Key Findings

• In all but one state, asset poverty is greater than income poverty.
• Asset poverty varies significantly by race, gender, and geography.
• No state can yet claim the right blend of policies at sufficient scope scope and scale to eliminate asset poverty.

In all but one state, asset poverty is greater than income poverty.

While the U.S. Census Bureau’s most recent figures report that the national poverty rate (based on income) is 11.3%, conservative estimates indicate that in every state except New Mexico, the asset poverty rate is higher than the income poverty rate.

Iowa has the lowest level of asset poverty—reporting a rate of 14%—but in 32 other states, asset poverty rates exceed 20% of their total populations. In New York, where asset poverty is the highest, it is estimated that almost one third of New Yorkers do not have sufficient net worth to live for more than three months at the federal poverty level without other support.

Asset poverty varies significantly by race, gender, and geography.

Race

In their book, Black Wealth/White Wealth, Oliver and Shapiro report that over 60% of African American households and 54% of Hispanic households have zero or negative net financial assets compared with only one third of all American households. The Report Card considers several measures, including asset inequality by race and by gender, as well as asset poverty by race and by gender. Without exception, the Report Card’s findings reinforce Oliver and Shapiro’s assertion.

In no state is wealth distributed even close to equally between white and non-white families. The state with the least inequality between white and non-white households is Tennessee, but even there, the mean net worth of non-white families is less than 50% that of white families. Other states with (comparatively) low inequality include California, Missouri, Colorado, and Florida. The state with the worst asset inequality by race is Virginia, with the average white family holding more than five times the wealth of the average non-white family.

In Mississippi—the state with the smallest gap in asset poverty by race—the rate for non-white families is almost twice that of white families. Asset poverty by race grows to staggering proportions in many states, with wealthy Connecticut posting the worst score. In Connecticut, where overall asset poverty is around 22%, the asset poverty rate of non-white households is almost four times that of white families. Connecticut is joined at the bottom on this measure by several other Northeastern states, including New York, New Jersey, and Massachusetts.

Gender

In Who Are the Asset Poor?, Haveman and Wolff—using the least restrictive definition of asset poverty—assert that 53.7% of female-headed homes with children are asset poor, compared with only 25.3% of married families with children. Again, the Report Card documents similar conclusions on a state-by-state basis, although asset inequality by gender is not as large as asset inequality by race, nor does it have as wide a range.

Nevertheless, in no state is wealth distributed equally among male-headed and female-headed households. Washington has the smallest gap, with male-headed households—at the mean—holding 20% more net worth than the average female-headed household. At the bottom is Louisiana, where female-headed households hold—on average—less than half of male-headed households.

The gap in asset poverty by gender is smallest in Arizona, where the asset poverty rate of female-headed households is only 16% greater than that of male-headed households. Other states with (comparatively) small gender gaps in asset poverty include Colorado, West Virginia, Oregon, and Nebraska. In the worst state, Mississippi—where almost 20% of all families are asset poor—the asset poverty rate of female-headed households is more than twice that of male-headed households.

Geography

Using unique estimates of financial wealth, the Report Card finds an interesting pattern of wealth accumulation and distribution in the states. The state with the highest reported mean household net worth is Hawaii, at $164,318 per household. (It bears pointing out that the cost of living in Hawaii is exceptionally high.) Other states in the top 10 for mean net worth are more predictable, such as Rhode Island, New Jersey, and Connecticut. Missing from the top of the list, however, is New York, whose posting of $103,177 ranks 29th nationally. Oklahoma ranks lowest in the nation with mean household net worth of $74,431.

Regional patterns emerged as well. As Phillips notes in his book, Wealth and Democracy, uneven regional wealth relationships and their shifting nature have always been a feature of the United States’ economic and political history. This goes back to the Revolutionary War—the financing and supply of which helped to establish the Northeast as the new nation’s wealthiest region—and continued through the New Deal and post-World War II expansion, which saw the rise of the Sun Belt industries and the decline of some of the traditional centers of wealth in the Northeast and Midwest.

Based on the Report Card, the leading regions are the Northeast, the Midwest, and the Pacific Coast:

• The Midwest posted the highest grades in the Asset Outcomes Index, with seven of the region’s eight states receiving an A or a B. In addition, half of the states in the Midwest received an A or a B in the Asset Policy Index, and no state earned less than a C.
• The Northeast posted the highest grades in the Asset Policy Index, with 90% of the states in the region earning an A or B and no states receiving less than a C.
• The Pacific Coast performed well on both indices, with 80% of the states in the region receiving an A or a B in the Asset Outcomes Index and 60% posting an A in the Asset Policy Index.

The regions with the lowest grades include the South and the Mountain West:

• Three quarters of the states in the South earned a D or an F in the Asset Outcomes Index. At the same time, almost 60% of the region’s states earned a D or an F in the Asset Policy Index, and only one state (North Carolina) earned above a C.
• Mountain West states also posted relatively low grades, especially in the Asset Policy Index, with over 60% earning a D or an F, and only one state (Arizona) earning above a C.

No state can yet claim the right blend of policies at sufficient scope and scale to eliminate asset poverty.

Given the infancy of anti-poverty policies based on assets, it is premature to look in this Report Card for measurable correlations between asset policy and asset outcome ranks and scores. However, there are already a great deal of evaluative data about public policies and programs—such as community reinvestment, anti-predatory lending, Individual Development Accounts (IDAs), and other asset-building strategies targeted toward low-income people—to document the potential of these programs.

Report Card data show that, of the 10 states that earned an A in the Asset Policy Index:

• Six require state-chartered banks to provide low-cost transaction accounts (commonly called lifeline accounts) to assist all families in accessing the mainstream financial system.
• Eight have enacted a state Earned Income Tax Credit (in addition to the federal credit) to help working families keep more of their income and save to build assets.
• Nine have adopted some form of IDAs program to help low-income families save, learn, and accumulate assets.
• Seven provide funding to help low-income entrepreneurs start microenterprises.
• Seven offer support to community development financial institutions (CDFIs) to make loans and provide banking services to low-income communities.
• Eight prepare and make public tax expenditure reports so that tax-based subsidies provided by the state are transparent to its citizens.

Yet, as is evident by the sometimes alarming data presented in the Asset Outcomes Index, even states that are enacting policies to encourage the accumulation and protection of the assets of low-income people can be plagued by high rates of asset poverty, inequality, and economic vulnerability among their citizens. More work must be done to find the right mix of policies and to implement asset-building policies of a scope and scale to serve more than a fraction of the low-income populations who can benefit from them.