The Assets and Opportunity Scorecard measures how easy or hard it is for families across the United States to achieve the American Dream.

The Dream is about opportunity. It is about the simple idea that no matter who you are, if you work hard and play by the rules, you can help your family get ahead... that you can do this in ways that add to your community, to your society, to your economy... that you have opportunity and security, and that your children do as well.

The foundation for that opportunity rests on two pillars: first, a family's ability to build assets that can be used to invest for the future, send children to college, and weather unexpected financial storms; and second, safety nets and safeguards that provide financial security in the event of a job loss, medical emergency, or other life events that could otherwise put a family in a tailspin.

The Assets and Opportunity Scorecard measures key parts of that foundation, compares them state-by-state, and looks at state policies that can help or hinder citizens' abilities to get ahead. The story it tells is compelling: many American families are living with practically no safety net, some groups and states are doing much better than others, and every state has room for improvement in helping its citizens achieve the Dream.

The Assets and Opportunity Scorecard shows that the picture is dire for many families. Nearly one in five American households owes more than it owns. In the event of a job loss, one in four households does not own enough to support itself—even at the poverty line—for three months. Circumstances are even bleaker for women and people of color: one in four female-headed households and one in three minority-headed households has zero or negative net worth.

Data paint a mixed, though largely troubling, picture of assets and financial security among Americans:

• Net worth—a basic indicator of financial security—varies widely by group. Female-headed households have significantly less net worth than male-headed households. Minority families have only one-sixteenth the net assets of white families. Results vary widely by state, too: the median Massachusetts family has nearly three times the net worth of the median West Virginia family.
• Health insurance—which provides a critical financial safety net—is on the decline. Fewer people are covered by employer-provided health insurance—66% were covered in 2000, but only 64% were by 2003. Nearly four million people lost employer-provided health coverage during that time.¹ Related research shows that nearly half of all bankruptcies in the United States result from unexpected illness or medical bills.²
• Homeownership—a key source of asset building—is a true success story and is at an all-time high. This said, the growth of homeownership has slowed substantially, and there is wide variance across the country. A little more than half of New Yorkers own their own homes, for example, while more than three quarters of West Virginians do. Homeownership among minorities, while also growing, continues to lag substantially behind that of white families.

A detailed look at the measures of assets and opportunity sheds more light on the picture.

Education is the first step toward achieving security, acquiring assets, and building wealth. Working Americans who are well-educated and well-trained provide future returns for society by creating a workforce that is productive, agile, and responsive to economic changes. The Scorecard shows promising trends in education.

• The percentage of children living at the poverty level who are served by a Head Start program increased in 46 states between 2001 and 2003.
• College attainment rates increased in 43 states since the late 1990s. The attain-ment gap by income has closed slightly, yet the wealthiest 20% of Americans complete college at a rate more than six times that of the poorest 20%.

In addition to education, accessible homeownership and an entrepreneurial culture can form the foundation of a true ownership society. Homeownership represents the single largest component of household wealth and is one of the biggest success stories in the financial security picture.

Small business creation has been the route into the middle class for many Americans. There has been increasing entrepreneurial activity in recent years, and some states have found effective ways to foster entrepreneurship.

Finding and utilizing financial services that meet a family's needs is critical. Those without a banking relationship—a surprisingly high 30%—have lower net worth than those with one. The Scorecard shows that the number of families with bank accounts has declined in recent years.

• In 2002, 29% of Americans had a checking account (down from 33% as recently as 1996) and 57% of Americans had a savings account (down from 59% in 1996). In some states, the picture is even more severe: only 18% of Georgians have a checking account, and just 24% of West Virginians have a savings account.
• Another sign of trouble is the historically high rate of personal bankruptcies.³ Per capita consumer bankruptcy filings increased in 49 states between 2000 and 2003.⁴

States can take proactive steps to encourage asset-building opportunities that reach lower-income families. Support for Individual Development Accounts (27 states), Community Reinvestment Act enhancements that cover state-chartered banks (7 states), and legislation creating lifeline bank accounts to expand access to mainstream financial services (8 states) can help families build their asset base.

Any family—but especially low-wealth families—can build assets only to see them stripped away. Unexpected health care costs, for instance, can quickly wipe out a family's savings. Health insurance provides an important means of asset protection, but the Scorecard shows that, while insurance is increasingly available to some of the country's most vulnerable citizens, access is quickly slipping away for many others.

• The rate of employer-provided health insurance continues to drop. New Mexico, Montana, and Texas have the lowest rates of coverage at 54%.
• The rate of uninsured low-income children declined in 40 states, but it remains alarmingly high in some states, such as Texas (34%), Nevada (29%), and Colorado (27%).

Unfair lending that preys on poor people is another form of asset stripping. Research shows that predatory lending is responsible for draining billions of dollars of assets from low-income families and communities each year.⁵ Twenty-nine states have enacted legislation against predatory lending in recent years. In North Carolina, for instance, abusive prepayment penalties have declined by 72% since legislation was enacted in 1999.⁶

Another issue that impacts the poor is asset limits on those who receive certain types of public assistance. Several states place strict limits on the assets a person can hold and still be eligible for federal assistance; these asset limits provide strong disincentives to saving. Ohio and Virginia stand out as the only states that have eliminated asset limits for means-tested programs.

Minority and female-headed households own much less than the national average, but these gaps are slowly closing.

• The number of families that owe more than they own is higher for minorities and female-headed households. Still, the "asset poverty" gaps by race and gender have both narrowed.
• The homeownership gaps between white and non-white heads of households and between female and male heads of households have closed slightly, with both gaps narrowing in a majority of states.

All families need assets and financial safety nets to live for today, plan for the future, and make sure that they and their children can get ahead. Many families are doing fine, but an alarming percentage of families are living on the financial edge.

There are many parts to the financial security picture, but states can play a key role. They can promote homeownership, improve health insurance availability, and encourage banks to offer products that meet the needs of all possible customers. They can foster entrepreneurship, make sure predatory lenders cannot operate with impunity, and ensure that the poor are not punished for saving. In short, states should remove barriers to asset accumulation, support asset building, and protect assets that already exist. States are only part of the picture, but there is much they can do to help their citizens do all they can do to achieve the American Dream.

1. Gould, E. (2004, September 16). "EPI Issue Brief #202: The chronic problem of declining health coverage." Washington, DC: Economic Policy Institute.
2. Himmelstein, D., E. Warren, D. Thorne, and S. Woolhandler (2005, February 2). "Illness and Injury as Contributors to Bankruptcy." Health Affairs, Market Watch.
3. Mileva, R. (2003, November 14). "Personal Bankruptcy Filings Continue to Break Records." American Bankruptcy Institute.
4. "Annual U.S. Bankruptcy Filings by State 2000-2003." American Bankruptcy Institute.
5. Stein, E. (2001, July 25). "Quantifying the Economic Cost of Predatory Lending." Durham, NC: Coalition for Responsible Lending.
6. Waldron, T. (2005, Winter). "Leading the Charge Against Predatory Mortgage Lending." Self-Help for The Annie E. Casey Foundation, Advocasey, Volume Seven, Number One.

Laura Burke, a 43-year-old grandmother, was able to use an Indiana Individual Development Account (IDA) savings program, Financial Foundations, to get a degree and start her own business. Laura learned about the IDA program from a friend and was impressed with what the program had to offer.

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