Many Oklahomans Are Walking Financial Highwire with No Safety Net
More than two in five Oklahoma residents are living on the edge of financial disaster with almost no savings to fall back on in the event of a job loss, health crisis or other income-depleting emergency, according to a report released today by the Corporation for Enterprise Development.
The 2013 Assets & Opportunity Scorecard defines these residents as “liquid asset poor,” which means they lack adequate savings to cover basic expenses at the federal poverty level for just three months if they suffer a loss of stable income. Included in this group are a majority of Oklahoma residents who live below the official income poverty line of $23,050 for a family of four, as well as many who would consider themselves middle class. Fully 26% of households earning between $44,893 and $73,140 per year have less than three months of savings ($5,762 for a family of four).
Without savings, these families have limited hope of building a more prosperous future for themselves or their children, including saving for college, buying a home or setting aside money for retirement.
“In order to cope with the recession’s continued impact, these families have had to prioritize today’s expenses over tomorrow’s goals,” said Andrea Levere, president of CFED. She called the findings “particularly disturbing given the ongoing budget talks in Congress that will likely result in further reductions in the social safety net and other programs that help low- and moderate-income people get on their feet and start planning and saving for a better future.”
Published annually, the Assets & Opportunity Scorecard offers the most comprehensive look available at Americans’ ability to save and build wealth, fend off poverty and create a more prosperous future. The Scorecard explores how well residents are faring in the 50 states and the District of Columbia and assesses policies that are helping residents build and protect assets across five issue areas: Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education.
Oklahoma ranks 32nd in the country overall in the ability of residents to achieve financial security. The Scorecard evaluates states across 53 measures within the five different issue areas. Oklahoma receives a “D” in Financial Assets & Income, due in part to Oklahomans’ lack of access to the financial mainstream. The state ranks 42nd for unbanked households and 43rd in underbanked households, those that have a checking or savings account but continue to rely on alternative and often costly financial services. Almost 63% of Oklahomans have subprime credit scores, the 44th worst rate in the nation. However, Oklahoma does have the 4th lowest level of credit card debt with an average of $6,495 per borrower. Oklahoma earns a “C” in Education, but there are highs and lows in the state’s outcomes. Oklahoma has the second highest early childhood education enrollment and the 8th lowest college graduate student loan debt. Conversely, the state has low levels of college attainment, with a ranking of 42nd for adults with a four-year degree and the 3rd highest student loan default rate in the nation. Oklahoma earns a “B” in Housing & Homeownership, with the grade largely driven by low housing costs. The state places in the top 10 nationally in both affordability of homes (7th) and cost burden for renters (9th). While the rate has decreased by 27% from the previous edition of the Scorecard, Oklahoma has the 3rd highest rate of high-cost mortgage loans in the country.
“Although there are signs of improvement in Oklahoma’s economy, this year’s Assets & Opportunity Scorecard paints a picture of a state – and a nation – that is struggling to achieve economic opportunity for all residents,” said Jennifer Brooks, director of state and local policy for CFED.
To address these challenges, the Scorecard includes a dozen policy solutions that can help Oklahoma increase opportunity and promote financial well-being for all residents. To reduce income poverty and increase net worth, Oklahoma should help its low-income population maximize their incomes and build assets by increasing the Earned Income Tax Credit and funding a state Individual Development Account program. To improve its secondary and post-secondary educational outcomes, Oklahoma should increase funding to schools, especially in high-poverty districts, and match savings for college in 529 accounts. Finally, to protect unbanked and underbanked households and improve credit scores, Oklahoma should ensure residents have access to fair and appropriate financial products by prohibiting or capping payday loans and short-term installment loans at 36% APR.