CORVALLIS, Ore. — Many Americans claim they simply don’t earn enough money to build any type of savings account or amass any meaningful financial assets. Now, a troubling study out of Oregon State University finds some definite statistical truth to these sentiments, concluding that over 63% of American children and 55% of Americans live in “asset poverty.”
Perhaps the most troubling aspect of the study is the authors’ assertion that ultimately, American children are the ones being hit the hardest by their families’ financial situations.
Asset poverty means having few or no financial assets to fall back on in the event of a financial calamity, such as losing one’s job or encountering a medical crisis. Some examples of common financial assets are vehicles, houses, savings accounts, and investments. Without these assets, weathering a financial crisis is extremely difficult.
“This is a dimension of financial security that we don’t think about that much, and it’s pretty high,” says David Rothwell, one of the study’s co-authors, in a statement. “The findings highlight the extent of financial insecurity among American families. These shocks ripple through the family and down to the children.”
While this is believed to be the very first study to focus on asset poverty among American children, many studies have already shown that children growing up in poverty are much more likely to perform poorly in school and suffer from lower job earnings as adults. Additionally, an emerging body of research is revealing that parental asset levels, not just overall poverty, can also have a big influence on children’s academic and career achievements much later in life.
According to Rothwell, not only do stable financial assets provide families and children a safety net in case of events such as recessions, a parent’s loss of employment, or a natural disaster, but they also promote a more secure and stable long-term social development for children. Simply put, children behave differently, and are treated differently by their peers and adults, when they are financially secure.
Researchers analyzed income and asset data on more than 250,000 households in America, Australia, the United Kingdom, Italy, Norway, and Finland. They found that the U.S. and Australia led the world in child asset poverty in developed nations, followed by the United Kingdom, Italy, and Finland. Norway had the lowest rate of child asset poverty, at 34.4%.
Even after accounting for other factors, researchers concluded that American children are more at risk of living in asset poverty than children born to similar demographics and income brackets in other countries.
“In a global context, the fact of being born in the U.S. puts you at higher risk for asset poverty,” Rothwell explains. “It’s especially difficult for families in the U.S. because the social safety net is so thin. Other countries have more robust health insurance systems, unemployment, housing and other social supports.”