Texas Trailing in Key Measures of Financial Health
Dallas Morning News
Jan 30, 2015
Despite Texas’ strong economic and job growth, its residents fare worse economically than those in most other states.
Texas continues to rank at or near the bottom among states on many key household financial health measures, making it difficult for residents to climb the economic ladder, according to data released Thursday by the Washington, D.C.-based nonprofit Corporation for Enterprise Development. Overall, the state ranked 37th in how residents are faring economically — the same as last year.
Nationally, millions of Americans still struggle despite lower unemployment and a better economy. Many people work in low-wage jobs, have stagnant incomes and don’t have health insurance.
“Many Americans are struggling,” Kasey Weidrech, CFED’s director of applied research and a co-author of the report, said Thursday in a media conference call. “The reality is that millions of families and individuals still have little opportunity to take charge of their financial lives, let alone plan for a more prosperous future. Millions of families have insufficient income to meet their basic needs.”
The U.S. household income poverty rate stayed around 14 percent for the third straight year, Weidrech said. The rate was higher in Texas, 15.7 percent, ranking it 36th.
The data from CFED’s 2015 “Assets & Opportunity Scorecard” shows that many people across Texas and the nation have recovered unevenly from the 2007-09 recession.
Although annual unemployment rates fell significantly, one of every eight Americans was underemployed. In Texas, one of every 10 people was underemployed.
Low-wage jobs increased in most states. One of every four U.S. jobs was in a low-wage occupation, up from 21 percent last year. In Texas, nearly one of every three employees worked in a low-wage job. However, Texas ranked fifth in average annual pay — $53,058 compared with a national average of $49,808.
“We talk a lot about the low unemployment rate and how many jobs we’ve created in Texas, but we need to look more at a living wage and what it takes not just to get by in Texas but to get ahead,” said Woody Widrow, executive director of Austin-based nonprofit Raise Texas. “There are still some challenges to help residents move forward and move up the economic ladder.”
Education is one of those challenges. Texas performed poorly on CFED’s scorecard for education, ranking 50th in adults with a high school diploma, 44th for its student loan default rate and 38th in eighth-grade reading proficiency. Although the state’s high school graduation rate of 88 percent was No. 3, it had a higher share of “disconnected youth” — those ages 16 to 24 not in school or not working (14.9 percent vs. 13.8 percent nationally).
Low wages may contribute to the 44 percent of U.S. households that don’t have enough savings to cover three months of living expenses should an emergency arise, nearly double that of last year. In Texas, half of all households are without that safety net, the same as last year.
Other factors may hurt savings. Texas was 41st in households with a bank account and 40th in households with a savings account. In addition, Texas ranked 45th in the share of residents participating in an employer-sponsored retirement plan — 41.3 percent vs. 45.8 percent nationally.
Jennifer Brooks, CFED’s director of state and local policy, noted that states with the lowest economic outcomes also rank poorly in policies that help residents achieve financial security, indicating a strong correlation between the two. Texas’ policy rank fell to 44 from 41 last year.
Widrow of Raise Texas thinks the state should adopt policies that encourage people to save. One way, he said, would be to eliminate asset limits for eligibility for state programs such as food stamps, which discourage household saving.
CFED suggested Texas take other policy steps, including reforming predatory lending practices, enabling schools to offer college savings accounts and focusing job training programs on higher-wage, higher-skilled occupations.
The scorecard evaluated how residents are faring across 67 measures in five areas: financial assets and income; businesses and jobs; housing and homeownership; health care; and education. It also evaluated 68 policy measures to see how states are addressing challenges facing residents.
Follow Sheryl Jean on Twitter at @SJeanDallas.