Two-Fifths of New Jersey Households Are One Crisis Away from Financial Devastation
FOR IMMEDIATE RELEASE: January 30, 2014
Contact: Jon Whiten, NJPP, 609-393-1145 ext. 15 or firstname.lastname@example.org
State Ranks 29th Overall in Financial Security of Residents
Despite an improving national economy, 40.2 percent of New Jersey 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 decreased from last year’s 44.6 percent level, but there is clearly more to be done to help New Jersey families obtain economic security. And while the report found that state policies are helping to improve New Jerseyans’ financial security, the state can and should build on that success to help even more residents.
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 New Jersey’s “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. One in six households earning $70,177 – $120,072 annually has 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. New Jersey ranks 29th for outcomes and 3rd for policy.
“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.
New Jersey received a “C” in the areas of Financial Assets & Income, Business & Jobs and Health Care. The state had the fifth lowest income poverty rate (10.5 percent) but also the third highest average credit card debt ($13,711). New Jersey also had the fourth highest unemployment rate and the 13th highest underemployment rate, as well as the fifth highest uninsurance rate for people of color.
It received an “F” in the Housing & Homeownership category, largely due to its high foreclosure rate (ranked 50th) and high number of delinquent mortgage loans (ranked 51st). But the state received an “A” in the Education category, reflecting its high number of students achieving math and reading proficiency in the 8th grade (ranked 2nd for both) and its high number of adults with a four-year college degree (ranked 6th).
The Scorecard also evaluates 67 different policy measures to determine how well states are addressing the challenges facings residents. New Jersey ranked high on policies aimed at decreasing poverty and creating more opportunities for low- and moderate-income families. These policies have helped lessen the impact of factors such as high cost of housing and high debt loads that pose particular challenges for Garden State residents. New Jersey ranked near the top in four out of the five policy categories assessed by Scorecard, including Health Care (1st), Financial Assets & Income (9th), Businesses & Jobs (3rd) and Education (1st). Housing & Homeownership, ranked 19th, was the only relative weak category. These strong policies have likely kept thousands of New Jerseyans from sliding into abject poverty during one of the worst economic downturns in history.
“This Scorecard makes clear what we have been saying for months: New Jerseyans are still suffering the ravages of the recession,” said New Jersey Policy Perspective President Gordon MacInnes. “Although the picture is slowly improving, New Jersey is near the bottom when it comes to foreclosures and underwater mortgages, long-term unemployed, and joblessness. CFED’s work provides a blueprint with sensible ideas on how to extend a helping hand to struggling working families.”
To build on its strong policies for low- and moderate-income residents, New Jersey should:
* Reverse the annual effective tax hike of $66 million imposed on about a half-million working poor families in 2010 by immediately and fully restoring the state Earned Income Tax Credit (EITC) to 25 percent of the federal credit. Since the cut went into effect, families that do not earn enough working full time to survive in high-cost New Jersey have lost more than a quarter billion dollars in crucial tax credits.
* Provide greater economic security to more than 1 million New Jerseyans by allowing all the state’s workers to earn paid sick days. Over 1 million New Jersey workers — one in four — face the choice of going to work with debilitating (and possibly contagious) illnesses or losing a day’s wages. This is bad for them, their coworkers and any customers who come in contact with them, and it is also a drag on business productivity and a threat to public health. New Jersey should follow the lead of its two largest cities and act
* Narrow the achievement gap by extending high-quality preschool to more of New Jersey’s poor children. While New Jersey is a national leader with its strong financing of preschool in 31 of the state’s poorest cities and towns, more than half of the state’s poor children live in other areas of the state and are denied the chance to start kindergarten with a fighting chance to become strong readers and writers. And the payoff from making this investment is huge – the Nobel Prize economist James Heckman calculates a return of $7 for every dollar invested.
Published annually, the Assets & Opportunity Scorecard offers the most comprehensive look available at Americans’ ability to save and build wealth, fend off poverty and create a more prosperous future. It explores how well residents are faring in the 50 states and the District of Columbia and assesses policies that are helping residents build and protect assets across the five issue areas listed above.
Nationally, the Scorecard data reveal that far too many families are living in a state of persistent financial insecurity, unable to look beyond immediate needs and plan for a more secure future.
On one hand, unemployment continues its slow but steady decline, the numbers of foreclosures and delinquent loans have fallen, and average credit card debt is down. On the other hand, families are still struggling mightily to save and build assets.
There are no comments yet, add one below.