Given the current public attention, as in this week’s State of the Union Address, on income equality, it makes great sense for CFED to release its annual Assets and Opportunity Scorecard this week. I’m a big fan of these annual CFED reports which have been an ongoing effort for them for at least 20 years. I like this Scorecard for a variety of reasons. The analytical work is good, but I especially like the fact that it takes a more holistic and comprehensive look at issues related to economic development. While it’s nice to have low business costs and a nice business climate, these competitive advantages may often be accompanied by real weaknesses, such as a lower skilled workforce, higher poverty rates, and poorer health and education outcomes. The Assets and Opportunity Scorecard is an attempt to paint this broader picture.
According to the 2014 Scorecard, the state of our union–at least for those at the bottom of the economic ladder–is precarious. Nearly half of American households (44%) are what CFED calls “liquid asset poor,” which means that they have less than three months worth of savings. What that means in reality is that they are one lost job, or one health incident, or one bad break, away from real poverty since they lack the resources to weather any major financial setbacks. Most of these households are lower income, but not all. For example, 25 percent of middle class households (with annual incomes from $56,000 to $92,000) also fall into the liquid asset poor category.
How do various states perform in terms of supporting economic security for their residents? The report assesses state performance in five areas: financial assets and income, business and jobs, housing and home ownership, health care, and education. The top ranked states (Vermont, North Dakota, and New Hampshire) tend to be smaller and have lower rates of income inequality. The weakest performing states (Mississippi, Nevada, and Georgia) suffer from high levels of income inequality and few policy tools to help improve family economic security.
As in all of these Scorecard products, the Assets and Opportunity Scorecard should not be viewed as the last word. But, it does provide a different and sobering lens on the challenges facing many American families today.