- More than 63 percent of American children and 55
percent of Americans live in "asset" poverty, meaning they have few or
no assets to rely on in the event of a financial shock such as a job
loss, a medical crisis or the recent federal government shutdown, new
research from Oregon State University indicates.
When families lack assets such as vehicles, homes, savings accounts
or investments, weathering a financial crisis is that much more
difficult, said David Rothwell, an assistant professor in OSU's College
of Public Health and Human Sciences.
"This is a dimension of financial security that we don't think about
that much, and it's pretty high," Rothwell said. "The findings
highlight the extent of financial insecurity among American families.
These shocks ripple through the family and down to the children."
The study is believed to be the first to explore asset poverty among
American children. It was published recently in the journal
Children and Youth Services Review. Co-authors are Timothy Ottusch of the University of Arizona and Jennifer Finders of Purdue University.
Rothwell studies poverty and its impact on families and children.
Experiencing poverty in childhood can have lifetime impacts for those
children; past research has shown that children who grow up in poverty
are more likely to struggle in school, have lower job earnings
throughout life and experience family instability as adults.
A growing body of research suggests that parents' asset levels also
predict academic achievement, educational expectations and likelihood of
college enrollment and graduation. Families with assets that can be
used when income is disrupted are also likely to experience less
financial stress and strain.
Yet asset poverty is higher than income poverty for children and
families. In a 2018 study of Canadian families, researchers, including
Rothwell, found that asset poverty was two to three times more prevalent
than income poverty. Families can have adequate day-to-day funds but be
asset-poor and would likely struggle during a financial shock.
"Recessions, natural disasters, government shutdowns ... these
things happen," Rothwell said. "What we're looking at is what tools
families have to respond when these events take place. It's almost like
an insurance mindset."
Assets can provide insurance against unexpected events, and they
also promote long-term social development, Rothwell noted. People behave
differently, and they are treated differently, when they are
financially secure and have assets to rely on, he said.
Using data from the Luxembourg Wealth Survey, researchers analyzed
income and asset data from more than 250,000 households in the U.S.,
Australia, the United Kingdom, Finland, Italy and Norway.
The United States and Australia had the highest rates of child asset
poverty, at 62.9 percent each, followed by the United Kingdom at 52.2
percent, Italy at 48.9 percent and Finland at 47.6 percent. Norway had
the lowest rate, at 34.4 percent.
Researchers found that in three of the six countries, more than half
of all children live in asset poverty. In all the countries, children
of single mothers are most at risk.
"There's some variation between the countries, but all of them are
high in asset poverty among children," Rothwell said. "Children are in a
vulnerable position."
The researchers also found that U.S. children are more likely to
live in asset poverty than similar children in other countries, even
after controlling for other factors.
"In a global context, the fact of being born in the U.S. puts you at
higher risk for asset poverty," Rothwell said. "It's especially
difficult for families in the U.S. because the social safety net is so
thin. Other countries have more robust health insurance systems,
unemployment, housing and other social supports."
Rothwell noted some cities and states are taking steps to encourage
residents to save more and help build their assets. For example, the
state of Oregon recently launched OregonSaves, a program to help people
save for retirement. In San Francisco, the city, county and school
district have partnered on a college savings program where a college
savings account is opened for each child entering kindergarten, with the
city and county kicking in the first $50. Families can add more.
There are also a number of federal proposals for child development
accounts, which are savings or investment accounts that begin as early
as birth and may include public and/or private matching funds. The goal
of these accounts is to promote savings and asset building for lifelong
development; the funds may be targeted for such things as post-secondary
education or home ownership.
"The prevalence of asset poverty suggests a need for innovative
policies to offset short-term insecurity and promote long-term
development," Rothwell said. "The current policy demonstrations have
potential to improve the life chances of children."
