Americans live beyond their means. In some states, debt as a ratio of income is greater than 2. In order to live within their means, we'll look at how many extra hours people in each state would need to work to make debt account for less than 25% of their income.
Debt is a huge problem in the United States. The Federal Reserve publishes data relating the amount of debt held by workers compared to their income. In some states, workers have debt levels equal to 2 years' pay. With debt that high, getting rid of it, is a nearly impossible task. Pay checks go to much more than debt service. And the behaviors that led to debt will only lead to more debt...you can't spend your way to financial freedom.
The issue is that American consumers have a greater spending appetite than they can afford. To paraphrase, they have champagne dreams on a beer budget. And its not just those who insist on driving luxury cars or live in McMansions. Across the nation, only North Dakota has an average debt to income level less than 1. That means that in North Dakota, workers only have as much debt as one full year's pay. It should be fairly obvious that workers in North Dakota are only the best of the worst...a little like being the best hitter on a last place baseball team.
If Americans held debt at responsible levels, they would owe only a maximum of 25% of one year's pay. Even at that level, the average working American would owe approximately $12,073.62 instead of the $69,652.95 they currently owe, on average. That is a significant difference in the average amount owed per American worker of $57,579.33. This begs the question, how much more do Americans need to work in order to have an income large enough to bring their debt to the 25% level?
According to the U.S. Census Bureau, that average American worker earns $928.74 per week. Assuming that worker works 40 hours in a week, that puts the average hourly wage at $23.22. That hourly rate will be the assumed rate of pay for these calculations.
In California, the average ratio of debt to income is 1.82, or stated in a different way, their debt is 182% as large as their income. A worker earning an average wage in California has $87,895.95 in debt. To bring that amount of debt in line with the 25% target, the income the average Californian worker requires is $351,583.81. Somehow, a worker in California would need to locate an additional $303,289.33 in income per year. Working at a rate of $23.22 per hour, that average Californian worker would need to work an additional 13,061.56 hours per year, or 251.18 hours per week. Given a week only has 168 hours, and 40 are already spent at the worker's day job, it is not possible to a Californian to make up the difference with an additional job.
The situation across the United States is not much better. Only 3 states have workers who have any glimmer of hope at adding a second job and getting their debt to be a more manageable 25% level. The District of Columbia, New York, North Dakota would each require workers to spend an additional 78.4 hours at work each week, in addition to the 40 they currently spend. That means workers in these three states would be at work for total of 16.91 hours a day, 7 days a week.
Summary
Getting debt to within 25% of income is challenging for workers across the United States. The amount of extra work necessary to go from current debt levels to a more reasonable level means many Americans would need to work for more hours than are in a single day. By having such large debt and no tools to reasonably escape, workers in all states except DC, New York and North Dakota are out of options when it comes to taking on more work in an effort to increase their income for the purpose of paying down debt. The idea that debt levels should be 25% or less than income seems to be pervasively foreign across the United States, with some states having average debt to income levels of more than 2, and a national average of 1.44. To transform a debt to income level from 1.44 to .25 means that either the average amount owed ($69,652.95) needs to be brought down to 25% of income ($12,073.62) or income needs to increase so that current debt is 25%. That income for the average American would be a staggering $278,176.20 per year.
Do you have debt that is only 25% of your annual income? How did you get it to a level that is reasonable? Do you work an extra job for the purpose of trying to reduce your debt burden? How long have you been working in multiple jobs?