Study Shows that Orleanians are 'Asset' Poor
Nnpa | 9/25/2012, 9:47 a.m.
Most Americans are familiar with measuring poverty in terms of dollars and cents, believing that the dividing line between rich and poor is one that separates high incomes from medium - and low-range earnings. But a new study on poverty in New Orleans by local researchers released this month digs deeper and examines - not only incomes - but the relationship between asset wealth and being able to live above the poverty line.
Commissioned by the Greater New Orleans Foundation, the study, entitled "Assets & Opportunity Profile: New Orleans," is aimed at fueling "a local conversation about wealth, poverty and opportunity," according to the foundation, and presents "a snapshot of the financial security and opportunities for New Orleans residents."
Key findings in the document include research indicating that 37 percent of New Orleanians live in what is known as asset poverty, a category met when the liquidation of a person's assets is not enough to provide a higher-than-impoverished standard of living for a three-month period in the absence of a regular income.
Dr. Albert Ruesga, who heads the New Orleans foundation, calls that figure "staggering" and points out that New Orleans outpaces Louisiana and the rest of the country in the number of people who lack sufficient assets. But while Black households in New Orleans are hardest hit by the figures - half of all Black residents live in asset poverty - the impact of having limited hard assets is felt across racial, educational and even economic lines.
"Twenty-two percent of people who have a bachelor's degree in New Orleans live in asset poverty," Ruesga says. "Thirteen percent of residents who have advanced degrees live in asset poverty. That means there are people with master's degrees and doctorates who are living without adequate resources."
Forty percent of area Latinos live in asset poverty and more than 20 percent of whites and Asians join them. Ruesga points out that nearly 30 percent of New Orleanians with annual incomes between $45,000 and $70,000 also face challenges with surviving on their existing assets in lieu of a regular paycheck.
"This underscores just how many people are only one or two paychecks away from being homeless," Ruesga says. "This type of research is important because simply looking at poverty from an income standpoint is not enough; this helps to present a more complete picture. There are people with some pretty high incomes when you look at it on the surface, but who are still living in poverty when it comes to assets."
Solving these issues is a multi-pronged approach, Ruesga says, and the study lays out several recommendations for policymakers and stakeholders to examine like creating neighborhood-based financial centers, establishing a local earned income tax credit, and incorporating financial education into social service and workforce development programs.
"Municipalities can also limit the development of check cashing and payday loan centers through zoning restrictions," Ruesga adds. "These places take advantage of the 'underbanked' - people who either don't have a bank account for various reasons or have one and don't use it - and charge very high fees for their services."