Too many families face persistent financial insecurity, and the situation is often much worse for Minnesota’s households of color. That’s from a new report from Prosperity Now (formerly the Corporation for Enterprise Development or CFED). Prosperity Now finds that Minnesota does well on many aspects of its annual scorecard that measures assets and opportunities within each state, but many families face hurdles in their dreams of both making ends meet and preparing for the future.
On Track or Left Behind? measures financial security and opportunities to climb the economic ladder in all 50 states and Washington, D.C., focusing on five issue areas:
- Financial assets and income,
- Businesses and jobs,
- Homeownership and housing,
- Health care, and
Minnesota ranks fifth highest for outcomes. Even so, over 20 percent of Minnesotans don’t have enough liquid assets, such as savings accounts, to even live at the poverty level for three months if they suddenly lost their jobs. This means 1 in 5 Minnesotans could be one setback away from falling into poverty.
Many Minnesotans, in addition to not having significant savings, do not have stable incomes. Stable incomes are a cornerstone of prosperity, making it easier for families to save and plan for their futures. One in four workers in Minnesota reported that their income varied “somewhat to a lot” from one month to the next, one of the highest rates in the United States.
It’s clear that Minnesota has a ways to go to expand opportunity to all Minnesotans. The report shows that Minnesota has some tremendous gaps in financial security between white residents and people of color, and these gaps are often due to systemic barriers.
The homeownership rate for white households is twice the rate for households of color. Black Minnesota households face particular barriers to homeownership. Only 22 percent of Black households own a home, while 76 percent of white Minnesota households do.
In Minnesota, the difference between poverty rates experienced by households of color and white households is one of the largest in the nation. Households of color in Minnesota are more than three times more likely to have incomes below the federal poverty threshold than white Minnesotans. Black Minnesotan households live in poverty at a rate of almost four times that of white households.
Minnesotans of color are also over three times more likely than white Minnesotans to be unemployed, one of the highest employment gaps in the nation. Minnesotans of color clearly face significant barriers in their quest for jobs and financial security.
Additionally, Black and Hispanic Minnesotans are more than twice as likely to forgo a doctor’s visit due to cost than white Minnesotans. Despite the recent narrowing of racial gaps in access to health insurance, in part thanks to the Affordable Care Act, the uninsurance rate for households of color in Minnesota is still three times that of white Minnesotans. The disparity is worst for Hispanic Minnesotans, who are uninsured at almost six times the rate of white Minnesotans.
The Prosperity Now report acknowledges the policies that Minnesota has already put in place to support families in attaining financial stability, but also provides a road map for how to make further progress. And policy changes are an especially important tool to close racial disparities in access to opportunity, since policies have contributed to these differences. For example, discriminatory housing policies like redlining made it very difficult for Black Americans to purchase homes, which also contributes to a generational wealth gap.
Prosperity Now notes the importance of tax policies in families’ ability to earn enough to afford basic needs and to save for a more secure future. In Minnesota, lower-income people pay a larger share of their incomes in state and local taxes than those with the highest incomes. Prosperity Now gives Minnesota high marks for having a strong state Earned Income Tax Credit (the Working Family Tax Credit). And in the 2017 Legislative Session, policymakers expanded the Working Family Credit, including allowing younger workers without children to qualify, a nation-leading improvement, and reducing barriers to accessing the credit faced by Native American families.
Additionally, Minnesota has made progress in making college more accessible. The scorecard commends Minnesota for targeting financial aid to students with the highest need and extending in-state tuition to undocumented students who meet certain criteria.
But we still have a long way to go. Too many Minnesotans across the state do not have access to earned sick leave, so they can lose wages or even their jobs if they take time off to recover from the flu or take their child to the doctor. The scorecard also highlights the need for housing policies that protect Section 8 voucher holders from discrimination, and a higher state minimum wage to better help Minnesota workers make ends meet.
-Clark Biegler and Nathan Williams