Everyone knows that poverty has been increasing in the United States for the past couple of decades.* However, if we take into account households’ ability to weather a financial emergency, the number of the poor and near poor—the “asset poor”—is much higher.
According to a new study by the Corporation for Enterprise Development, the 2012 Assets & Opportunity Scorecard, the number of “asset poor families”—families do not have the savings or other assets to cover basic expenses (equivalent to what could be purchased with a poverty level income) for three months if a layoff or other emergency leads to loss of income—has increased by 21 percent from about one in five families to one in four families. And the percentage of “liquid asset poor families”—a measure that excludes assets such as a home, business, or car that can’t easily be converted to cash—rises to 43 percent.
the asset poverty and liquid asset poverty data tell a story of families who increasingly have nothing to fall back on and little prospect of building a more prosperous future. This story is particularly true in parts of the country where policy has not kept pace with need. For example, in Nevada, which provides little support for programs that increase financial security, more than 45 percent of residents are asset poor – the highest rate in the nation. By contrast, Vermont, the state with the lowest asset poverty rate in the country (15.7 percent), has long supported programs that help residents improve their financial stability and future opportunities.
The story is especially disturbing for households of color, who are more than twice as likely as white households to be asset poor – 44 percent compared with 20 percent, respectively. Nearly double the proportion of households of color are liquid asset poor compared to white households (65 percent and 34 percent, respectively). . .
Without intervention, the United States is on a trajectory toward even greater disparities in income, wealth and opportunity. . .
* Everyone, that is, except of course the Mitt Romneys of the world.