From Carl Rist, a vice president at the Corporation for Enterprise Development in Durham:
Unemployment in the Charlotte region, while still high, is on the mend. And there are other indicators that the N.C. economy is inching toward recovery. Yet, as millions of households re-gain their financial footing and shore up balance sheets following the Great Recession, its time to contemplate: What do Charlotte area families really need to be financially secure again?
The metrics commonly in use focus on income, such as median household income and the number of households whose income falls below the poverty line. Yet, as English writer G. K. Chesterton wrote: It isnt that (we) cant see the solution. It is that (we) cant see the problem. In our economy, financial success comes not only from what you earn, but also from what you own in the form of assets and other tangible property.
A new analysis of Charlotte and two other N.C. communities uses this assets lens to analyze the financial health of families, and the results are striking. The report, prepared by the nonprofit think-tank, CFED, finds that 36 percent of Charlotte residents are asset poor (compared with 11 percent who are income poor). This means 1 in 3 households lack a basic financial cushion to survive for three months at the poverty line if they were to lose their primary source of income.
Nationwide, 29 percent of households are asset poor, and statewide in North Carolina, the figure is 30 percent.
So what does living in asset poverty mean? People who are asset poor struggle to come up with the cash to respond to even minor emergencies, such as a broken-down car, and often rely on high-cost credit, which can push them deeper into financial distress. In some cases, this cycle can spiral into homelessness. Those who are asset poor cant aspire to purchase a home and are much less likely to go to college key components of the American Dream. Whats more, living paycheck to paycheck saps these households and their younger generations of the hopes and aspirations for future success that are so integral to a thriving economy.
Recently, a group of more than 15 human service leaders were convened by Crisis Assistance Ministry to study this new data. Each agency had a stake in understanding the implications of the alarmingly low financial security of households in the community. Each leader, representing groups from the United Way to the City of Charlotte, committed to working with business leaders to attack asset poverty and its impact on the community.
Across the U.S., innovative municipalities are developing strategies to help families build wealth and financial security, and this group of leaders reviewed these national best practices. This includes large-scale campaigns to help families claim the Earned Income Tax Credit, which puts money back in the local economy, and pioneering efforts such as San Franciscos Kindergarten to College initiative, which endows all students entering public kindergartens with a college savings account.
Crisis Assistance Ministry and the human services leaders will soon share this report with the community, a starting point for taking action. Restoring economic prosperity means not only helping struggling residents to get by in an emergency, but also supporting low-income households to actually build a safety net of their own so they can get ahead.