It’s not just your income, it’s your assets
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It’s not just your income, it’s your assets
Kai Ryssdal: Poverty is one of those words that can be kind of vague in its application, used when maybe it’s not exactly the right term. The government actually has a definition. The poverty line. But a report out today says that when you define it by assets — not income, as the government does — then a whole lot more people are poor. At least something called “liquid asset poor.”
New Hampshire Public Radio’s Dan Gorenstein explains.
Dan Gorenstein: Ask Lois Matheson where she and her husband keep their money.
Lois Matheson: In a savings account, in a 401 account, in a retirement account of some kind, an annuity account.
That’s liquid asset wealth, money you can get to when you need to, which is exactly what Matheson did after she lost her job back in 2010.
Matheson: That was the first time that I thought, “this is not a good situation, this is not something I want to be doing.”
But for the past 16 months the Matheson’s have been dipping into their 35 years worth of reserves because they can. A new report from the Corporation for Enterprise Development finds that many Americans cannot.
The Corporation’s Andrea Levere.
Andrea Levere: Forty-three percent, or almost half of this country, is living in liquid asset poverty.
That means some 50 million families don’t have money to cover the basics for more than three months when faced with job loss. Income poverty, the typical definition of poverty, stands only at 15 percent. But that number doesn’t tell the full story.
Ray Boshara: For too long, we’ve focused simply on income. We didn’t focus on savings and assets.
That’s Ray Boshara, with the Federal Reserve in St. Louis. Boshara says the benefit of liquid savings isn’t just about weathering the storm.
Boshara: You don’t have to go to the check casher or the payday lender if you need some cash. You can open up a mainstream banking account. You can start a business, you also can make a down payment on a home.
Boshara says easy-to-grab cash helps determine who stays in poverty, who falls further behind and who moves up.
I’m Dan Gorenstein for Marketplace.
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