CFED Scorecard

Georgia is dead last in financial security

Craig Schneider
Atlanta Journal Constitution
Feb 10, 2012

Georgians live closer to the financial edge than anyone else in the nation, and the danger extends beyond the poor to the middle class, according to a newly published in-depth analysis.

The study by the Washington-based Corporation for Enterprise Development ranked Georgia dead last in terms of the financial security of its residents, based on factors such as their high debt load, lack of savings and assets, and the prevalence of personal bankruptcies.

"This is not just people with a low-end job or people on unemployment," said Kasey Wiedrich, a senior researcher for the nonprofit educational organization, which promotes economic opportunities for people with low incomes. "A lot of these families make a decent living, but they don't have savings and they're just getting by."

The report reflected the devastating blows that have struck a state where unemployment exceeds the national average and major economic engines -- real estate, banking and home construction -- aren't firing on all cylinders. The state ranked in the bottom fifth of states in several categories: poverty-level income (42nd in the country), bankruptcies (50th), poor credit (48th), overdue debt (48th), and households with neither a savings nor a checking account (49th).

Georgia households' average net worth of $48,425 fell far below the national average of $70,600 -- yet one more indicator that even amid signs of an economic rebound, many Georgians' finances are precarious.

"Even if the jobs come back and bring families out of crisis, many have a long way before they can start saving and planning for the future," Wiedrich said.

Mike Rohlfs lives on the financial edge. The certified automotive technician, who lives in Marietta, has an income well above the Cobb County average of $30,424, but he says he's just two paychecks away from not being able to pay his bills.

"I'm a week-to-weeker," said Rohlfs, 39, noting that much of his discretionary income has gone into buying tens of thousands of dollars worth of automotive tools.

Rohlfs has already gone bust once. In 2009, he was working at a Saturn dealership when his boss walked in and said the shop was closing for good in 36 hours. Things went downhill fast from there. Rohlfs grabbed a job at half his former pay and took a debt consolation loan to reduce his monthly nut.

"I had to pull the rug back under me," he said.

He acknowledged that he could do more to save money. He's thought about cancelling his cable TV and downgrading his cell phone service. "But when I look at the grand scheme, it's chump change," he said. "The last thing I want to do is work hard and not be able to enjoy my money."

In the terminology economists use, Rohlfs is "liquid asset poor" -- a description that fits more than half the households in Georgia. If such households lose their income, they can not lay their hands on enough cash to keep them out of poverty for three months.

In addition to measuring the financial security of each state's residents, the study's authors challenged states to enact policies and programs to shore up areas in which they were weak. In Georgia, calls for additional government intervention are apt to meet stiff resistance, with opinions often split along partisan lines. Policy analysts across the political spectrum noted that few if any of the solutions proposed by the group, which identifies itself as progressive, are on the table here.

For example, pointing to Georgia's high percentage of uninsured households, the study recommended that the state make more families eligible for Medicaid, the federal-state program that provides medical care to low-income families. Knowledgeable Georgians said the only way that will occur here is if the federal health care overhaul survives an upcoming review by the U.S. Supreme Court.

That would spell trouble for Georgia, said Kelly McCutchen, president of the fiscally conservative Georgia Public Policy Foundation. "There's no need to increase government welfare programs," McCutchen said. "We need to expand job opportunities."

He said the state is already doing a lot to create jobs by marketing Georgia to outside companies, providing assistance to small businesses and working with technical schools to train workers for specific companies.

The state did rank high -- in 7th place -- for its percentage of businesses with fewer than five employees, defined as microenterprises. But it ranked 49th for small business ownership rate, a sign, the study's authors said, that microenterprises need more assistance to grow.

Gov. Nathan Deal's office declined to comment on the study.

Zac Williams didn't expect to be living check-to-check when he moved to Atlanta eight months ago from a small town in Ohio. But the 28-year-old market researcher found that the costs of living here far exceeded his expectations.

With little savings, school debt of $55,000, and a 9-year-old Honda Civic as his primary asset, Williams is working hard to save money. But he worries that he's pushing his luck, eating lots of fast food and avoiding doctor appointments in order to save money. A few weeks ago, his boss had to virtually order him to see a doctor when an eye irritation grew into a rash.

"I have this feeling hanging over my head," he said. "When am I going to stop just barely making it?"

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