Will slow wage growth create another consumer debt crisis?

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“One of the false selling points of the tax cut was that employers would more often feel ‘charitable’ in sharing their own benefits from that move, but the reality is employers, by and large, are only going to pay the wages they absolutely need to pay,” Hamrick said.

As the unemployment rate drops, more companies are hiring less-skilled workers — whom they can pay less, but who may have to be trained at the employer’s expense — and finding new ways to attract and retain workers, like Walmart’s announcement this week that it would begin subsidizing college education for its workforce.

“The other part is the rising cost of benefits,” Hamrick added. “The rising cost of health insurance is essentially a form of compensation that doesn’t end up in the wallet.”

Credit experts said promises of trickle-down tax cut-related pay raises may have given some borrowers unrealistic expectations about their own financial well-being and ability to handle a larger debt load.

“People seem to have this idea in their minds that 2018 is the year when they’re going to be paying off debt, more so than they have in the past,” said Jill Gonzalez, senior analyst at Wallethub.com. “I think people hear these big, high-level ideas and somehow that helps shape what their picture is of their own finances,” she said. “There’s definitely a disconnect there.”

“The reality is that about 40 percent of the U.S. population is living paycheck to paycheck.”

“The reality is that about 40 percent of the U.S. population is living paycheck to paycheck.”

“The concern related to the subprime market is that these individuals aren’t as resilient when it comes to surviving a financial shock,” said Bruce McClary, spokesman for the National Foundation for Credit Counseling. “One small thing could be the tipping point. That’s an area of concern.”

That small thing could be the increase in interest rates, which some credit market experts were already expecting to be a problem for people with tenuous financial stability.

“The reality is about 40 percent of the U.S. population is living paycheck to paycheck,” Hamrick said. “With rising inflation and rising interest rates, the risks are only rising for borrowers.”

Credit pros predicted that lenders, after being burned by the lax lending standards they extended to borrowers a decade ago, will tighten their terms, requiring higher credit scores, curtailing credit limits and promotional interest-free offers. In harder-hit sectors like retail cards and subprime car loans, this is already happening.

“These originators have pulled back,” Cutts said. “They opened the door wider, performance is not what they wanted it to be and they’ve since curtailed their lending a little bit in response.” A more measured loosening of credit terms combined with a swift response to indications of instability will help contain the losses and prevent contagion by insulating lenders from broader losses, she said. “The card lenders, even if they made a bad decision last year, can very quickly turn that around.”

But while the banks will do just fine, the prospects for struggling borrowers aren’t as bright.

“I do think they’re going to be becoming a little more stringent in how they’re lending,” Gonzalez said. “If anyone is going to be hurt, it’s going to be consumers who’ve gotten so used to this open credit landscape.”

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