CFED Scorecard Release Highlights Widespread Asset Poverty

CFED released their 2012 Assets & Opportunity Scorecard today and held a webinar to introduce new data on asset poverty, financial security, and sound policy approaches. This is the 10-year anniversary of the Scorecard, which grades all 50 states and the District of Columbia in five key areas: Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education.

The speakers on the webinar framed the issue of rising asset poverty as one of profoundly diminshed economic security. Asset poverty is defined as the percentage of households who lack sufficient net worth to subsist at the poverty level for three months in the absence of income in 2009 figures.While poverty is typically defined by income alone, including data on asset holdings paints a clearer picture of families’ actual stability. Notably, the asset poverty rate is nearly double that of the income-based poverty rate (27% to 14% nationwide).

CFED recognizes that not all assets are functionally the same, of course. While a family can draw money from a savings or checking account quickly in an emergency, wealth in the form of a home is not easily tapped into in the event of an emergency. Particularly with the housing market still on shaky ground, having liquid assets is the key to remaining stable during uncertain economic times. That’s what makes the liquid asset poverty rate section of the Scorecard particularly alarming. A whopping 43% of Americans are defined as liquid asset poor. In dollars, that’s a family of three with liquid assets totaling less than $4,632, a sum easily consumed by the cost of a major medical emergency, a car repair, or other emergency.

The Scorecard also allows comparison across racial groups for each of the categories data are available. Families of color consistently have twice the rate of asset poverty as white families. This is true even in states that are doing comparatively well: 52% of Massachusetts families of color are asset poor compared to 22% of white families. With 19% of all Americans having zero or negative net worth, asset based policy approaches are not only smart but indispensable.

A wide range of policies are included in the Scorecard. For example, improving job quality, particularly for low-wage workers, is one part of addressing asset poverty for working people. Almost half of companies do not offer health insurance to workers and 55% of employees do not participate in a retirement plan. Meanwhile, sound policies to address disparities in homeownership are also desparately needed as foreclosures continue to have a disproportionate and devastating impact on communities of color. CFED’s speakers on the webinar emphasized the critical role that public policy must take in addressing problems within each target area. The federal government remains the major provider of asset building opportunities but these benefits remain skewed to the wealthy and do little to eradicate racial disparities. State policies modeled on these flawed federal ideas replicate the same problems at the local level. The Scorecard presents concrete policy solutions within each target area that advocates and policymakers can use to build support at all levels for well-crafted asset-based policies that promote stability for families and individuals, eliminate institutional barriers, and address disparities.