In February, Prosperity Now released its annual Asset Poverty Scorecard. At Prepare + Prosper, we look to this data each year for the story it tells about the landscape, particularly how Minnesotans are faring when it comes to financial health–income, savings amounts, banking products, and more. I sat down with Fran Rosebush Baylor and Anne Leland Clark to take a closer look at what it’s telling us about our state and the people who live here.

Fran Rosebush Baylor
Director of Field Engagement
Prosperity Now

Anne Leland Clark
Financial Capability + Learning Director
Prepare + Prosper

Q:  What does the 2017 Prosperity Now Scorecard tell us? What drives Prosperity Now to do this on an annual basis?

FRB:  Prosperity Now’s mission is to make it possible for low-to-moderate income families to build wealth and achieve prosperity. We use multiple means to do so—advancing policies, improving financial services and programs, and building coalitions and networks to bring solutions to scale.

What informs and drives all of our work is data. Data grounds us, helps drive innovation of programs and informs policy analysis.

The Scorecard is one of the only platforms that makes the connection between how families are faring financially and the policies their states have in place that impact household financial security. It shares household outcome and policy data across five major areas and is one of the only places you can find data about emergency savings, specifically liquid asset poverty rates of households. Liquid asset poverty is measured as the amount of liquid savings (savings account, checking account, retirement savings, etc.) a household has to cover three months of expenses at the poverty line if they face a job loss, medical emergency or some other crisis.

The main message of the 2018 Scorecard shows how our economy in the United States is upside down.

Since 2009, we’ve seen major improvements to the national economy in terms of number of jobs available and stock market improvement, however when you look deeper into the data at how households are faring we’re seeing major disparities. Despite businesses being more successful, wages are stagnant and cost of living is sky rocketing in areas.

We’re highlighting through the Scorecard data that we can’t blame this on people not working hard enough, instead we need to look at the systems and policies that govern their opportunities to get ahead.

The 2018 Scorecard shows data at the national and state level, however we know there are so many nuances at the local level that can be masked when we don’t dive deep enough. So to better understand the dynamics of what’s happening at the local level, we added 26 measures to our local data center to show how households are faring financially at the city, county and metro levels.

Q: What does the data show us is happening in the Twin Cities?

FRB: Nationally, the liquid asset poverty rate of households is around 37%, meaning one-third of families do not have enough liquid savings to live at the federal poverty level for three months if they face a job loss, medical emergency or other financial crisis. Minnesota as a whole has the lowest liquid asset poverty rate in the country at 21% and the Minneapolis/St. Paul metro area is slightly higher at 27%. This area has a great reputation for household financial security and a place for families to thrive.

However, when you break the data down by race you see that that narrative doesn’t accurately represent the reality for households of color.

Liquid asset poverty rates of white households in the metro area is around 22%, while for black households in the metro area it’s 65%, for Latino households it’s 58% and for Native households it’s 48%. Nearly two-thirds of black households do not have enough liquid savings to survive a financial emergency. This is a glaring disparity.

The metro region also boasts a high homeownership rate, however when we break it down we see that 76% of White households own their home while 25% of Black and 40% of Latino households do.

We cannot look at this data and not ask what is happening in this community, what systems and policies and job markets are doing to not allow communities of color the same opportunities to build security and get ahead.

There are a lot of historical social and economic policies that have stripped households of color of opportunity and wealth which has led to that disparity.

Q:  What are ways P+P is addressing this gap in the Twin Cities?

ALC:  We serve the individuals and communities behind this data. Those struggling to get by let alone get ahead in the Twin Cities are among our more than 12,000 customers, 59% of which are from communities of color. Our survey data underscores the Scorecard data on liquid asset poverty, with 73% of our customers reporting that they have less than $500 in liquid savings.

A tax refund can often be a reset moment to catch up on past due bills and expenses and, perhaps even allow our customers to build up a small nest egg to smooth income for the year ahead or save for future emergencies, dreams, and goals.

We know through research and practice that the majority of our taxpayers arrive to our tax sites with the intention to save some of their tax refunds – 58% self-reported savings intention last year. It is our site staff and volunteers who provide the environment and tools to nudge those able to save into action. For those without access to bank accounts, we can sign people up on-the-spot for a savings account or we can facilitate a purchase of U.S. savings bonds through the federal tax refund. Since the launch of our savings campaign in 2013, more than 5,100 taxpayers have saved $8.4 million.

For those ready to take action on conquering their financial goals outside of tax time – whether it be increasing savings, paying down debt, building credit – we offer financial coaching.

Our Money Mentors program helps people take the steps and doing the hard work needed to reach their long-term financial goals of homeownership, small business ownership, and financial security.

What’s more, they are building strength, confidence, and power to protect and build their social capital in peer groups.

Recognizing that our direct programs and services are only able to reach a sliver of those shut out of financial opportunities and systems here in the Twin Cities, we are partnering with a community bank to bring to market an integrated set of financial products called the FAIR Financial Solution.

For those 254,000 households across the Twin Cities who are either partly or wholly shut out of the our financial mainstream and relying on high fee and interest financial products, the Financial Access in Reach (FAIR) initiative is providing the tools and support to help people keep more of their income, set aside some liquid savings and (re)build their credit to ultimately achieve financial health and wealth.

Q:  How do we collectively continue to address this real issue of financial health for all Americans?

FRB:  As we’ve talked about, the improving economic climate in Minnesota and the metro region is not reaching everyone. We all need to come together and encourage our elected officials to invest in and support the most marginalized groups so that everyone can have the opportunity to prosper.

When the poorest households succeed the whole community benefits.

As I reflect through the Scorecard, some of the policy opportunities that I see are implementing an automatic children’s savings account program, regulating predatory lending practices, as well as regulating paid tax preparers who advise on the most important financial transaction households make every year. The state can also support the requirement of financial education in schools and integration of financial capability services at Volunteer Income Tax Assistance (VITA) sites. However, these are simply policy opportunities I see from the data, but I know local community leaders like Prepare + Prosper, Minnesota Asset Building Coalition, Minneapolis Urban League, and the African American Leadership Forum are on the ground every day identifying and advancing the changes that are needed most.

As modeled by groups like these, it’s so crucial we first listen to residents and truly understand the needs of the community, look at the data and dissect what’s really going on and then make informed policy decisions that are based in equity.

I’d encourage everyone to make sure you’re registered to vote, you connect with community leaders like those listed above to learn more about their policy agendas, and then get involved in informing policymakers and elected officials about the changes and opportunities needed to truly make the Minneapolis/St. Paul region a thriving area for everyone.

ALC:  In addition to our on-the-ground work helping individual’s access financial tools and opportunities, we know that it is our responsibility to also work hand-in-hand with our customers to make sure systems and policies support them as well. We work with coalition partners and voices from our stakeholders, volunteers and customers, to push for state and federal policy that bolsters financial health.

To really be successful at addressing the large disparities in financial outcomes in our community, it will require action from all sectors – policy makers, funders, financial service providers and nonprofits – to understand what’s happening behind this data and engage in change making.

Learn more about the Scorecard. Learn more about the federal policy campaigns Prosperity Now is coordinating and how you can get involved and take action.