Tuesday, September 20, 2005

Around the Kitchen Table

Will the South Rise Again?
Playing Catch-Up in the Ownership Society
By: Sam Bishop and Beadsie Woo, CFED
Despite the national buzz about an "ownership society," results from a new national report suggest that many people in the southern part of the U.S. have few opportunities for building and protecting wealth.

In a recent cross-state comparison, 11 southern states-Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia-are among the weakest in terms of financial security, health care, and education, critical components of economic stability and family wealth.

The Assets and Opportunity Scorecard: Financial Security across the States, released this summer by CFED, evaluates states in two main categories: 1) performance measures, which assess how well state residents are doing in accumulating and retaining wealth; and 2) policy measures, which assess the degree to which states encourage and facilitate wealth creation and protection.

The scorecard compares the states by analyzing available data and policies in the areas of financial security, business development, homeownership, health care, and education.

The Southern states fared poorly on the scorecard.

In fact, none of the states received better than an average overall grade on its asset performance, and eight states' asset policies are rated "substandard."

Part of the reason for their substandard performance may be because these 11 southern states exhibit two of the alarming trends in ownership that characterize our nation: 1) wide disparity between segments of the population, and 2) limited opportunities for working poor families to move out of poverty.

Disparities in wealth, particularly across race, are even more pronounced in the South.

Across the U.S., for every $1 that a white household has in net worth, a minority household has just 6 cents.

For these 11 states, minority net worth ranges from 5.6 cents (in Arkansas) to 20 cents (in Tennessee) for every dollar of white household net worth.

The picture for male and female headed households is also one of acute disparity.

For every $1 in net worth that a dual- or male-headed household has, a female-headed household has between 25 cents (in Arkansas) and 92 cents (in Kentucky).

(Nationally, female-headed households have 40 cents for every $1 that dual- or male-headed households have.)

Assets and savings play a critical role in moving people out of poverty and into the middle class.

Without the extra cushion of savings, many families fall back into the poverty trap after they face income loss due to a layoff or an accident.

Out of every 100 people who live in these 11 states, 43 are "asset poor," meaning that in the event of a job loss or an illness-anything that interrupts the households' income - these families do not have enough savings to subsist at the federal poverty level for three months.

Additionally, household debt is another detrimental factor for many families: 35 percent of minority households in Alabama have zero or negative net worth.

One in 10 dual- or male-headed households in Louisiana has zero or negative net worth.

Kentucky and Virginia boast outstanding homeownership rates (74.4% and 75%, respectively).

And North Carolina stands out as the only state in the South to have policies consistently supportive of wealth building and protection.

In 2004, Virginia became one of just three states (the others are Ohio and Illinois) across the nation to have eliminated asset limit tests for public assistance programs.

In some states, once a family accumulates $1,000 in savings or acquires a car, it becomes disqualified from receiving important income supports.

State policy plays a critical role in ensuring opportunities and incentives to build wealth are widely shared.

Summarized by Copernic Summarizer


No comments:

Post a Comment

Note: Only a member of this blog may post a comment.