Listen to the UVA Today Radio Show report on this story by Rebecca Arrington:
Using data from the U.S. Census Bureau's American Community Survey and the Federal Reserve Board’s Survey of Consumer Finances, the study calculated household income and available assets and found that:
• Almost one-quarter of Virginia households earn less than the amount needed to meet basic monthly expenses on their own; and,
• Slightly more than one-quarter of Virginia households do not have enough cash assets (savings, retirement accounts) to protect them from financial ruin in case of emergencies such as health problems, divorce or job losses.
"Economic security for Virginia households is essential to the economic vitality of the commonwealth," said Qian Cai, director of the Demographics & Workforce Group that produced the study. "When households are secure financially, they have better educational, health and employment outcomes, and are less likely to rely on social services or to default on debt or mortgages."
Using a self-sufficiency standard to evaluate how much Virginia families must earn to pay basic expenses, such as food, housing, child care and transportation, the study shows that the federal poverty level does not capture how many Virginia families face real economic challenges. For example, a family of four with an annual income of $21,756 is above the federal poverty line. According to the study, that same family actually needs income of approximately two times the federal poverty line ($44,000) to cover expenses – with no room for savings, emergencies such as car repairs or job losses, or special events such as birthday or holiday gifts for children.
The study also examined whether Virginia families have enough cash assets to get them through short-term financial emergencies. More than a quarter of Virginia families are asset poor, putting them at increased risk of poverty, delinquency and bankruptcy.
"As is true across the country, Virginia families are facing significant threats to economic security," study author Rebecca Tippett said. "High unemployment rates, rising food and health care costs, and stagnant wages are straining family budgets, regardless of income level. In such times, savings and accumulated assets provide an important cushion against poverty, yet many families had no savings before the recession, and are unable to save now because of these economic times."
The report is in the latest edition of Numbers Count, a data-driven publication that analyzes Virginia demographics and discusses topics of current interest. It's also available online.