A new report from the Corporation for Enterprise Development (CFED) finds Minnesota does well on many aspects of its Assets & Opportunity Scorecard, but even after the recession has ended, too many families face persistent financial insecurity.
Treading Water in the Deep End measures states on policies that:
- Help people learn financial skills and build their human capital.
- Increase earnings and maximize public benefits.
- Encourage creation of affordable financial products and savings incentives.
- Expand opportunities to invest in assets that generate wealth and income.
- Protect consumers from the loss of income and assets through access to insurance and curbing predatory practices.
Minnesota ranks 7th among the states in CFED’s Assets & Opportunity Scorecard. Even so, over a quarter of Minnesotans don’t have enough liquid assets (bank accounts, retirement funds) to live at the poverty level for three months if they suddenly lost their jobs. This is a disturbing figure, and one that actually increased since last year.
The report also shows that Minnesota has some of the nation’s widest gaps in financial security between white residents and people of color. We’ve reported on other measures of how economic opportunity fails to reach Minnesota’s communities of color, like unemployment and income and poverty before, and CFED’s measures of financial stability are no exception. The homeownership rate for households of color is only half of the rate of white households, and the share of people of color who lack health insurance is 2.5 times higher than for white Minnesotans.
CFED commends Minnesota for enacting policies that support Minnesotans in attaining financial stability. Some of these include having a state Earned Income Tax Credit (the Working Family Credit), expanding health care coverage through Medicaid, and funding quality pre-K programs.
But we still have a way to go. CFED suggests additional outcomes policymakers should strive for to improve financial security in Minnesotans, such as:
- A progressive state tax system, where lower-income families pay a smaller share of their incomes in taxes than high-income families. (Adopting federal improvements in the Working Family Credit is a good step in that direction.)
- A state minimum wage that is higher than the federal wage and indexed to inflation.
- Limits on predatory lending, which can trap Minnesotans in a downward spiral of debt.