A new report from the D.C.-based Corporation for Enterprise Development ranks Maine 9th in the nation in terms of the overall financial stability of its residents, in part because of the high level of business ownership in the state.
Still, the report found, 24.1 percent of Maine’s households are asset poor, “meaning they have little or no financial cushion to rely on if unemployment or another emergency leads to a loss of income.”
Nationwide, 27 percent of households are asset poor, the nonprofit think-tank found. Asset poverty rates ranged from a high of more than 45 percent in Nevada to a low of 15.7 percent in Vermont.
“Growing numbers of Americans have almost no savings or other assets to fall back on if they lose their jobs or face a medical crisis,” said Andrea Levere, president of CFED, in a release on the report. “Without those savings, few will be able to invest in a more economically secure future, including buying a home, saving for their children’s college educations or building a retirement nest egg.”
Those numbers, the group noted, represent a conservative estimate of financial security. That’s because it counts all assets that would be liquidated for day-to-day needs, including a home, a car and other items not easily converted to cash.
“A more realistic measure of the resources available to families is ‘liquid asset poverty,’ which excludes assets such as a home or car that are not easily converted to cash,” the report noted. “Excluding these assets, the liquid asset poverty rate increases to 48% of Maine residents.”
Other Maine-specific findings include:
Maine earns an “A” in Businesses & Jobs, boasting high business ownership rates. However, unemployment numbers are high, especially by race, ranking 36th. The state ranks 35th in average annual pay and 20th in low-wage jobs. Residents are saddled with high debt when graduating from college; the state ranks 49th in average college graduate debt and 43rd in college graduates with debt. Maine does well in Health Care, earning an “A”, with the insured rate high. The state ranks 12th in overall uninsured rate, 2nd in uninsured by race and 3rd by income.
The Scorecard highlights a dozen policy solutions that can help Maine increase opportunity and promote financial well-being for all residents. To address income and asset poverty rates, Maine should provide more funding and support for its state Individual Development Account program and remove the disincentive for low-income families to save by lifting asset limits in two public benefit programs: TANF and family Medicaid. To increase math and reading proficiency and boost college attainment rates, Maine should increase funding for K-12 education among high-poverty school districts, create strong systems for teacher evaluation and retention, and restore the full savings match on its state 529 college savings plan. In addition, to address low average annual pay and benefits for workers, the state should increase its minimum wage and adopt policies that that enable workers to address family or health issues without jeopardizing their earnings or job security.
On a nationwide basis:
· More than half of consumers (56%) have subprime credit scores.
· Between the third quarters of 2008 and 2011, the home foreclosure rate increased by 50%, widening the already-considerable homeownership gap between white households and households of color. As of 2010, 73% of white households owned homes, compared with just 47% of households of color.
· One in five jobs is low-wage and nearly half of employers do not offer health insurance. In addition, 55% of workers do not have or participate in retirement plans.
· While the number of people getting four year college degrees is up slightly, the average debt for graduating college seniors has risen 19% since 2007 to $25,250.