State Ranks 23rd Overall in Financial Security of Residents; Households of Color Face Huge Uphill Climb
Even though the national unemployment rate has dropped to five percent in recent months, the unemployment and underemployment rates in Connecticut remain stubbornly high, according to a new report
from the Corporation for Enterprise Development (CFED).
Indeed, 39% of Connecticut’s households are locked into a “new normal” of perpetual financial insecurity
, unable to build the savings needed to last even three months in the event of an emergency. The research, reflected in CFED’s 2016 Assets & Opportunity Scorecard
, also found that state policies are doing little to improve the financial security of Connecticut residents.
The situation is most dire for households of color. African-American and Latino households in Connecticut are significantly more likely to live below the federal poverty line compared to white households. Even more startling, new data show that businesses owned by whites in Connecticut are valued almost 15 times higher than businesses owned by African-American residents.
Published annually, the Assets & Opportunity Scorecard offers the most comprehensive look available at Americans’ ability to save and build wealth, stay out of poverty and create a more prosperous future. This year’s Scorecard assesses all 50 states and the District of Columbia on 61 outcome measures spanning five issue areas: Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education. It also ranks the states on 69 policies that promote financial security. When it comes to outcomes, Vermont ranks at the top of the country overall, while Mississippi ranks last.
Connecticut’s 23rd -place outcome ranking improved slightly from last year’s 27th -place ranking. The state received a “B” in Financial Assets & Income, driven by a low income poverty rate, a high rate of households with savings accounts and a low rate of underbanked households-those which have bank accounts but still use high-cost non-bank alternatives such as payday loans. Unfortunately, the state is one of the worst when it comes to income inequality-the richest 20% of households in Connecticut make 5.1 times as much annually as the poorest 20%. The state received an “F” in Housing & Homeownership due to its high foreclosure rate (3.06%) and its disparities in homeownership by race and income. The homeownership rate for white households in Connecticut is twice that of households of color, and the homeownership rate among households in the top income quintile is 2.8 times higher than for that homeownership rate for households in the bottom income quintile. The state received an “A” in Health Care, due in part to having one of the lowest uninsured rates in the country (8.0%). Connecticut earned an “A” in Education, driven by its second-best rate of early childhood education enrollment (64.6%). Finally, CFED Connecticut earned a “D” in Businesses & Jobs, meaning residents don’t have access to quality job and business opportunities.
The Scorecard also evaluates 69 different policy measures to determine how well states are addressing the challenges facing their residents. Connecticut ranks third overall in policy adoption, having adopted 36 of the 69 policies assessed. It is the third-best state when it comes to Education policies, partly because of its adequate funding for K-12 and postsecondary education. Connecticut ranks 5th in Financial Assets & Income, thanks to its refundable Earned Income Tax Credit, consumer protections for small-dollar lending and legislation that allows financial institutions to operate prize-linked savings accounts. The state ranks slightly lower, but still in the top ten, for Housing & Homeownership policies (7th) and Health Care policies (7th). Connecticut ranks 6th in the area of Businesses & Jobs, having implemented half of assessed policies in this area (5 of 10).
Across the nation, the Scorecard found scant evidence that federal and state governments were willing to embrace policies that would open new doors to greater financial security for those struggling the most in the American economy. Without such commitments, most low-income individuals-particularly people of color-find themselves falling farther behind.
Among the key findings from this year’s Scorecard:
- Homeownership rates remain at historic lows, falling to 63.1% for the eighth consecutive year of decline and contributing to crowding and rising costs in the rental market.
- Fully 14.3% of adults say there was a time in the past year that they needed to see a doctor but could not because of cost. The statistics are worse for individuals of color with one in four Latino adults and one in five African-American adults saying money concerns prevented them from seeing a doctor.
- Although both high school graduation rates (82.3%) and four-year college degree attainment (30.1%) increased from 2013 to 2014, racial disparities remain severe. Less than 20% of AfricanAmerican adults and fewer than 15% of Latino adults hold four-year degrees.
- While the national unemployment rate has dropped to 5%, the underemployment rate is twice as high, at 10.8%. What’s more, one-in-four jobs is in a low-wage occupation.
- Building up even a small amount of savings is a challenge for almost half the country. Some 44% of households are “liquid asset poor,” meaning they have less than three months of savings to live at the poverty level if they suffer an income loss.
- Business ownership among both men and women (21.4% and 17.1% of the labor force, respectively) declined from 2007 to 2012, even as average business value for both groups increased. Yet female-owned businesses still are worth only a third the value of the average male-owned business-$239,486 to $726,141, respectively.
“There certainly are positive signs that the nation’s economy is improving,” noted Andrea Levere, President of CFED. “But there also is very compelling evidence that many households are stuck in a financial hole and are struggling to dig themselves out. State governments can play a critical role in helping them move on to firmer ground and a more prosperous future.”
To read an analysis of key findings from the 2016 Assets & Opportunity Scorecard, click here. To access the complete Scorecard, visit http://scorecard.cfed.org.