org/key-findings/" target="_hplink">worker productivity rose 69 percent</a>, median hourly compensation rose just 6.5 percent, according to the Economic Policy Institute. [Chart credit: <a href="http://stateofworkingamerica.org/chart/swa-wages-figure-4u-change-total-economy/" target="_hplink">Economic Policy Institute</a>]
CEO pay has skyrocketed.
Maybe it's time to consider your CEO's massive pay package as a cut out of your own paycheck. <a href="http://stateofworkingamerica.org/wages/" target="_hplink">CEO pay is more than 200 times</a> that of a typical worker, up from 30 times that of a typical worker in the late 1970s, according to the Economic Policy Institute.
There aren't enough jobs.
At its current rate of job creation, the U.S. will not return to its pre-recession unemployment rate of around 5 percent before 2020, according to the Economic Policy Institute.
Job growth was slow even before the recession.
From the Economic Policy Institute: "The business cycle from 2000-2007 is the weakest full business cycle on record for job creation, due to the fact that demand was insufficient to drive overall GDP gains that were robust enough to generate strong job growth." It appears that the middle class squeeze has hurt job creation and economic growth.
We are poorer than we could be.
Households in the middle fifth of income distribution would have been making $18,897 more per year as of 2007 if their incomes had grown as quickly as overall average incomes between 1979 and 2007, according to the Economic Policy Institute. (The sizable income growth for top earners since 1979 skewed the overall average.)
The rich have captured most income growth.
The top one percent captured 60 percent of total income growth between 1979 and 2007, while the bottom 90 percent was left with just 9 percent of the total, according to the Economic Policy Institute. Moreover, the top one percent's incomes rose 241 percent, in contrast to 11 percent growth for the bottom fifth and 19 percent growth for the middle fifth. [Chart credit: <a href="http://stateofworkingamerica.org/chart/swa-income-figure-2a-real-median-family/" target="_hplink">Economic Policy Institute</a>]
Wages have grown more quickly for the rich.
Wages for the top one percent spiked 131 percent between 1979 and 2010, while wages for the bottom 90 percent of workers rose just 15 percent over that same period, according to the Economic Policy Institute. [Chart credit: <a href="http://stateofworkingamerica.org/chart/swa-wages-figure-4h-change-real-annual-wages/" target="_hplink">Economic Policy Institute</a>]
The poorest Americans are earning less than in 1979.
Americans in the bottom tenth of the wage distribution earned less last year than the lowest earners did in 1979, accounting for inflation, according to the Economic Policy Institute. Meanwhile, the real wages of the median worker rose only 6 percent between 1979 and 2011.
The American Dream is eroding.
"Families headed by early baby boomers (born between 1945-1954) are the last generation (on average) to achieve higher living standards than the one that preceded them," the Economic Policy Institute says. Among families with incomes below $28,000 in 1994, less than 1 percent made it to the top fifth of incomes 10 years later, according to the Economic Policy Institute.
This has been a lost decade.
On average, hourly pay has not grown at all since 2002 for workers with a college degree or with only a high school degree, according to the Economic Policy Institute. Wages have not grown for college graduates in nearly every occupation, and college graduates in the 70th income percentile or lower have had stagnant or falling wages since 2000. [Chart credit: <a href="http://stateofworkingamerica.org/chart/swa-wages-figure-4a-change-total-economy/" target="_hplink">Economic Policy Institute</a>]