Despite an improving national economy, 49.8 percent of Texas households are in a persistent state of financial insecurity, according to a report released today by the Corporation for Enterprise Development (CFED). The number of households who have little or no savings to cover emergencies or to start building a better life has barely budged from last year's 49.5 percent level. The report also found that state policies are doing little to improve the financial security of Texans.
CFED's 2014 Assets & Opportunity Scorecard defines these financially insecure residents as "liquid asset poor," which means they lack adequate savings to cover basic expenses at the federal poverty level for even three months in the event of an emergency such as a job loss or health crisis. Included among Texas' "liquid asset poor" are a majority of those who live below the official income poverty line of $23,550 for a family of four, as well as many who would consider themselves middle class. Fully 32 percent of households earning $54,049 - $90,468 annually have less than three months of savings (i.e., less than $5,887 for a family of four).
The Scorecard provides rankings for the 50 states and District of Columbia on both the ability of residents to achieve financial security and, for the first time, policies designed to help them get there. On both measures, Texas ranks near the bottom with an outcomes ranking of 37 and an overall policy ranking of 41.
"Nationally, policies at all levels of government helped stem the tide of the recession's damage to household finances. They protected consumers from foreclosure and abusive financial practices, helped raise wages and connected families to the financial mainstream," said Andrea Levere, President of CFED. "Without strong policies that address the challenges facing low- and moderate-income families, wealth and income inequality will continue to grow and our nation's economy will continue to struggle."
The Scorecard evaluates how residents are faring across 66 outcome measures in five different issue areas-Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education. Texas received:
-A "D" in Financial Assets & Income, reflecting a high level of income poverty and the large number of residents with subprime credit rates.
-An "F" in the Health Care category, mainly because 25 percent of residents lack medical insurance.
A "C" in the Businesses & Jobs category. Texas ranked 42nd in the number of lowwage jobs (27.8 percent of jobs are considered low-wage), but it ranked 5th in average annual pay of residents ($51,983), reflecting a large division in income levels.
A "C" in Education, ranking 51st for the number of adults with a high school degree and 32nd for the number of adults with a fouryear college degree.
The Scorecard also evaluates 67 different state policy measures to determine how well states are addressing the challenges facings residents. Texas ranked moderately on policies aimed at creating more opportunities for low- to moderate-income families in the Housing & Homeownership (11th) and Health Care (17th) areas. The state ranked low in the policy areas of Financial Assets & Income (48th) and Education (34th), underscoring the link between inadequate policies and ongoing challenges confronting the state's low- and moderate-income families.
"Despite steady job growth and low unemployment rates, many Texas residents are still struggling with persistent financial insecurity and have difficulty moving up the economic ladder," said Tim Morstad of AARP Texas and RAISE Texas Board Chair. "The data from the 2014 Assets & Opportunity Scorecard should motivate state and local policymakers to build on an emerging consensus to improve household financial security."
Our leaders can take immediate steps to create more opportunities for low- and moderate-income families and build an economy that works for everyone by:
-Empowering all families to open college savings accounts.
Curbing abusive payday and autotitle lending.
-Removing barriers to household savings and asset building.
"With 1 in 12 Americans now living in Texas, and our state at the leading edge of a profound demographic shift, a snapshot of economic opportunity in Texas is a window into the future of our country," noted Don Baylor, CFED Board Member and Senior Policy Analyst at the Center for Public Policy Priorities. "These common-sense recommendations provide a roadmap for policymakers to improve the bottom line for Texas families and the state economy."