An astonishing 39 percent of Dallas residents are not financially secure, according to a new study. This is double the national average. Increasing more concern, is that middle and high income wage earners are nearly as vulnerable, with 20 percent of those earning between $70,015 and $107,000 could not weather a job loss without falling into poverty. Of concern to economists - already one-third of Dallas residents that make between $45,000 and $70,000 live in asset poverty.
The new study on wealth, poverty, and opportunity by the Corporation for Enterprise Development (CFED) was released Feb. 16. The study outlines the financial insecurity of Dallas households, and reveals that two-fifths of Dallas households are just a crisis away from serious financial trouble or even homelessness. The city’s 19 percent income poverty is twice the national average of 9.9 percent.
“These numbers should shock us,” said Mayor Mike Rawlings at the press conference hosted by the Community Foundation of Texas (CFED). “They should make us sit up and take notice.”
The criteria to determine whether a family is family secure is determined by whether they have three months of assets to live at the national poverty level in case they lose their main source of income.
Nationally, more than one-third of families do not have enough assets to live for three months at the federal poverty level should they lose their main source of income.
The new study is alarming to local business and elected officials because economic insecurity also jeopardizes the long-term vitality of cities and local economies. Where other cities have experienced a movement of minorities into higher economic brackets, Dallas is reversed.
Ida Rademacher, Vice President of Policy and Research at CFED, which commissioned the study, says: “There’s a 45 percent chance that African-American families who are solidly middle income will be in the lowest income bracket just one generation later.”
Dallas City Council member Jerry Allen, a former banker, believes that financial education and asset-building programs are needed. Allen, who has fought payday lenders with regulations in Dallas and Austin, is working closely with minority leaders to bring better financial literacy to South Dallas. Allen, who has become nationally recognized for taking on payday lenders, believes increasing financial literacy, education levels, and preparing families for homeownership are critical to our cities future.”
Allen, who chairs the Budget, Finance, and Audit Committee is concerned about the 18 percent of its citizens who do not use banks, but rather utilize “alternative financial services” such as payday loans, check cashers, pawn shops and rent-to-own stores, all which charge high fees.
He has encouraged the 68 percent of Dallas citizens who have subprime credit and poor financial resumes to enroll in Bank on Dallas, a program that teaches people about savings and financial literacy.
Rademacher says: “Having a bank account promotes long term thinking and planning, and research shows that children who have a college fund are four to seven times more likely to go to college.”
Mayor Rawlings left the audience with a sobering thought: “In America, we’re moving into a society with two classes: those with assets and those without. For the first time in Dallas, we understand where that divide is. Four out of ten people in Dallas are at that level…Too many of us are one paycheck from falling into dire straits. We have to think about that.”
Other alarming facts found in the study are:
- 68 percent of Dallas residents have subprime credit scores
- 15 percent of Dallas residents do not use a bank
- 21 percent of White Dallas households are asset poor
- 50 percent of Black and Hispanic families are asset poor
- 45 percent of Black children and 16 percent of White children whose parents were solidly middle class are now in the bottom third as adults
- Black families are 7 times more likely to live in income poverty
- White adults are nearly 8 times more likely to have a bachelor’s degree than Hispanic or Latinos.
- 50 percent of low-income residents do not have health insurance.
- 1 in 6 Greater Dallas residents are food insecure
- 1 in 5 of Dallas County live in poverty.
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