Modest Improvement in Low-Income Families’ Ability to Meet Basic Needs Despite Improving Economy

A recent study by the Urban Institute, “Despite Labor Market Gains in 2018, There Were Only Modest Improvements in Families’ Ability to Meet Basic Needs,” found that families saw little improvement over the past year in their ability to meet basic needs despite rising employment and real wage growth. The survey highlighted economic challenges beyond employment that may help explain the persistently high rates of hardship among adults in low-income families, including unexpected income losses, inadequate savings, household members with disabilities, lack of health insurance, and high housing costs relative to income.

According to the study, the share of adults aged 18 to 64 who experienced a material hardship, defined as trouble paying for housing, utilities, food, or health care, in 2018 was 38.5 percent, statistically unchanged from 2017. The report is based on the Urban Institute’s Well-Being and Basic Needs Survey, a nationally representative survey of more than 7,500 adults between the ages of 18 and 64. The Urban Institute conducted the survey in 2017 and again in 2018.

It found that between 2017 and 2018, the share of adults with a material hardship did not statistically change, while the share with multiple hardships declined from 23.6 percent to 22.3 percent. The share of adults with trouble affording their utility bills declined from 13 percent to 11.1 percent, and the share with problems paying their medical bills declined from 18 percent to 16.6 percent. The share of adults with trouble paying their rent or mortgage (9.3 percent), affording food (23.1 percent), or having an unmet need for medical care because of costs (17.8 percent) did not statistically change.

Low-income adults with family incomes below 200 percent of the federal poverty line were much more likely than adults in higher-income families to face a material hardship (61.1 percent vs. 28.3 percent), including food insecurity (43.6 percent vs. 14.1 percent), problems paying for their housing (16.7 percent vs. 5.9 percent), problems paying their utilities (20.5 percent vs. 6.9 percent), problems paying for medical bills (25.1 percent vs. 12.9 percent), and unmet medical care because of costs (27.8 percent vs. 13.4 percent). Between 2017 and 2018, 3.3 percent of adults in low-income families were evicted or forced to move compared to less than 1 percent of adults in higher-income families.

The authors note these findings underscore that, although employment is a critical determinant of families’ ability to meet basic needs, it’s not the only factor, and further progress is likely to depend on policies to raise and stabilize incomes, offset the cost of essential expenses, and provide a buffer against adverse financial shocks.