Millions of families had no financial cushion to last three months — and that was before COVID-19 struck

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Millions of families had no financial cushion to last three months — and that was before COVID-19 struck


“Net-worth poverty” — a measure of poverty concerning wealth rather than income — affected one in three U.S. households with kids even prior to the pandemic-induced recession and has disproportionately struck families of color, a new study says.

Fifty-seven percent of Black households with children and 50% of Latino households with children were net-worth poor in 2019, versus 24% among white households, according to a study by Duke University researchers published in the Journal of Marriage and Family

Net-worth poor means a household’s net worth — total assets minus total debts — falls below a quarter of the federal poverty level, the researchers said. In other words, net-worth poverty is a measure of whether a household has enough resources to meet basic needs for three months, they added. 

Households living in net-worth poverty lack a “financial cushion” to provide for their children’s basic needs, study co-author Christina Gibson-Davis, a Duke professor of public policy and sociology, said in a statement.

“These ‘net-worth poor’ households have no assets to withstand a sudden economic loss, like we have seen with COVID-19,” she said. “Even before the pandemic, many families with children were in a precarious situation. Things are not going to get better in the wake of COVID-19.”

The study analyzed U.S. Survey of Consumer Finances data from 1989 to 2019 on households with at least one resident member under 18. The sample included 19,013 households.


‘When a household has few or no assets, even a minor financial setback can make it difficult to pay for necessities such as food, clothing, and shelter.’


— Journal of Marriage and Family article

While both income and wealth are significant factors in child wellbeing, net-worth poverty (“a measure of the adequacy of the stock of resources owned by a household”) may provide a better snapshot of long-term household financial stability than income poverty, which “measures the adequacy of a flow of resources,” the authors suggested.

“Wealth, as a store of value, therefore represents goods that a household can access to meet unexpected expenses, buffer against income loss, or contend with economic shocks, such as medical emergencies, that can deplete financial reserves,” they wrote. “When a household has few or no assets, even a minor financial setback can make it difficult to pay for necessities such as food, clothing, and shelter.”

The researchers found that net-worth poverty was more prevalent than income poverty across demographic groups, with white, Latino and Black households with kids two to three times as likely to experience net-worth poverty than income poverty.

Most net-worth poor households with children weren’t income-poor, they said. Net-worth poverty, unlike income poverty, is increasing.

Centering policy efforts solely on income poverty won’t fully address the problems these families face, the authors argued. They suggested pro-wealth accumulation strategies such as expanding child-care or housing subsidies to “free up net income” and relaxing safety-net programs’ asset tests.

“Most policies focus on income and families meeting their day-to-day needs,” co-author Lisa Gennetian, a Duke associate professor of early learning policy studies, said in a statement. “These efforts are important. But our findings suggest that they are not helping families increase savings that help set children up for success.”



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