The ABC Data Exchange

Financial Assets and Income

The reality is that many families in our community are living paycheck to paycheck.

When a family is teetering on the edge of financial stability, even a small disruption in income, like getting sick or missing a shift, can force difficult choices about what to do with limited resources.

The measures contained in this page shine a light on different conditions that are relevant to a family’s or an individual’s fiancial stability. It is important that we look critically at this data to understand the patterns that are present across and among measures. Such patterns might include disparities by race/ethnicity, sex, and/or age; improving or worsening conditions over time; or significant difference among peer communitites. An understanding of these patterns equips us to work together to identify, explore, and address the underlying systemic inequities that are impacting our community.

Literature Review Highlights

 

Assets may raise a family’s income through the following channels: [1]

  1. Assets such as stocks bring passive investment income;
  2. Physical assets can allow people to pay less for services (people with cars do not have to pay for taxi / Uber);
  3. Help extend job search (having a car) or invest in human capital such as education;
    1. Car ownership increases employment and hours worked. [2]
  4. Functions as an insurance stock that allows job seekers to take more risks in the job market or relocate.

Asset poverty may negatively impact a family’s income through higher financial stress, which relates to increased absenteeism at work. [3]

Literature Review References

[1] Lerman, R. I., & McKernan, S. M. (2008). The effects of holding assets on social and economic outcomes of families: A review of theory and evidence. The Urban Institute, November.

[2] Raphael, S., & Rice, L. (2002). Car ownership, employment, and earnings. Journal of Urban Economics, 52(1), 109-130.

[3] Kim, J., Sorhaindo, B., & Garman, E. T. (2006). Relationship between financial stress and workplace absenteeism of credit counseling clients. Journal of Family and Economic Issues, 27(3), 458-478.

Major Finding

Significant racial/ethnic disparities were present across all financial assets and income measures. White residents and households had better outcomes than Black and Hispanic/Latino residents and households across all measures.

Asset Poverty

Asset Poverty is a condition in which an individual, family, or household lacks the savings to cover basic expenses (at federal poverty level) for three months if their income is interrupted. Liquid Asset Poverty is a similar measure, in which the household lacks the savings to cover basic expenses at the federal poverty level for three months, but only considers assets that are more readily accessible and does not include wealth building vehicles like a home or business assets. View data notes for this measure.

Data Visualization

Estimated Asset Poverty and Liquid Asset Poverty (Forsyth County, 2018)

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Key Takeaways

Approximately 27% of Forsyth County households were in Asset Poverty in 2018, while 36% were in Liquid Asset Poverty.
Major Asset Poverty disparities were present by race/ethnicity in Forsyth County.

About 17% of White households were living in Asset Poverty in 2018 compared to 48% and 39% of Black and Latino households, respectively.

The liquid Asset Poverty rate was higher than the asset poverty rate in 2018 for all racial/ethnic groups with disparities remaining stark.

Approximately 56% and 68% of Black and Latino households, respectively, were in liquid Asset Poverty compared to 24% of White households.

Zero Net Worth

A person’s net worth is the sum of all of their assets (things like cash, savings, an automobile, or a home, for example) minus the combined value of their liabilities (also known as debts). A person with a negative or zero net worth lacks the assets to cover their liabilities and is left in a financially vulnerable situation. View data notes for this measure.

Data Visualization

Zero Net Worth (North Carolina, 2018)

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Key Takeaways

About 1 in 5 households, or 20%, in North Carolina had a negative or zero net worth.
Major disparities were present by race/ethnicity.

About 29% of Black or African American households and 33% of Hispanic/Latino households had a negative or zero net worth compared to 16% of White households.

Median Employment Income

Access to adequate financial resources is necessary for economic self-sufficiency. Median income of the working age population, 16 to 64 year olds, is an indicator of the financial resources available to middle-income households in our community. Median income of the working age population refers to the specific income level that is below the highest-earning 50% of the working age population and above the lowest-earning 50% of the working age population. Because income is closely tied to poverty, the Census Bureau and other studies use household income to determine poverty status [1,2]. View data notes for this measure.

Data Visualization

Median Income (Forsyth County, 2019)

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Key Takeaways

The median income in 2009 was similar to the median income in 2019.
Adults between the ages of 35 and 64 have the highest median income.

In 2019, 35-64 year olds had a median income of approximately $40,000 compared to around $24,000 for 16-34 year olds.

Disparities were present in median income by race/ethnicity.

Whites had a median income of around $40,000 compared to around $28,000 for Black $21,000 for Hispanic/Latinos.

Disparities were present in median income by sex.

In 2019, male working adults had a median income of around $40,000 compared to around $30,000 for female working adults.

Disparities were present in median income by educational attainment.

Those who had a Bachelor’s Degree or more than a Bachelor’s Degree had median incomes of around $51,000 and $71,000, respectively, compared to around $26,000 for working adults with a high school diploma or less.

Income Insufficiency

Income insufficiency is a measure of financial hardship that compares family income to estimated family expenses. While poverty rates are widely used as a measure of financial hardship, there is some evidence that poverty rates rely on outdated assumptions, which can lead to underestimated family expenses and financial hardship [1]. The income insufficiency measure supplements analysis of financial hardship based on poverty rates; it accounts for factors not considered in poverty calculations. View data notes for this measure.

Data Visualization

Income Insufficiency (Forsyth County, 2019)

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Key Takeaways

Forsyth County residents were more likely to be income insufficient than Durham County and the state of North Carolina residents.
Among age groups, those under the age of 25 were the most likely to live in households without sufficient income.

Children under 18 years and young adults ages 18-24 were the most likely to be living in households with insufficient incomes at 72% and 58%, respectively, in 2019. Residents who were 45 years old and older were the least likely to live in households with insufficient income at 26%.

There were significant disparities by race/ethnicity.

In 2019, about 57% of Black and 77% of Hispanic/Latino residents lived in income insufficient households compared to 31% of White residents.

Poverty

In practical terms, poverty indicates insufficient financial resources to pay for basic needs such as food, housing, and health care [1,2]. It is important to note that while poverty rates are widely used as a measure of financial hardship, there is some evidence that poverty rates rely on outdated assumptions, which can lead to underestimated family expenses and financial hardship [3]. For an alternative measure to poverty, see the income insufficiency measure above. View data notes for this measure.

Data Visualization

Poverty (Forsyth County, 2019)

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Key Takeaways

Poverty rates peaked at 22% in Forsyth County in 2012 and decreased to about 16% in 2019 since then.

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Poverty rates are lowest for older adults.

About 9% of adults 65 years old or older live in poverty compared to 13% of 35-64 year olds, 19% of 18-34 year olds, and 22% of those under the age of 18 living in poverty.

There were major disparities in poverty rates by race/ethnicity.

Black and Hispanic/Latino residents had more than double the rate of experiencing poverty compared to White residents. About 24% of Black and and 29% of Hispanic/Latino residents experienced poverty in 2019, compared to about 8% of White residents.

Residents with a high school diploma or less were more likely to live in poverty.

In 2019, about 21% of residents with a high school diploma or less were living in poverty, compared to 4-10% of residents in other educational attainment categories.

Adult females were more likely to live in poverty than adult males.

In 2019, about 16% of adult females were living in poverty compared to about 11% of adult males.

Household Banking Status

Banking status is critical to financial security and many day-to-day economic activities rely on the assumption that individuals have full access to traditional banking insitutitions [1, 2]. Banking with a Federal Deposit Insurance Corporation (FDIC)-insured bank provides a safe place for individuals to store their money, cash checks for free, pay bills, and provides an opportunity to access other products from the bank such as credit financing and loans. The FDIC describes those without a checking, savings, or money market account as unbanked [3]. Those that have a bank account but also use alternative financial services such as money orders, payday loans, pawn shop loans, and paycheck advances are considered underbanked. Nationally, the unbanked and underbanked “are more likely to have low income, less education, or be in a racial or ethnic minority group [3].” These are groups that also have historically been or felt excluded from traditional banking services [2]. Thus, some of those who are unbanked or underbanked may not trust banking institutions given the historical context. Additionally, some banks require a minimum balance in the account at all times, which affects those with lower or inconsistent income. 

Disparities exist and persist in part because of those aforementioned issues with traditional banking, but for those who use alternative financial services there are additional financial costs that significantly affect users [2]. For example, those who use prepaid cards as a substitute for a debit or credit card may pay an activation fee, a monthly fee, and/or a fee to deposit or withdraw money from an ATM.  

A pilot banking program via the USPS began in September, 2021 to help the underbanked and unbanked [4]. The program was launched across four United State cities to provide customers with opportunities to cash checks up to a certain amount, use ATMs, pay bills, and put money on a gift card without the fees associated with more predatory alternative financial services such as the payday lenders [4].

View data notes for this measure.

Data Visualization

Estimated Unbanked and Underbanked Households (Forsyth County, 2018)

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Key Takeaways

In 2018, 7% of Forsyth County households were unbanked while 19% were underbanked.
Approximately 3% of White households were unbanked compared to 15% of Latino and Black households, respectively.

Additionally, 12% of White households were underbanked compared to 36% and 29% of Latino and Black households, respectively.