Texans teeter on personal fiscal cliff
Dallas Morning News
Jan 30, 2013
Talk about living on the edge. Half of Texas residents have almost no savings to fall back on if they lose their job, have a health crisis or other financial crisis, according the Corporation for Enterprise Development.
The nonprofit group, which aims to help low- and moderate-income consumers build and preserve assets, released is 2013 Assets & Opportunity Scorecard, which looks at Americans’ ability to save and build wealth, fend of poverty and create a more prosperous future.
The study explores how well residents are faring in the 50 states and the District of Columbia, and assesses state policies that are helping residents build and protect assets across five areas: Financial Assets and Income, Businesses and Jobs, Housing and Homeownership, Health Care and Education.
Texas ranked 39th overall across all states, compared with 41st last year, but the ranking isn’t the number we need to worry about.
“The number I would highlight would be that half of Texans are what we would call ‘liquid-asset-poor,’ meaning that they don’t have three months of savings to rely on for some reason if they lost a job, a medical emergency,” said Jennifer Brooks, director of state and local policy at CFED.
And it’s not just the really poor people who are struggling.
“We would expect that the people who are liquid-asset-poor are also the income poor, the people we think of generally as poor,” Brooks said. “That’s true, but it’s also the case that a significant proportion of people who would consider themselves middle class are also living on the edge. In Texas, it’s actually 28 percent of households that earn between $55,045 and $86,448.”
Those folks have less than three months worth of savings in the bank, CFED said.
“As people lost jobs, as they were faced with a very difficult economy, they had to dip into whatever kind of personal safety net they had, and now this far into a difficult economy, there’s not much left,” Brooks said. The state outcome rankings are a measure of financial prosperity and how that prosperity is shared and safeguarded. Texas got a “D” in Financial Assets and Income, a grade driven by a high poverty rate and a poor performance in the Scorecard’s three banking measures.
Almost 13 percent of Texas households are unbanked, the second worst rate in the nation, and 27 percent are underbanked, meaning that they have an account but continue to rely on alternative and often costly financial services.
Additionally, more than 65 percent of Texas consumers have subprime credit scores, ranking 49th, compared with other states.
Texas got an “F” in Health Care and ranked 49th in that area.
That’s not surprising, given that Texas has the highest rate of uninsured residents in the U.S. at 25 percent.