This year's Assets and Opportunity Scorecard from CFED highlights the alarming reality with which many Americans are coming to terms: the 'economy' may be getting better, measured on a variety of indicators, but that doesn't mean that their own finances--or those of their communities--are in much better shape than they were at the beginning of the devastating recession we all weathered together. If a rising tide is not lifting all boats, and if a stronger stock market doesn't necessarily mean much to millions of American households, we clearly need a different accounting--and different policy levers--to make the American Dream viable again.
CFED's report looks at the dimensions of financial well-being identified in research by the Consumer Financial Protection Bureau, and many American households are in troubling straits on one or more of these measures: control over daily finances, capacity to withstand financial shocks, on track to reach financial goals, and financial freedom to pursue life objectives. Of course, assets are key to all of these aims, and this is where the picture is particularly concerning.
For example, 44% of all American households (and 80% of the poorest households, 61% of households of color, and even 25% of middle-class households) are liquid asset poor, without even enough in savings to cover three months of expenses. This financial precariousness extends to longer-term savings, with fewer than half of Americans saving in employer-based retirement plans. As a generation reaches retirement age, strained not only by the employment disruptions many experienced in the recession but also their scarce asset cushion and, in many cases, ongoing student debt obligations, the future looks bleak indeed.
At AEDI, we're particularly interested in one of the positive indicators CFED included this year: the increase in the high school graduation rate in 36 states and the District of Columbia. While it's not a foregone conclusion that all of these graduates are actually college-ready, of course, it's certainly the case that growth in high school graduation creates more potential demand for college enrollment, which means greater urgency to address that part of the upward mobility ladder. As we collectively make progress earlier in the academic pipeline, it will become all the more important that policies regarding financial aid, and those with implications for college completion and the return on degree, cultivate positive educational expectations and increase persistence. These students' promise must not be squandered, and the progress we've made in getting children to high school graduation must not be wasted.
The Assets and Opportunity Scorecard includes, of course, not just the report but also detailed assessments of where different states stand on these indicators, including an evaluation of the effects of different policy approaches on individual rankings. The infographics alone are worth taking a look, and I know that we'll return to the Scorecard repeatedly over the coming year, as we help policymakers and others understand where we are today, and what it will take to get to where America needs to be. Check it out!