Tuesday, March 11, 2014

Beyond understanding "asset poverty"

Recent studies of the Dallas community indicate that between 30 and 39 percent of the population live in "asset poverty."

"Asset poverty" exists when a person or a family doesn't possess cash reserves adequate to sustain them for 3 months at the current, nationally defined poverty line.  For a family of four that line stands at $23,550 in annual income.  These statistics demonstrate the fragility of our economy at the street level. 

After participating in the "One Crisis Away" public forum week before last, sponsored by the Communities Foundation of Texas, KERA, the Thompson Family Foundation and other underwriters, I came away with a familiar feeling.  I've been invited to weigh in, as a panelist on "asset poverty" more than once.  My role is always to report and reflect on the status of folks even lower down the economic ladder

At times my presence in the middle of these discussions feels like a big disconnect. 

With 10% of the Dallas population living at one half the poverty level (that is $23,550 divided by 2 for a family of four), my concerns and focus usually come off being somewhere else. I don't always, actually I seldom provide satisfying answers to the predictable questions.

Of course, I recognize that the economic realities of our entire community are welded together. 

Truly, we're all in this together.  It's just that if I am face down at the very bottom of the economy with virtually no assets, the canons and proposed solutions that are truly helpful for folks up the ladder don't really resonant. 

After the engaging forum last week I started thinking (normally a really scary development!). 

Maybe what we need is a study of "asset wealth."  The "asset poverty" analysis provided a scorecard type summary of the reality facing families on the precipice of falling deeper into poverty. 

But, what would "asset wealth" look like when faced with similar, cataclysmic events?

For the sake of illustrative comparison, how would a family of four fare who enjoyed a liquid asset base of $1,000,000? 

How long could such a family survive at the poverty line?  Some would quickly say that such a family couldn't survive at all due to past experiences!  But, for the sake of the illustration we seek, how long could an asset rich family survive at this benchmark? 

509.5 months.

Or, almost 43 years

These startling numbers set me to thinking, again already! (Sorry!)

What can, could or would wealthy families be able to do to assist their neighboring families who live in "asset poverty"? 

I mean, if I have nearly 43 years with which to work, couldn't I share a year or two with families who work hard and play by the rules? 

I mean, wouldn't I want to share from my abundance for the sake of the health and well-being of my entire community?  Especially in view of the almost certain fact that my current position will allow me to continue earning and adding to my net wealth even if I do nothing but spend the principal of my wealth?

Aren't we in this together? 

For certain, asset poor families need to do their part.  And, there was much talk in the forum about the responsibilities of the "asset poor."

But the scale of our problem leads me to believe systemic forces are at work here.  Asset rich families need to do their part as well, and that means they need to do more, act more responsibly and support new, scalable solutions. 

Part of that response should involve more aggressive philanthropy. 

But a larger, more sustainable part must come from the coordinating function of public policy reform. This is how a truly free and noble society is intended to work.

There is just no other way to really change this undeniably worsening reality. 

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