According to 2012 Assets & Opportunity Scorecard, asset poverty is on the rise in Illinois. The Scorecard, released today by our national asset building partners at the Corporation for Enterprise Development (CFED), reports that 1 in 4 Illinois residents has almost no savings or other assets to help them stay afloat in a financial crisis. This is a 5% increase from just one year ago.
The Scorecard ranked Illinois 32nd in the country for how our residents fare economically. In determining this ranking, CFED assessed policies that are helping residents build and protect assets across 52 measures in five issue areas: Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education. CFED found that 26.4% of households are asset poor. Asset poverty measures a family’s financial vulnerability. If a family looses their household income, can they live at or above the federal poverty level for three months? If the answer is no, that household is considered asset poor. Families without assets have a harder time weathering temporary financial hardships like job loss, reduction in hourly wages, or illness.
However, the Scorecards measure of asset poverty is a conservative estimate because it includes all assets â€“ such as a home or car â€“ that can’t be easily liquidated. When you look at “liquid asset poverty” the rate in Illinois increases to 39.8% of residents. The scorecard finds that:
- 17.8% of white households in Illinois are asset poor and 29.5% are liquid asset poor, while 46.7% of households of color are asset poor and 64.3% are liquid asset poor.
- 21.9% of Illinois households are unbanked or underbanked
- 54.6% of Illinois consumers have subprime credit scores
The CFED Scorecard highlights what we are seeing across the state – continued erosion of individual wealth, especially among communities of color. As a state, we need to explore asset building policies and advance asset building initiatives that provide families with opportunities to invest and build savings over their lifetime.
In the face of growing inequality we should look to asset building policies that have a proven track record for helping families build financially secure futures; this includes foreclosure prevention and protection policies, access to employer-base retirement savings opportunities, removal of asset limits from the Temporary Assistance for Needy Families program, and improvements to the state’s 529 college savings program that will expand access for low-income families.
We currently have a system that disproportionally benefits those with higher incomes. If we are to build a strong middle class, we need to create a system that increases opportunity and promotes financial well-being for all residents.
Later this week, we’ll blog about the policies that IABG is pushing to address growing asset disparity in our state.
IABG serves as the Lead State Organization from Illinois and a Steering Committee Member for CFED’s Assets & Opportunities Network.