Washington, D.C. — In Massachusetts today, 26.4 percent of households are “asset poor,” meaning they have little or no financial cushion to rely on if unemployment or another emergency leads to a loss of income, according to a report released today by the national nonprofit Corporation for Enterprise Development (CFED).
The report “2012 Assets & Opportunity Scorecard” ranked Massachusetts 10th in the country overall for how their residents fare in terms of achieving financial security. Many of Massachusetts’ residents have jobs, but they lack adequate savings or other assets to cover expenses for three months if they lose a steady income.
Asset poverty, the Scorecard’s signature measure, is a conservative estimate of financial security since it counts all assets, including those — such as a home — that would need to be liquidated to be used for day-to-day needs. A more realistic measure of the resources available to families is “liquid asset poverty,” which excludes assets such as a home or car that are not easily converted to cash. Excluding these assets, the liquid asset poverty rate increases to 34.9 percent of Massachusetts residents.
For asset poor families, scraping by day to day is a constant struggle and investing in the future is all but impossible.
“Growing numbers of Americans have almost no savings or other assets to fall back on if they lose their jobs or face a medical crisis,” said Andrea Levere, president of CFED. “Without those savings, few will be able to invest in a more economically secure future, including buying a home, saving for their children’s college educations or building a retirement nest egg.”
Massachusetts earns an “F” in Housing & Homeownership, ranking 45th in overall homeownership rate, 49th in homeownership by race and 48th by income and family structure.
The state ranks 47th when it comes to affordability of homes and 38th in housing cost burden of homeowners. The state earns an “A” in Education, receiving the top spot in both 8th grade math and reading efficiency, and 2nd place in two- and four-year college degrees. However, the average college graduate debt rank is 39th and 34th in college graduates with debt.
Nationally, the Scorecard paints a picture of a country where low- and moderate-income families continue to fall further down the economic ladder more than two years after the official end of the recession.
• More than half of consumers (56 percent) have sub-prime credit scores.
• Between the third quarters of 2008 and 2011, the home foreclosure rate increased by 50 percent, widening the already-considerable homeownership gap between white households and households of color. As of 2010, 73 percent of white households owned homes, compared with just 47 percent of households of color.
• One in five jobs is low-wage and nearly half of employers do not offer health insurance. In addition, 55 percent of workers do not have or participate in retirement plans.
• While the number of people getting four-year college degrees is up slightly, the average debt for graduating college seniors has risen 19 percent since 2007 to $25,250.
Levere added that the Scorecard findings are “particularly disturbing in the context of precipitous drops in incomes for many Americans and widening of the wealth gap between the richest and poorest households.”
The report found growing racial gaps in asset poverty, with the number of people of color who are asset poor more than double the number of white people (43 percent versus 20 percent). The number of people of color who were found to be liquid asset poor was nearly double the number of white people (60 percent versus 32 percent).