Two reports were released this week show that large numbers of Ohioans are facing tough times, with one in six residents living in poverty and 43 percent of Buckeyes have almost no savings to cover emergencies or save for the future.
Two reports, two grim pictures
The reports, State of Poverty 2012 Report produced by the Ohio Association of Community Action Agencies (OACAA) and 2013 Assets & Opportunity Scorecard released by the Corporation for Enterprise Development (CFED), paint a somber picture of the real state of economic health for a former industrial Titan state hit hard by the Great Recession that's still struggling to recover.
Philip E. Cole, executive director of OACAA, said the report will not only demonstrate what it means to be poor, but will dispel some of the stereotypes and preconceived notions about low-income people, like possessing a college degree. Cole said one in 12 Ohioans in poverty has a bachelor’s degree or higher."
"Poverty afflicts a multitude of people, from the educated to your hard-working neighbor," he said, adding, the report will "show how close many people are to living in poverty – only one catastrophic incident away."
To do this, the report uses graphics, stories and an appendix with tables and sources.
According to OCAA, its network of 50 agencies that serve the needs of low-income people in all of Ohio’s 88 counties work to alleviate poverty and empower low-income families in their communities.
Some report highlights:
- Ohio’s poverty rate of 16.4 percent in 2011 exceeds the nationwide average of 15.9 percent. Ohio ranks 31st among all states.
- The number of people living below the poverty line rose 69.9 percent in suburban counties over the last decade, outpacing the growth in other areas.
- Ohio’s median hourly wage grew 2.9 percent over the last decade. Meanwhile, a gallon of gas costs 75.3 percent more and tuition at a four-year public college increased 63.4 percent.
- A family of four in poverty lives on about $1,900 a month.
- The number of children in poverty grew by 232,199 over the last decade, but there are 189,158 fewer children than 10 years earlier. A third of those living in poverty are children.
Ohioans living on the edge
The second report by CFED shows how tenuous the lives of many Ohio are as they struggle to afford today's expenses with little left over to save for tomorrow.
More than two in five Ohio residents are living on the edge of financial disaster with almost no savings to fall back on in the event of a job loss, health crisis or other income-depleting emergency, CFED said. The group says it empowers low- and moderate-income households to build and preserve assets by advancing policies and programs that help them achieve the American Dream, including buying a home, pursuing higher education, starting a business and saving for the future.
Using a definition of "liquid asset poor" to mean Ohioans lack adequate savings to cover basic expenses at the federal poverty level for just three months if they suffer a loss of stable income, the report showed that included in this group is a majority of Ohio residents who live below the official income poverty line of $23,050 for a family of four, as well as many who would consider themselves middle class.
Fully 27 percent of households earning between $51,013 and $83,136 per year have less than three months of savings ($5,762 for a family of four).
Without savings, these families have limited hope of building a more prosperous future for themselves or their children, including saving for college, buying a home or setting aside money for retirement.
"In order to cope with the recession’s continued impact, these families have had to prioritize today’s expenses over tomorrow’s goals,” said Andrea Levere, president of CFED. She called the findings "particularly disturbing given the ongoing budget talks in Congress that will likely result in further reductions in the social safety net and other programs that help low- and moderate-income people get on the their feet and start planning and saving for a better future."
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. Published annually, the Scorecard 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 five issue areas: Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education.
The Scorecard evaluates states across 53 measures within the five different issue areas.
- Ohio ranks 36th in the country overall in the ability of residents to achieve financial security.
- The Buckeye State earns a "C" in Financial Assets & Income, due in part to its 37th rank in borrowers 90+ days overdue.
- 39th in Bankruptcy rate.
- 27th in average credit card debt.
- 34th in the number of underbanked households, with 19% of households having a checking or savings account but still continuing to rely on alternative financial services.
- 41st and 40th in two- and four-year college degree attainment, respectively.
- "D" in Education.
- Ohio also performs poorly on measures of student debt, as 68 percent of college students graduate with an average debt of $28,683.
- "D" in Housing & Homeownership.
- 43rd for its foreclosure rate, the state ranks highly on measures of affordable homeownership.
- 14th in housing cost burden.
- 13th in the affordability of homes.
To address these challenges, the Scorecard includes a dozen policy solutions that can help Ohio increase opportunity and promote financial well-being for all residents.
- To reduce income poverty, the high percentage of borrowers who are past due on debt payments and bankruptcy rates, Ohio should maximize the earnings of low-income workers by adopting a refundable state Earned Income Tax Credit and making the Dependent Care Credit refundable.
- Ohio should also increasingly fund free tax preparation for low- and moderate-income households and seniors.
- To protect unbanked households from predatory financial products, Ohio should enact stronger consumer protection laws and close loopholes regulating payday lenders.
- To increase homeownership and reduce the foreclosure rate, Ohio should regulate mortgage servicers and allow local land banking to ensure strong management and redevelopment of foreclosed properties.
- To help families save and build assets, Ohio should create college and emergency savings accounts that are accessible and safe.
"To ensure that Ohio’s economy works for everyone, we need an infrastructure and a set of policies that help build assets,” said David Rothstein, Project Director for Asset Building at Policy Matters Ohio, a lead organization in the Assets & Opportunity Network. “Compared to other states, we are not doing enough to help families save for their future."
In separate news, Ohio Gov. John Kasich signed an Executive Order allocating up to $1.5 million to assist the Ohio Association of Foodbanks for the purpose of increasing the amounts of food for at-risk children in the summer months.
National
Nationally, the Scorecard data reveal the daunting reality facing far too many low- and moderate-income families as they struggle to move up the economic ladder. CFED found that 25 states saw increases in liquid asset poverty over findings reported in the 2012 Assets & Opportunity Scorecard.
The report also found continuing racial gaps, with nearly 64 percent of households of color considered liquid asset poor compared with 34 percent of white households. Among the other key findings:
Many households don’t have the basic tools to save for a rainy day, with nearly a third (30.8%) lacking a savings account and 8.2 percent with no mainstream financial account at all.
For the second year in a row, more than half (56.4%) of consumers have subprime credit rates, meaning they do not qualify for short-term credit at "prime" rates, making them more likely to turn to high-cost payday, auto-title or installment loans.
Two out of every three college graduates is leaving school with student loan debt, the average amount of which increased by $552.98 over last year’s Scorecard findings to $26,600.
By the second quarter of 2012, the foreclosure rate had dropped to 4.2 percent—a decrease from a 2010 high of 4.6 percent—but still above the pre-housing crash rate of 0.99 percent in 2006. The move from financial institutions to stop offering high-cost mortgages has been a mixed blessing for asset poor families, the report concluded.
On a positive note, they are no longer prey to abusive and unscrupulous lenders. On the down side, they are largely shut out of the mortgage market.
Read the reports here and here.
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