Weathering the Recession: The Financial Crisis and Family Wealth Changes in Low-Income Neighborhoods

• NCJ Number: 241462
• Author(s): Leah Hendey; Signe-Mary Mckernan; Beadsie Woo
• Date Published: March 2012
• Length: 28 pages
• Sponsoring Agency: Ford Foundation; Annie E. Casey Foundation
• Corporate Author: The Urban Institute
• Sale Source: Annie E. Casey Foundation
• Publication Format: Document (Online)
• Publication Type: Report (Study/Research)
• Language: English
• Country: United States of America

Annotation

This study conducted a detailed analysis of how families living in low-income neighborhoods have fared in the "Great Recession."

Abstract

The study had three objectives. First, it determined what happened to the assets and debts of families in low-income neighborhoods since the financial crisis began. Second, it examined how asset and debt levels differed across families living in low-income neighborhoods, with attention to the most significant household characteristics and the characteristics of location. Third, the study addressed how changes in assets and debts differed across families living in low-income neighborhoods and which household and location characteristics are related to these changes. The study found that both average savings and debt amounts increased for families living in the seven low-income communities examined in the study. It is noteworthy, however, that nationally only low-income families (not higher income families) increased their financial assets between 2007 and 2009 (Bricker et al., 2011). This may be because low-income families had the greatest concerns about the loss or decline of future income and related employment. Their increased savings buffered their households from financial shifts; however, even with these relative increases in savings, levels of assets and debts in 2008/2009 remained lower for low-income, low-education, and minority families. Younger families and those with children had less wealth, less savings, more debt, and less home equity than older families. These findings highlight vulnerable populations that currently miss out on the benefits of asset building. Hispanics had substantially less equity in 2008/09 than Whites. There were significant differences in the characteristics of families moving in and out of home-ownership, with poor families more likely to leave home-ownership. Recommendations are offered for addressing the financial conditions of low-income families. 3 tables, 5 figures, 24 references, and appended survey questions on assets, debts, and home equity from the Making Connections Cross-site Survey