Causes of Child Poverty: Lack of Assets and Support

The reasons are concentrated by the child poverty model in Connecticut USA.

Low-income families move in and out of poverty, depending on the job market and other factors affecting family economic self-sufficiency. Many families lack the coordinated assets and supports needed to impede further poverty or to facilitate economic success. Assets are an important way to strengthen a family’s financial independence.

Asset Formation and Protection

Asset formation and protection are essential strategies in helping families become and stay economically secure. Financial assets can transfer into income quite readily and soften difficulties during hard times. Assets protect against economic ruin, from such things as parental unemployment or severe illness.

Assets can provide a bridge to help families move permanently out of poverty. For example, if a married family of median income in Frog Hollow (a Hartford neighborhood) participated in a homeownership Individual Development Account (IDA), the family could purchase a home within three years. When welfare-to-work policies lift people to the poverty line but leave them without (and often penalize them for having) sufficient assets to survive a family sickness or accident, the family is at great risk of falling back into poverty.

The vast majority of assets are in the possession of high earners. Nationally, the top quintile of earners commands 43% of earned income but controls 86% of net financial assets.

Lack of Assets

Most low-income families have few if any assets to help them weather even a short-term loss of employment.

Nearly one in four (22.5%) of Connecticut households are “asset poor”. That is, their net worth is insufficient to support the household for more than three months if family income is interrupted.

One in six Connecticut households have either no or negative net worth, in which the households debt is greater than all its financial assets.

Many low-income families have few assets to leverage if they are confronted by a financial crisis, such as a job layoff or long illness. Many of these families have

Low-income families move in and out of poverty, depending on the job market and other factors affecting family economic self-sufficiency. Many families lack the coordinated assets and supports needed to impede further poverty or to facilitate economic success. Assets are an important way to strengthen a family’s financial independence.

Asset Formation and Protection

Asset formation and protection are essential strategies in helping families become and stay economically secure. Financial assets can transfer into income quite readily and soften difficulties during hard times. Assets protect against economic ruin, from such things as parental unemployment or severe illness.

Assets can provide a bridge to help families move permanently out of poverty. For example, if a married family of median income in Frog Hollow (a Hartford neighborhood) participated in a homeownership Individual Development Account (IDA), the family could purchase a home within three year. When welfare-to-work policies lift people to the poverty line but leave them without (and often penalize them for having) sufficient assets to survive a family sickness or accident, the family is at great risk of falling back into poverty.

The vast majority of assets are in the possession of high earners. Nationally, the top quintile of earners commands 43% of earned income but controls 86% of net financial assets.

Low Homeownership Rates

Homeownership is a key indicator of financial stability. It increases the likelihood that a family will enjoy better living conditions and that their children will succeed in life. Homeowners, who accumulate wealth as the investment in their homes grows, are often more involved in their communities, and have children who tend on average to do better in school and are less likely to become involved with crime. Communities benefit from real estate taxes homeowners pay, and from stable neighborhoods homeowners create.

Homeownership rates in Connecticut differ by race and ethnicity, with 28% of Latinos, 37% of African Americans, and 74% of white non-Hispanics owning homes.

Source:
http://www.opm.state.ct.uspdpd1cpcCPCFinalPlan.pdf

More about Causes of Child Poverty

Changing economy The rapidly changing economy turn parents of the children in deeper poverty, so that they can't provide the children main resources for living. Read More

Lack of Educational Attainment No education, no better life in society. Children must have even basic education to help it in the future.   Read More

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