2017 Scorecard: Economic Momentum Leaving Too Many Households Behind
Prosperity Now President Andrea Levere often likes to say that numbers don’t lie, but they can obscure the truth. The 2017 Prosperity Now Scorecard is one good example of where this axiom holds true.
On the surface, the U.S. economy seems to be chugging along. Since the last Scorecard, income poverty rates declined from 14.5% to 13.8%—the first measurable decline since 2011. Likewise, unemployment rates are hovering near historic lows.
This is great news, but when you dig into the data to see who is benefiting from this momentum and how, the numbers tell a different story.
On the question of who is thriving, the answer is unsurprising: it’s primarily the wealthy and the White. Despite overall unemployment rates around four percent, Black workers are still nearly twice as likely as White workers to be without a job (8.7% vs. 4.0%, respectively). This might explain, in part, why people of color are more likely to start a business than their White counterparts—business ownership can create work where none exists. However, the Scorecard finds that when households of color own businesses, they don’t see nearly the same returns on their investments that White business owners see. White-owned businesses are not only significantly more likely to have employees other than the owner (21%) compared to Black-owned (4%) and Latino-owned (9%) businesses, but the average value of White-owned businesses ($656,000) is about three times higher than the average worth of businesses owned by workers of color ($224,530).
Irrespective of race, those who find business ownership not to be a viable strategy are relegated to the labor market, but even the increase in the number of jobs isn’t translating into workers’ long-term success. One key reason is the number of low-wage jobs. Although average annual pay went up slightly to just under $53,000, one in four jobs is in low-wage occupations, a number that has remained largely stagnant for several years.
Even in occupations where wages aren’t necessarily low, a new measure in the Scorecard—income volatility—reveals that changes in how workers get paid is wreaking havoc on household balance sheets. In states like Wyoming, as many as 30% of households experience extreme fluctuations in their income from month to month. In other words, having income is one thing, but having an income that comes in consistent amounts at steady increments is perhaps even more important, and we’re seeing more workers challenged by volatile incomes. As a result, a $400 car repair that might be only a minor setback in September has the chance to unravel a household’s finances if it comes in March.
Given these data, the impact of all these challenges may not be surprising: more and more families are struggling to make it by, much less get ahead. In the shorter term, this is evidenced by the low percentage of households that saved in the past year (56.3%), and the fact that more than one-third of households (36.8%) do not have enough in liquid savings to live at the poverty line for at least three months in the event that they lost their primary source of income due to a job loss or other emergency.
In the longer term, these trends are evidenced by the Scorecard’s net worth data. For the third year in a row, median net worth—$76,708 this year—has not changed significantly. Even more troubling is that nearly 20 million households (16.9%) have zero or negative net worth, meaning they owe more than they own. And, while just about all households are experiencing the effects of a broader inability to build wealth, the situation for households of color is much worse. The Scorecard finds that Black households own just seven cents for every dollar of wealth owned by a White household, while Latino households own 10 cents on the dollar.
Despite the impact of all these data on households, communities and the economy at large, there is much that can be done to stem the tide. This year’s Scorecard assesses the 50 states and DC on 53 policies that are proven to boost residents’ financial health and well-being. Although some states have a ways to go, others are leading the way, and these trends are especially promising given the federal government’s apparent disinterest in clearing paths to prosperity.
At both the state and federal levels, we know that governments can do much to help everyone get ahead. But, we also know that they won’t take action absent the efforts of advocates whose collective voices together insist on the need for inclusive, equitable and proactive solutions to the financial insecurity documented by the 2017 Scorecard.
"[Governments] won’t take action absent the efforts of advocates whose collective voices together insist on the need for inclusive, equitable and proactive solutions to financial insecurity."
If you’re ready to add your voice to this growing base of advocates, I encourage you to join the Prosperity Now Community today. Doing so will keep you connected to opportunities to take action, connect with your peers and more. And, use the Scorecard data, reports and resources in your advocacy efforts and to make the case for policies and solutions that put households on a stronger financial footing. You can find the 2017 Main Findings Report and all of the state and local data at scorecard.prosperitynow.org. The Scorecard team is also available to give customized presentations for your networks or at your events. Please contact us at email@example.com to get those scheduled!