Nearly HALF of U.S. households live just one crisis from poverty
Daily Mail UK
Feb 1, 2012
Nearly half of U.S. households are just one piece of bad luck - such as a job redundancy or a medical emergency - from poverty, it has emerged.
A staggering 43 per cent are 'liquid-asset poor', meaning that they are above the breadline, but don't have the savings to weather an emergency.
It means around 130 million people across the country are just one crisis away from the poverty line - and would fall beneath it within three months.
In addition, 27 per cent of American households are asset poor, the report by the Corporation for Enterprise Development found.
Along with still-high unemployment and few wage rises, the findings are yet another suggestion that the country is struggling to get back on its feet following the recession.
'Growing numbers of families have almost no savings or other assets to see them through if they lose their jobs or face a medical crisis,' said Andrea Levere, president of the advocacy group.
'Without savings, few will be able to build a more economically secure future, including buying a home, saving for their children’s college educations or building a retirement nest egg.'
Speaking to the Huffington Post, the CED's Jennifer Brooks added: 'The resources that people have - they are using up those resources,'
'They're living off their savings. They're at the end of their rope.' She added: 'A family that loses its job, that was maybe solidly middle class, in a state where they have restrictive asset tests, is going to have to liquidate all their assets, all their savings for the future' in order to qualify for benefits.
But the group warned that many of the liquid-asset poor are unaware of how delicate their situation is because they are still receiving paychecks.
'They don't necessarily realise how close people can be to one interruption to income or one interruption to health benefits,' said David Rothstein from Policy Matters Ohio, a non-profit group.
'They're one paycheck away from being in debt.'
Speaking to the Huffington Post, Rothstein said people often turn to payday lenders to cover an unexpected payout - but it can be a slippery slope.
'People say things like, it's just one mechanical problem with their car,' said Rothstein. Before they know it, he said, 'every other week, they're back at the payday lending shop'.
Recent studies have found many Americans are unprepared for emergencies due to the high cost of medical treatment and the drop in the value of house prices.
The report added that there are measures that could help liquid asset poverty, such as making greater assistance available to first-time home buyers.
Currently, 15 per cent of Americans - around 46 million people - are at or below the poverty line.
THE GROWTH OF POVERTY
The report by the Corporation for Enterprise Development found:
- 27% of U.S households are 'asset poor'
- 43% are 'liquid-asset poor'
- The number of asset poor families has increased from one in five to one in four since 2010
- 44% of non-white households are asset poor compared to 20% of white households
- 65% of non-white households are liquid-asset poor compared to 34% white
- Asset poverty highest in Nevada (45%) and lowest in Vermont (15.7%)
- Liquid-asset poverty highest in Alabama (64.5%) and lowest in Hawaii (22.8%)