Posted by: Howard Dvorkin, CPA
Date of post: September 8, 2014

If Americans are working harder than ever, how can they be more in debt than ever?

Last month, two tiny polls were released on the same day, and no one covered them. Combined with the big headlines from August, they reveal a lot.

The first poll, from travel website TripAdvisor, asked more than 16,000 employees in 10 developed countries about their paid vacations. Americans have the fewest paid vacation days of anyone — an average of 18 compared to 29 for Russians and 31 for the French. However, 91 percent Americans will check their email while on vacation — that’s more than anyone else. The global average is 65 percent.

Even worse, American workers aren’t even taking the vacation time they do have. Another poll, this one commissioned by the U.S. Travel Association, says 40 percent “leave vacation days on the table” and coins the term “worker martyr complex” to explain why.

“It’s because ‘busyness’ is something we wear as a badge of honor,” says USTA CEO Roger Dow. “But it’s also because we’re emerging from a tough economy and many feel less secure in their jobs.”

So if we agree that Americans aren’t slacking, how to explain this debt riddle, that one-third of all U.S. adults have unpaid debts in collections?

It’s not the unemployed and under-employed

There are nearly 107 million full-time workers in this country, compared to 9.7 million officially unemployed, according to the Bureau of Labor Statistics. Underemployment is hard to measure, but by some accounts, there are at least as many under-employed as unemployed. Last year, NPR figured the total at 22 million. Using that, it still leaves many full-timers with massive debt problems.

It’s not wages

According a BLS report on the same day those two polls came out, “Real average hourly earnings was unchanged, seasonally adjusted, from July 2013 to July 2014.” Looking further back, the Social Security Administration says its “national average wage index” rose 3.12 percent from 2011 to 2012 (the last year it’s reported).

It’s not inflation

The Consumer Price Index has mostly been holding steady. The BLS reports it rose 2 percent over the past 12 months. In July, it rose .1 percent, its smallest increase since February.


So what is it?

Some experts have argued the Great Recession so devastated families that the effects are still lingering. While I certainly believe that, I think more is going on here.

During the height of the recession, Americans cut back on their spending. While many lost real wages either due to unemployment of under-employment, they also spent less.

The past few years, however, Americans have ramped up their revolving credit. That’s mostly credit card debt, and in April, it surged $8.8 billion – the largest jump in any month since November 2007. Since then, credit card debt has continued to climb, albeit at a lesser pace.

This has pleased retailers and the stock market, since consumer spending is what drives our economy. So in response, businesses are ramping up their advertising, enticing Americans to spend more.

As I wrote in my book Power Up

Every day, mailboxes around the country are filled with zero-percent financing offers and other promises from credit card marketers. Just fill in the blanks and they’ll do the rest. It’s a message that plays right into the American psyche: There’s no better way to get what you want – a new flat screen, shoes, stereo, a lavish night on the town – than with a credit card.

This may sound simplistic, but I believe we’re looking in the wrong place to explain America’s debt problem. It’s not financial, it’s psychological.

Howard Dvorkin is a CPA and chairman of, an educational resource for those who want to conquer all forms of debt in their lives.