Ohio ranks in bottom third nationally for financial stability of residents: CFED Scorecard
Clevelands Plain Dealer via Cleveland.com, Business
Jan 25, 2016
CLEVELAND, Ohio – Ohio ranks in the bottom third nationally when it comes to the financial stability of its residents, according to a scorecard released Monday.
The 2016 Assets & Opportunity Scorecard ranks the 50 states and Washington, D.C. in a range of areas, from financial assets and income to businesses and jobs to education. Ohio ranks 36th out of 51. The Scorecard is done by the Corporation for Enterprise Development in Washington, D.C., or CFED, which is focused on empowering "low- and moderate-income people to build wealth." Ohio ranked 35 last year.
The Scorecard refers to such measures of financial stability – most often based on analyses of government data -- as outcome rankings. Of 61 outcomes, Ohio performed below the national average on several of them most often crucial to ensuring financial stability for a state's residents, according to Lebaron Sims, research manager at CFED. Among the outcomes for which Ohio performed poorly were the income poverty and bankruptcy rates and the liquid asset poverty rate, which is the percentage of households with less than three months savings at the poverty level. That came to about $6,000, Sims said.
The state also has a higher percentage of low-wage jobs than the national average, a smaller percentage of microenterprises, or businesses with no more than four employees. Ohio has a business creation rate that nationally ranks the state near the bottom. The organization has done the Scorecard for about 15 years, but this was the first year CFED analyzed racial disparities among some of the outcomes. The Scorecard's findings reflect that in Ohio, as nationally, African Americans and Latinos are faring far worse than their white counterparts.
That Ohio would fall in the bottom third overall nationally should not only be of concern to Ohioans, Sims said. He said the state is more than just a political bellwether.
"Ohio really is a microcosm of some of the trends both in society and in the economy that have led to these inequitable outcomes," he said. Here is a look at some of the outcomes that caused Ohio to rank in the bottom third:
Income Poverty Rate – In Ohio, 15.1 percent of households live in poverty, compared to 14.5 percent nationwide. "There are huge disparities by race," Sims said.
He said the income poverty rate for white households is about 11 percent. For black and Hispanic households, it is about 23 percent. "At 23 percent, they are really living on the brink," he said. "It is not only difficult for them to save for emergencies, but it limits their ability to even access the drivers of financial or economic mobility."
Such drives include higher education or other things that help people build wealth, such as a home or financial investments. Liquid Asset Poverty -- Ohio's liquid asset poverty rate is 44.7 percent, compared to 43.5 percent for the United States.
"This is a very conservative measure we generate at CFED of a family's ability to stay afloat in case of some sort of financial emergency," Sims said. "Thirty-nine percent of white households in Ohio are liquid asset poor. Among households of color, we are looking at 69 percent." Bankruptcy Rate – Ohio has 3.3 bankruptcies per 1,000 residents. Nationally, the rate is 2.9 per 1,000. Sims said Ohio might have such a high bankruptcy rate because the state was hard hit by the foreclosure crisis. Homeowners are often motivated to file for bankruptcy in an attempt to save their homes.
Low-wage Jobs – In Ohio, 28.4 percent of the jobs were low-wage. Nationally, it was 25.6 percent. These numbers are based on 2013 data. A job is considered low-wage if it paid less than $23,624, which was the poverty rate for a family of four in 2013. Microenterprise Ownership -- The microenterprise ownership rate, which is based on businesses with up to fur employees, in Ohio is 14.4 percent. Nationally, it is 16.6 percent.
"For low-income individuals, self-employment is a significant source of employment and income, and business ownership represents an important opportunity to build assets," the Scorecard states.
Business Creation Rate – Ohio's business creation rate is 6.6 per 1,000 workers. Nationally, the rate is 9.3 per 1,000. That ranks Ohio 48th of 51.
Vermont ranked first for overall outcomes. North Dakota was second and New Hampshire third. Mississippi was in last place. Alabama ranked 50th and Georgia 49th.
In addition to outcomes, the Scorecard did rankings based on the policies a state had implemented that CFED believes would make it easier for a state's residents to secure financial stability. Ohio did considerably better on the policy measure than it did on outcomes, ranking 15 overall out of 50 states and Washington, D.C.
"We looked at 69 different policies that have been proven to help low-income, moderate income and middle income people find financial stability, but Ohio has passed lees than half of them. There is always room for improvement."