Updated April 22, 2026 at 5:07 PM EDT
Less than half of Americans have $1,000 saved up in case of an emergency, according to an .
That鈥檚 because saving for retirement and emergencies, while juggling the rising costs of the basics, can be tough in this economy.
鈥淚f you don鈥檛 make enough money, you don鈥檛 save enough,鈥� said labor economist . 鈥淎nd although we have a very well-intentioned personal finance and financial advice industry, there鈥檚 not much advice you can give to someone who is at a severe disadvantage when it comes to affording their own life.鈥�
Edwards suggested the government could do more to create a nation of savers.
6 questions with Kathryn Anne Edwards
There are some retail surveys out that suggest more people plan to use their tax refunds this year to pay off bills and debt, rather than save. Does that line up with what you鈥檙e seeing?
鈥淚t lines up perfectly with what we鈥檝e seen from the labor market and from credit markets. The U.S. labor market has had a low unemployment rate, but has been in steady decline for about four years. We鈥檙e not seeing as many people quit. We鈥檙e not seeing as many people get hired. And we鈥檙e not seeing high wage growth.
鈥淪o how do you afford a more expensive life when your wages aren鈥檛 rising that quickly? You borrow. And so, in tandem, we have seen an explosion in consumer credit, consumer debt, and even over the past, say, nine months, a steady increase in the number of 90-day delinquencies on that rolling debt.
鈥淣ow, it鈥檚 not like the 2000s when a lot of the explosion in debt was coming from [the] housing market. You saw mortgage debt and home equity lines of credit take off. Today鈥檚 debt is much more in the consumer credit market. So, auto loans, credit card loans and other unsecured loans.鈥�
How much of this savings barrier that you鈥檙e talking about is related to inflation?
鈥淚t鈥檚 hard to tell. I think inflation is that much more salient. You know, we see the price tag. We see the amount on the bill, we see the amount on the receipt, and we have sticker shock from it.
鈥淏ut the real driver of affordability and the lack of affordability in the U.S. has been an underperforming labor market that [has] had five decades of issues when it comes to just remunerated wages for the U.S. worker. But it鈥檚 harder to see the wage side, right?
鈥淵ou can see that you know, you have a bill that went up. And there鈥檚 a lot of psychology behind numbers and emotions behind numbers of, 鈥楾his is how much I had in my head something cost 鈥� and now it鈥檚 more.鈥� We don鈥檛 really necessarily see the whole board of wage stagnation played out over several decades for the U.S. worker.鈥�
But Americans also love to buy stuff. Isn鈥檛 consumer spending the biggest driver of the U.S. economy?
鈥淵es, but that鈥檚 not because of some kind of personal fault of American households that we鈥檙e just so spendy and we don鈥檛 like saving. Part of it is that we need to just afford and buy our lives.
鈥淧art of it is that a post-industrialized economy tends to move towards consumption and away from production. And of course, we don鈥檛 necessarily have the infrastructure in place to encourage saving. A lot of the things that we鈥檇 like to blame an individual on, to say, 鈥榊ou鈥檙e not great at savings鈥欌�� Saving is manipulable by public policy. And we have really good evidence that we can get Americans to save, it鈥檚 just we withhold it from a lot of people.鈥�
What鈥檚 an example of how the government could help people save?
鈥淲ell, you probably read about how there鈥檚 a record number of millionaires in the United States. We have roughly 22 million people who have over $1 million dollars in net wealth. Those people don鈥檛 make better decisions than the rest of us, who are all suckers. A lot of them are defaulted into 401(k) savings plans from their employer.
鈥淲e鈥檝e learned, since 401(k)s started to replace defined benefit plans in the early 1990s, when you lost pensions and gained an investment account, you know, people didn鈥檛 sign up for them. And throughout the 90s, you saw participation rates in the low 30s, mid-30s. So, then they started to do experiments that say instead of having people sign up, figure out what they鈥檙e going to invest in and figure out how much they鈥檙e going to invest, what percentage of their paycheck. Why don鈥檛 we just put everybody in an account, put everybody in a plan, sign them up for some default status and see how many people decide to leave? And participation rates, for one case, went from the 30s to the high 80s. It was a more than 50-point jump in the people who saved when they were defaulted into a plan.
鈥淭wenty years later, we enshrined in , that if you get a retirement plan from your employer, they legally have to enroll you in the plan and have to escalate your contributions as you age. We are saving on your behalf, and we are really, really good at it. But we only offer it to workers whose employers have decided that they are worth a 401(k) 鈥� and not everybody else.鈥�
Housing prices are also way, way up. So, if you own a home, that might be another reason why you鈥檙e a millionaire on paper, but you might not necessarily feel that rich, right?
鈥淵es. And the home prices over the past 25 years have been through a roller coaster. A lot of people say the housing market has been one of the more difficult aspects of their life in terms of affordability.
鈥淏ut I think we quickly jump from broad macroeconomic problems like a housing market that was unregulated, that led to a foreclosure crisis, to individual decisions of whether or not to save. Individual decisions of whether or not they can afford that down payment for a house. When, at the same time, you could set up a savings account for a home when you鈥檙e born. [Former President Barack] Obama tried to do it. It was called the myRA [my Retirement Account]. [President] Trump is trying to do it. It鈥檚 called the Trump accounts. We could set up an automatic retirement account for every single worker in the U.S., whether or not their employer wants one or not.
鈥淭hese don鈥檛 have to be withheld from Americans or gatekept by their employers. There鈥檚 lots of great policies to turn America to a country of savers. We have them. We know they鈥檙e successful. We do not implement them.鈥�
Any advice for people?
鈥淚 don鈥檛 think I have good advice. I think there鈥檚 so much judgment in the personal finance space and personal decision-making of you. 鈥楧id you do this? Did you save this? Did you have this?鈥� What we have learned from research and studies of American households is that they are incredibly resourceful and strategic in trying to make ends meet. I wish they didn鈥檛 have to be so.鈥�
This interview was edited for clarity.
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produced and edited this interview for broadcast with Locke also produced it for the web.
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