More in Connecticut living on the edge financially
The percentage of Connecticut residents living on the financial edge took a dramatic turn for the worse in the past year, according to a report released Wednesday by the public policy group Corporation for Enterprise Development.
The report said 37 percent of Connecticut families are now considered "liquid asset poor" — lacking enough savings to sustain themselves for three months during an emergency. That's a big jump from last year, when only 25 percent of families in the state were living on the precipice, according to the Washington, D.C.-based organization.
The policy group, which annually publishes its Assets & Opportunity Scorecard, noted that the state now ranks 29th in the country in terms of the percentage of residents who have so little savings that a personal disaster — such as a job loss, health crisis or other emergency — would be nearly impossible to withstand financially. The state ranked 26th last year.
"Although there are signs of improvement in Connecticut's economy, with unemployment edging downward in recent months, this year's Assets & Opportunity Scorecard paints a picture of a state — and a nation — that is struggling to achieve economic opportunity for all residents," Jennifer Brooks, director of state and local policy at the Corporation for Enterprise Development, said in a statement.
Despite Connecticut's downward trend, the state still has a better record on the financial security of families than the rest of the nation. Nationally, nearly 44 percent of U.S. households are on the edge of financial disaster, the report said.
"In order to cope with the recession's continued impact, these families have had to prioritize today's expenses over tomorrow's goals," Andrea Levere, president of the policy group, said in a statement.
She said the findings add a new layer to discussions in Congress about budget cuts that might reduce funding for the nation's social safety net and cut programs to help low- and moderate-income families get back on their feet.
Lisa Shippee, director of housing services for the Norwich-based Thames Valley Council for Community Action, said cuts that social service agencies in the state already have sustained may have contributed to the downward spiral of people in Connecticut who are living on the edge. Reductions in energy assistance, for instance, have meant that many families are digging deep into their budgets to pay for heating oil, she said.
"The household budgets are just extremely tight," Shippee said. "One bump in the road — a major car repair or a month without a job — anything can send you tumbling, and it's hard to stop."
Shippee runs an eviction-prevention program, and she said it's not unusual to get 25 to 40 calls a week from people seeking help to catch up with their rent. But while in the past, families have needed only a few hundred dollars to avoid eviction, she said people these days are often seeking $3,000 to $6,000 — far above the maximum help her agency can offer.
"Many people have liquidated their 401(k)s," Shippee said, referring to the popular retirement funds. "It's been really tough for about five years now."
Adding to the woes, she said, has been the lack of local employers willing to offer full-time work with benefits. This means breadwinners often have to string together two to three part-time jobs — without benefits — and then face a huge bill in April because not enough money was set aside from the individual jobs to cover their taxes.
Another burden faced by Connecticut residents is credit card debt. The state's average debt of about $15,000 is the second highest in the nation, according to the report.
In other measures, the state ranks 42nd on the affordability of homes, 43rd on the housing cost burden on owners and 44th on the rental burden. The high cost of housing statewide earned Connecticut an "F" on the scorecard issued Wednesday.
Another area of concern to Connecticut residents is its ranking in the category of businesses and jobs. The state earned a "D" grade in this area, ranking 44th in business creation and 46th in private loans to small businesses.
The state's ranking for overall financial assets and income, health care and education were all given a "B" grade.
Among the suggestions made in the report to boost Connecticut's climate for building and preserving assets were to offer personal finance courses in high school, provide more assistance to first-time homebuyers and institute funding for a microenterprise association that would include a self-employment assistance program.
- 31 percent of households lack a savings account.
- 8 percent of households lack a mainstream financial account.
- 56 percent of consumers have subprime credit ratings (49 percent in Connecticut), meaning they must pay more to borrow money.
- The average college student is graduating with $26,600 in education-loan debt, up more than $550 from last year.
- 25 states saw increases in liquid-asset poverty during the year.
- 63 percent of minority households are asset poor, compared with 35 percent of white households.
Source: Corporation for Enterprise Development
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