Illinois Asset Building Group - Building Financially Strong Families and Communities

Lack of Savings and Assets Puts Illinois Families at Risk of Poverty

FOR IMMEDIATE RELEASE

July 2, 2009

Chris Giangreco, 773.336.6073, cgiangreco@heartlandalliance.org

National figures just released for the month of June show the unemployment rate at 9.5%, the highest since August 1983. Illinois unemployment in May 2009 reached 10.1%, higher than the national rate. With 671,400 workers out of a job, thousands of families in Illinois are struggling to make ends meet. Many of them face an even more precarious situation because they do not have sufficient savings and other assets to rely on in the face of job loss.

Over one quarter of Illinois households lack a sufficient financial cushion to live above the poverty line for three months if they lose their job, according to data released by the Illinois Asset Building Group. These “asset poor” households do not have an adequate safety net to fall back on until a new job is found or other arrangements are made.

Typical assets that families often liquidate or use to fall back on in tough times include savings, a home, or retirement accounts, yet many families lack these resources.

• 27% of households in Illinois are asset poor
• Over half (52%) of single mothers with children are asset poor
• The high percent of asset poverty among racial minorities reveals the racial wealth gap in Illinois
  • 51% of African-American households are in asset poverty
  • 48% of Latino households are in asset poverty
• Families and individuals who rent their homes are 3 times more likely to be asset poor than income poor
• Almost 1 in 4 middle income families – those earning between $43,000 and $66,000 a year – are asset poor

These findings highlight the extent to which families in Illinois are more financially vulnerable than their income alone might suggest. Coupled with rising unemployment in Illinois, a growing number of families are at significant risk of financial destitution.

Assets are the hallmark of financial stability for individuals of all income levels, providing a safety net for families. With so many individuals and families living right at the edge in these difficult financial times, poverty rates are projected to rise as unemployment rates continue to remain high.

Groups from around the state are urging the Governor and legislators to support the adoption of a set of asset building and anti-poverty measures that could help unemployed people stay out of poverty, including:

• Age-appropriate, quality financial education across the lifespan to assure individuals and families have the knowledge and skills to build assets.
• Consumer protections for predatory payday and consumer installment loans, which drain millions of dollars from low-income families each year.
• Development of a strong network of credit unions and banks who offer lower-interest alternatives to payday loans, helping families build relationship with financial institutions and avoid predatory loan products.
• Lifelong opportunities to build savings and invest, such as children’s savings accounts, matched-savings programs, and portable retirement accounts.

Detailed data on asset poverty, including information for specific counties and legislative districts can be found on the data page of our website.