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Recent SafetyNet Survey: Wisconsin’s Workforce Lives on Financially Shaky Ground

42% of Those Surveyed Have Less Than $1,000 in Savings

First the good news: Unemployment in Wisconsin is at a remarkable low. Across the state the number of applications for unemployment benefits has fallen, and last spring the size of Wisconsin’s labor force hit an all-time high. What’s more, national employment trends continue to indicate a healthy labor economy, despite a recent slowdown statewide.

Despite such encouraging news, however, one financial study after another reports American households face an increasingly precarious financial reality. How is this possible?

That was the question SafetyNet’s Vice President of Product Development Dan Murray and his team set out to answer with their recent online survey of Wisconsin’s workforce.  “What interested us was the disconnect in our minds between historically low unemployment in Wisconsin and the results of our prior national surveys [which pointed to widespread financial insecurity],” Murray says of the impetus behind the study.

Wisconsin workers demonstrate a dearth of savings

“What we learned is that, just like the people across the country, many people in Wisconsin have no savings.  Many others have very little in savings,” Murray says. “As a result, they struggle when they have a dip in income, lose a job or have an unexpected increase in expenses.”

Of the 490 Wisconsin workers whom SafetyNet surveyed online, 42% of respondents reported having just $1000 or less in savings to carry them through a shortfall. Some 13% said they don’t have a savings account at all.

Spanning incomes from $25,000 to nearly $125,000, almost half of the respondents said they save less than 5% of their incomes each month— including 21% percent of people who said they are living pay-check-to-paycheck with nothing left to save.

A rise in expenses

Lest we conclude Wisconsinites, despite hearty employment rates, are uniquely ill-prepared when it comes to financial security, these numbers reflect national trends. And there are myriad forces to blame.

As SafetyNet Director of Innovation and Product Development Mark Greene wrote in a recent piece for The Cap Times, “the link between work and financial security has weakened in recent decades.” While wages have remained practically stagnant since the 1970s, unemployment insurance coverage has decreased while essential expenses including housing and healthcare costs continue to rise. In Wisconsin, for example, SafetyNet’s respondents reported worrying most about covering (in order of degree) housing, health insurance and groceries.

Like most hardworking Americans, Wisconsin residents still strive to build their emergency funds and retirement nest eggs while paying their bills each month, but they run into some significant financial challenges. When asked “What keeps you from saving money,” the top 3 answers were:

  • Not making enough money (48%);
  • Paying off credit card debt (16%);
  • Medical expenses (11%).

For many, these activities prevent them from accruing that cushion of savings meant to soften the income shocks that rock their routines.

An abundance of shocks

And those shocks are sure to come. According to analysis by the New School of Social Research almost everyone (96%) will endure not just one but 4 income shocks during their working lives. That means facing at least a 10% drop in income due to job change, job loss or ill health—a few times over.

Closer to home, about 26% of SafetyNet’s survey respondents reported they were unable to bring in an income over the past five years due to lay off, illness or disability.

infographic one in four need income insurance

Their plan for staying afloat in the face of unexpected income loss? Responses included: tightening their belts, relying on what savings they do have and borrowing from friends, family or their own retirement accounts.

It’s no wonder that one in four respondents said they worry about potential job loss today.

“When you combine this with the insight that people often have little or no savings,” Murray says, “you realize that a significant portion of our population is living on the edge.”

New solutions for new challenges

Like the causes of this new financial reality, the solutions, too, are myriad. Improved wages, increased public assistance and assessable financial wellness programs are initiatives known to buttress a shaky financial foundation. Newer to the field are innovative products like SafetyNet, an insurance program that provides workers with a lump sum emergency fund after an unexpected layoff, injury or illness.

inf: top savings blockers and boosters for Wisconsin workers

“One in four Wisconsinites needed this coverage, and would have been far better off with the coverage, in just the last five years,” Murray says. “We have a mission to help the struggling American consumer by providing them with affordable access to the financial tools they really need.”

Unlike most financial companies, Murray says, SafetyNet, asks the consumer to drive the product. “Instead of saying, ‘You need the products we sell,’ we’re asking people what their financial lives are really like and what they need from us to be more in control of their finances,” he explains. “It’s very simple and very basic.”

Beyond providing income loss insurance, SafetyNet also provides innovative tools designed to increase workers’ financial wellbeing. SafetyNet’s free blog, for example, provides budgeting tools and tips on everything from and financial planning, job loss and shopping.  They also seek to forge partnerships with other “entrepreneurs, companies, and public and private sector organizations who really want to help.” Together, Murray says, “we can reduce the pain people go through from these income shocks.”

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