Majority of Newark households don't have three months of savings, report says

By Naomi Nix | NJ Advance Media for NJ.com
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on September 19, 2014

A new report from the Corporation for Enterprise Development says the majority of Newark households don't have three months worth of savings. Areas shaded darker purple have a higher percentage of financially vulnerable residents.

 

NEWARK — Almost two thirds of all Newark households would not be able to support themselves for three months if they had a financial crisis, according to a new report.

Corporation for Enterprise Development, a D.C. based non-profit organization, released a study this week showing that 74 percent of Newark households are "liquid asset" poor, which means they do not have three months of savings to sustain them at the federal poverty rate.

To meet that standard a family of four would need to put away $5,964, including any retirement savings.

By contrast, just 50 percent of Essex County residents and 40 percent of New Jerseyans overall were considered liquid asset poor, the report said.

When families don't have enough savings they are more likely to struggle to buy a home that can be passed on to subsequent generations or run into trouble if a wage owner gets sick or loses his or her job, said Kasey Wiedrich, senior research manager for the Corporation for Enterprise Development.

“While income is of course crucial it's really wealth that can help families feel financially stable," Wiedrich said. “Newark is certainly doing worse that other cities.”

The study also projected that 34 percent of Newarkers don't have a bank account, compared to just 13 percent of essex county residents and 8 percent of Americans over all.

“A bank account is often people’s first step into financial mainstream,” Wiedrich said.

To produce the report, researchers at the Corporation for Enterprise Development worked with an economist and estimates from the 2011 American community survey and other data sources.

The results of the study echo other recent studies suggesting poverty rates are higher in Newark than other parts of New Jersey

But the Corporation's report ended on a bright note, drawing attention to a number of city programs and organizations combating poverty.

“There has been a lot of work in Newark," Wiedrich said.

To see the full report click here.

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