Almost half of Louisianians have little or no savings
KNOE 8 News
Feb 1, 2012
WASHINGTON, D.C., (KNOE 8 News) - A group known as CFED, or national nonprofit Corporation for Enterprise Development, released a report today that claims Louisiana residents are in very poor shape financially.
According to the report, 23.6% of Louisiana 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 company's 2012 Assets & Opportunity Scorecard ranked Louisiana 36th in the country overall for how their residents fare in terms of achieving financial security across 52 measures in five different issue areas. Most of Louisiana's 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 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 46.8% of Louisiana 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."
The Scorecard explores how well residents are faring in the 50 states and the District of Columbia and assesses policies that are helping residents build and protect assets across five issue areas: Financial Assets & Income, Businesses & Jobs, Housing & Home ownership, Health Care and Education.
The Scorecard suggests a dozen policy solutions that might help Louisiana increase opportunity and promote financial well-being for all residents. To address high rates of income and asset poverty, Louisiana should increase its state Earned Income Tax Credit so working families have more income left over to save, reinstate funding for its state Individual Development Account program to help residents build assets, and protect families from predatory credit products by prohibiting or capping payday and installment loans. To increase math and reading proficiency and help boost college attainment rates, Louisiana should increase funding for K-12 education among high-poverty school districts, close teacher licensure loopholes and expand college savings incentives through the state 529 plan. In addition, to combat its high uninsured rate, Louisiana should expand coverage to more low-income people by raising income eligibility for parents in Medicaid and covering childless adults through Medicaid.
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%) have subprime credit scores.
- Between the third quarters of 2008 and 2011, the home foreclosure rate increased by 50%, widening the already-considerable home ownership gap between white households and households of color. As of 2010, 73% of white households owned homes, compared with just 47% of households of color.
- One in five jobs is low-wage and nearly half of employers do not offer health insurance. In addition, 55% 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% since 2007 to $25,250.
The report says there are 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% versus 20%). The number of people of color who were found to be liquid asset poor was nearly double the number of white people (60% versus 32%).
To read an analysis of key findings from the Assets & Opportunity Scorecard click here. To access the complete Scorecard visit http://scorecard.cfed.org.