Report: Rhode Islanders are 5th most financially distressed in the nation. Is it true?

With rising rents, inflation and insurance rates amid a crushing housing crisis, how are Rhode Island residents doing financially?

According to a new report from the personal finance website WalletHub, not very well. Residents are doing better than people in Michigan, Texas, Nevada and Tennessee, but worse than everyone else in the nation.

WalletHub ranked Rhode Island fifth among the states where residents are in the most "financial distress."

What does 'financially distressed' mean? See WalletHub's methodology

According to Investopedia, financial distress is a condition in which a "company or individual cannot generate sufficient revenues or income, making it unable to meet or pay its financial obligations. This is generally due to high fixed costs, a large degree of illiquid assets or revenues sensitive to economic downturns."

WalletHub compared all 50 states across nine key metrics in six categories, including:

• Average credit score
• People with accounts in distress
• Average number of accounts in distress
• Change in number of bankruptcy filings – March 2024 vs. March 2023
• “Debt” search interest index
• “Loans” search interest index

Where is Rhode Island struggling?

In two of perhaps the three most important rankings, Rhode Island was first and second (which is bad), but ranked near the bottom in another key measure.

• The Ocean State topped the list for the number of people with accounts in distress, meaning they can't pay their bills.
• Rhode Island came in second in the average number of accounts in distress.
• The state ranked 48th in the change in bankruptcy filings from March 2023 to March 2024
• It ranked 9th for bad credit scores

Another way of slicing the accounts in distress data makes the situation look even worse.

• Rhode Island ranked first in the change in proportion of people with accounts in distress from the first quarter of 2024 compared to the same time in 2023.
• Rhode Island tied with Michigan for the change in the average number of accounts in distress from the first quarter of 2024 compared to the same time in 2023.

Rhode Island was a lot closer to the middle of the pack on two soft indicators of how people are doing, the prevalence of search terms.

• The search index rank for the term "debt" was 40th
• The search index rank for the term "loans" was 22nd

Why would people be struggling?

Rhode Island is in a crushing housing crisis, with rents going up faster than anywhere else in the country.

One report puts Providence as the ninth most expensive metro area, up there with Buffalo, New York, and Seattle.

While high rents are pushing many people to buy instead, despite high interest rates, inventory has not recovered after everyone pulled their houses off the market during the pandemic. In May, the median cost of a single-family house hit $460,000, a 67% increase over April 2019, while multi-family houses are up 118% since 2019.

At the same time, the minimum wage ($14 an hour) continues to drag well below what is calculated as the living wage in the state. According to calculations from the Massachusetts Institute of Technology, a living wage in Rhode Island (based on a 40-hour work week) is:

• $24.24 for a single person ($50,419/year)
• $42.87 for a single person with a child ($89,169/year)
• $16.25 each for two adults when both are working ($33,800)
• $32.50 for two adults when only one is working ($67,600)

Compare those living wage costs to the bulk of the 1,500 jobs that Amazon has promised to bring when it opens its mammoth distribution facility in Johnston, where pay will range from $17 an hour ($35,360) to $20 an hour ($42,640) – even at its max, below a living wage in the state.

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USA Today Reporter Samantha Neely contributed to this report. Reach reporter Wheeler Cowperthwaite at wcowperthwaite@providencejournal.com or follow him on Twitter @WheelerReporter.