ASSetS & opportunity ProfILe: NewArk ASSETS & OPPORTUNITY PROFILE key HIgHLIgHtS 58% of Newark residents live in asset poverty Cities have long been thought of as places of opportunity for low-income workers to forge pathways to the middle class. But far too many urban households struggle to gain a foothold in the mainstream economy. In major U.S. cities, one out of every four households owe more than they own, and almost 60% of consumers have subprime credit scores. More than one-third of families do not have enough assets to live for three months at the federal poverty level should they lose their main source of income. Not only does financial insecurity destabilize families, it also jeopardizes the long-term vitality of cities and local economies. That is why a growing number of local leaders are seeking to expand the vision of what municipal government can and should do to stabilize the financial lives of their low-income residents. These Financial Empowerment programs involve a set of approaches designed to help families manage their money and avoid bad debt, create strategies for saving, and access appropriate financial products and services. Financial empowerment programs typically focus on four key areas: improving access to financial services; advancing financial education and coaching; encouraging asset building and protection; and promoting tax time services and benefits. Newark has joined with a group of 10 leading cities to form the Cities for Financial Empowerment (CFE) coalition, which is striking a new path towards integrating income enhancement, saving incentives and asset development. These programs, when coupled with enhanced consumer protection policy, are changing the paradigm for poor families in our urban centers. ABOUT THE PROFILE This Assets & Opportunity Profile was created to fuel a local conversation about wealth, poverty and opportunity in Newark. It contains a data snapshot of the financial security and stability of Newark residents, and provides an overview of the efforts that the city is supporting to help financially educate, empower and protect residents and enable them to build a more prosperous future. 61% of Essex County residents have subprime credit scores 17% of Newark households are unbanked 24% of Essex County mortgages are high-cost mortgage loans 12% of Newark residents have at least a bachelor s degree 20% of Essex County residents are uninsured 1
financial empowerment in newark Newark s financial empowerment mission is coordinated out of the Office of the Deputy Mayor for Economic Development. Working closely with Newark Now, a nonprofit founded by Cory Booker before he became mayor, the City works to economically empower residents by supporting initiatives that increase access to benefits, save residents precious dollars, help build assets and provide financial education to the community at large. Initiatives include financial and legal counseling, a robust VITA program and an IDA fund that matches deposited savings for eligible residents. The City of Newark also brings innovative financial empowerment opportunities to Newarkers through initiatives including a Bank On Newark campaign, which aims to remove obstacles that block unbanked Newarkers from opening bank accounts and to expose residents to mainstream financial relationships; and a Financial Helpline that brought volunteers with finance backgrounds into the City s 311 call center to answer residents personal finance questions for free. Additionally, Newark launched its first Financial Empowerment Center (FEC) in the spring of 2009. The FEC works as a one-stop shop and offers tax help, benefits screening, FAFSA application assistance, financial counseling, and other services. Newark hopes to launch four more FECs, one in each ward. Mayor Cory Booker (center), Newark Now Chief Operating Officer Anthony Santiago (far right), and others cutting the ribbon on the City s first Financial Empowerment Center. The FEC uses SingleStop USA s OneStop-Shop model to provide comprehensive services to Newark residents, including free tax assistance, financial education, and FAFSA form assistance. Residents are also screened for eligibility for a range of health care and public assistance programs. for more information Financial Empowerment Center 103 Bloomfield Ave. Newark, NJ 07104 973.624.3733 2 MUNICIPAL profile: newark
CFED: ASSETS & OPPORTUNITY PROFILE financial empowerment opportunities in newark VOLUNTEER INCOME TAX ASSISTANCE (VITA) Provide free income tax preparation to families earning up to $50,000. REFUND NOW Partner with TD Bank to provide taxpayers a no-fee, no-interest alternative to refund anticipation loans (RALs) offered by commercial tax preparers that often include high fees and interest rates costing lowincome taxpayers hundreds of dollars. BANK ON NEWARK Working with 11 area banks and credit unions to create a positive first banking relationship for previously unbanked Newark residents and provide second chance features for those with a prior record of poor credit or banking difficulties. Additional features include free money orders and flexible ID policy. FINANCIAL AID U Helps students complete the Free Application for Federal Student Aid (FAFSA) form. Service is often provided alongside VITA tax preparation. INDIVIDUAL DEVELOPMENT ACCOUNTS (IDAs) Match $2 for every $1 saved by eligible lowincome families toward a postsecondary education, homeownership or small business ownership. Savers can receive up to $1,500 a year, for up to three years. NEWARK HEALTHPLUS AND NEWARK RX Newark HealthPlus provides medical services to those without health care coverage so they don t need to rely on emergency room services for basic medical care. Newark Rx provides lowincome, uninsured residents with access to critical, often life-sustaining, prescription medications. FINANCIAL EMPOWERMENT CENTER One-stop shop for financial empowerment resources and benefit screening. Residents can meet with a counselor who will align one s goals with available programs and benefits. FAMILY SUCCESS CENTERS A network of free, comprehensive services and resources that promote child and family well-being by connecting residents to health care enrollment assistance, drug and alcohol treatment programs, career readiness training, parenting workshops and other resources. NEWARK-ESSEX FORECLOSURE PREVENTION TASK FORCE Task force of over 40 agencies and organizations providing advocacy for homeowners. Activities include workout fairs that convene mortgage lenders and mortgage borrowers. RESULTS In 2009, City-supported tax sites saved Newarkers over $7M The new Financial Empowerment Center has already delivered benefits worth over $1.4M to Newarkers. The average client receives benefits worth almost $3,000 not counting tax services. That s over 15% of adjusted gross income (using the average AGI of a VITA client) Newarkers have received $448,000 in no-interest, no-fee loans through Refund Now for more information Newark Now 89 James Street Newark, NJ 973.733.3460 www.newarknow.org City of Newark Office of Economic and Housing Development 920 Broad Street, Room 218 Newark, NJ 973.733.6576 (ask for Jacob Daniels) 3
about the data The data in the Profile includes a look at households in asset poverty, a demographic snapshot of Newark, and outcomes in five categories essential to building assets and long-term financial security in today s economy: Household Finances & Use of Services, Employment & Business Ownership, Housing & Homeownership, Educational Attainment, and Health Insurance. Taken together, these five categories provide a comprehensive look at the financial stability and economic resiliency of families in Newark and Essex County. HOUSEHOLDS IN ASSET POVERTY Asset poverty is a measure that expands the notion of poverty to establish a minimum threshold of wealth needed for household security. A household is asset poor if it has in sufficient net worth to support itself at the federal poverty level for three months in the absence of income, i.e., net worth of less than $4,577 for a family of three in 2009. Asset poor households would not have enough savings or wealth to provide for basic needs during a sudden job loss or a medical emergency. Minority and single-parent households are more likely to be asset poor, as are those with lower levels of education. Even middle income families face asset poverty. In Newark, 54% of those earning between $37,741 and $59,604 are asset poor. PERCENT OF HOUSEHOLDS... City of...essex...ny-nj-pa,... New... United IN ASSET POVERTY All Households... 58.4%... 39.9%... 31.7%... 24.5%... 25.9% By Housing Tenure Homeowner... 7.8%... 4.1%... 3.6%... 4.5%... 5.3% Renter... 73.6%... 69.3%... 60.5%... 62.4%... 63.0% By Race... 46.9%... 18.0%... 18.7%... 15.5%... Minority... 60.1%... 51.6%... 46.4%... 40.1%... Black... 61.5%... 55.1%... 51.0%... 47.0%... Latino... 59.8%... 52.3%... 54.2%... 46.8%... 19.7% 39.8% 45.8% 41.2%...... 16.8%... 21.3%... 14.9%... 17.6% Native American...... 49.6%... 41.1%... 37.7%... 39.7% By Education High School... 61.8%... 52.7%... 39.8%... 32.1%... Some College... 52.4%... 42.8%... 32.3%... 25.2%... Bachelor s Degree... 38.0%... 19.7%... 20.4%... 14.2%... Advanced Degree... 28.5%... 10.6%... 14.6%... 9.4%... 30.4% 26.2% 15.4% 10.6% By Age of Householder < 35... 71.0%... 61.4%... 49.4%... 44.7%... 35-44... 57.7%... 39.0%... 31.9%... 24.1%... 45-54... 49.5%... 30.5%... 25.3%... 17.6%... 55-64... 50.2%... 28.4%... 22.7%... 14.8%... 45.5% 24.3% 17.6% 13.6% By Marital Status Married... 43.0%... 20.2%... 18.0%... 12.6%... Household with Children... 63.9%... 41.0%... 32.7%... 24.7%... 13.9% 27.6% Single Parent... 75.1%... 65.9%... 60.0%... 51.7%... 49.7% By Poverty Status Below Income Poverty Line... 76.9%... 73.4%... 65.5%... 59.6%... 55.7% Above Income Poverty Line... 53.2%... 35.0%... 27.7%... 21.8%... 22.1% By Household Income Below $19,992... 73.3%... 69.2%... 62.0%... 56.0%... 51.4% $19,993-$37,740... 63.9%... 59.1%... 50.9%... 44.5%... 37.9% $37,741-$59,604... 53.8%... 46.7%... 37.8%... 33.0%... 23.5% $59,605-$93,492... 35.9%... 27.0%... 21.7%... 16.6%... 12.0% Above $93,492... 25.1%... 6.3%... 8.6%... 4.7%... 4.4% 4 MUNICIPAL profile: newark
CFED: ASSETS & OPPORTUNITY PROFILE newark population demographics Total Population... 265,375... 779,203... 18,785,319... 8,669,815... 298,757,310... 12.4%... 35.4%... 51.3%... 62.5%... 66.3%... 51.2%... 40.2%... 16.8%... 13.2%... 12.2%... 0.2%... 0.2%... 0.2%... 0.1%... 0.7%,... 1.6%... 4.2%... 9.0%... 7.3%... 4.4%... 31.7%... 18.0%... 21.1%... 15.6%... 14.7% U.S. Citizen... 81.4%... 87.1%... 86.2%... 90.0%... 92.8% Speak English Less Than Very Well... 24.3%... 14.3%... 16.8%... 11.6%... 8.6% household finances & use of services Median Household Income... $33,991... $53,351... $60,964... $66,509... $50,007 Income Poverty Rate... 20.5%... 11.1%... 9.8%... 6.5%... 9.8% Asset Poverty Rate... 58.4%... 39.9%... 31.7%... 24.5%... 25.9% Extreme Asset Poverty Rate... 38.2%... 27.5%... 22.4%... 17.6%... 16.9% Hseholds w/ Interest, Dividend or Net Rental Income. 7.7%... 23.1%... 27.0%... 29.9%... 25.1% Tax Filers Receiving EITC... 34.0%... 20.1%... 16.1%... 11.8%... 16.6% Average EITC Refund... $2,120... $2,011... $1,913... $1,853... $1,932 Unbanked Households... 17%...... 8%...... 8% Median Credit Score...... 637... 696... 702... 672 Consumers with Subprime Credit Scores...... 61.4%... 50.9%... 49.7%... 55.2% Average Revolving Debt...... $14,417... $14,785... $14,591... $11,863 Average Revolving Credit Utilization...... 29.7%... 29.7%... 28.3%... 29.9% Average Installment Debt...... $24,180... $24,943... $25,747... $23,717 Borrowers 90+ Days Overdue...... 4.8%... 3.3%... 3.4%... 4.3% $38,747 15.4% Household Income $31,517 $33,170 $64,242 Income Poverty 22.3% $34,249 23.4% 0 $20k $40k $60k $80k 0 5% 10% 15% 20% 25% employment & business ownership Annual Unemployment Rate... 14.3%... 10.5%... 8.8%... 9.2%... 9.3% Average Annual Pay...... $57,229...... $53,853... $44,458 Self-Employment... 5.5%... 9.6%... 10.8%... 9.9%... 12.1% Microenterprise Ownership Rate...... 16.9... 20.0... 15.9... 16.4 Vehicle Non-Availability by Working Household... 29.4%... 15.2%... 24.4%... 7.1%... 4.9% 5
housing & homeownership Homeownership Rate... 25.4%... 47.7%... 53.7%... 67.4%... 67.3% Cost Burdened Renters... 50.2%... 47.8%... 48.6%... 47.8%... 45.7% Cost Burdened Owners... 65.2%... 49.5%... 47.4%... 43.8%... 36.3% Affordability of Homes... 8.40... 7.5... 7.4... 5.4... 3.6 Average Mortgage Debt...... $285,290... $275,866... $240,825... $195,500 High-Cost Mortgage Loans...... 24.1%... 15.6%... 16.3%... 17.5% Foreclosure Rate... 16.3%... 5.9%... 2.6%... 3.0%... 3.0% 32.0% Homeownership 23.7% 23.8% 25.6% 23.7% 0 5% 10% 15% 20% 25% 30% 35% educational attainment Less than High School... 35.5%... 19.7%... 16.4%... 13.7%... High School Degree... 64.5%... 80.3%... 83.6%... 86.3%... Associate s Degree... 15.7%... 35.7%... 40.9%... 39.8%... Bachelor s Degree... 11.8%... 30.8%... 34.6%... 33.7%... Graduate or Professional Degree... 3.6%... 12.5%... 14.1%... 12.4%... 16.0% 84.0% 34.4% 27.0% 9.9% 53.0% 11.1% High School Degree 51.4% 74.0% 91.8% Bachelor s Degree 13.0% 7.9% 46.7% 0 20% 40% 60% 80% 100% 0 10% 20% 30% 40% 50% health insurance Uninsured Rate...... 19.5%...... 16.6%... Uninsured Low-Income...... 9.3%...... 9.3%... Uninsured Low-Income Children...... 5.1%...... 5.5%... 17.2% 29.4% 18.3% 6 MUNICIPAL profile: newark
CFED: ASSETS & OPPORTUNITY PROFILE data measures & SOURCES Population Demographics Household Finances and Use of Services Employment and Business Ownership Data Measure Measure Description Source Total Population Total population Percentage of population that is, non-hispanic, Other Pacific Islander Percentage of population that is, non-hispanic Percentage of population that is or Alaska Native, non-hispanic Percentage of population that is, Native Hawaiian or, non-hispanic Percentage of population that is U.S. Citizen Percentage of population that are U.S. citizens Speak English Less Than "Very Well" Percentage of population that speaks English less than "very well" Median Household Income Median household income in the past 12 months Income Poverty Rate Asset Poverty Rate Extreme Asset Poverty Rate Households with Interest, Dividend, or Net Rental Income Tax Filers Receiving EITC Percentage of all families with income in the past 12 months below the federal poverty threshold Percentage of households without sufficient net worth to subsist at the poverty level for three months in the absence of income Percentage of households that have zero or negative net worth Percentage of households reporting any interest, dividend, or net rental income in the past 12 months Percentage of tax filers receiving the federal Earned Income Tax Credit Estimates calculated by Beacon Economics, based on U.S. Census Bureau's 2004 Survey of Income and Program Participation, Wave 6 (2006) and 2005-2007 American Community Survey Estimates calculated by Beacon Economics, based on U.S. Census Bureau s 2004 Survey of Income and Program Participation, Wave 6 (2006) and 2005-2007 American Community Survey Brookings Institution (2006) Average EITC Refund Average EITC refund amount per EITC filer Brookings Institution (2006) Unbanked Households Percentage of households lacking both a checking and savings account. Median Credit Score Median TransUnion TransRisk Score TransUnion (Q1 2009) Consumers with Subprime Credit Scores Percentage of consumers with a TransRisk Score <=700 [on a scale of 150-934] Estimates calculated by Mia Mabanta, Pew Safe Banking Opportunities Project, based on data from the Federal Reserve Board's Survey of Consumer Finances (2007); U.S. Census Bureau, 2005-2007 American Community Survey; and data on the location of retail financial services locations TransUnion (Q1 2009) Average Revolving Debt Average amount of revolving debt per revolving borrower TransUnion (Q1 2009) Average Revolving Credit Utilization Average utilization of available revolving credit TransUnion (Q1 2009) Average Installment Debt Average amount of installment debt per installment borrower TransUnion (Q1 2009) Borrowers 90+ Days Overdue Annual Unemployment Rate Average Annual Pay Self-Employment Microenterprise Ownership Rate Vehicle Non-Availability by Working Household Percentage of borrowers who are 90 days or more past due on any debt payments Annual average unemployment rate of the civilian noninstitutional population 16 years of age and older Average annual pay for all workers covered by unemployment insurance Percentage of households reporting any self-employment income in the past 12 months Number of firms with 0-4 employees (non-employer firms plus establishments with 1-4 employees), per 100 people in the labor force Percentage of households (with at least one worker) lacking access to a vehicle TransUnion (Q1 2009) U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics (2009) U.S. Bureau of Labor Statistics, Quarterly Census of Employment and Wages (2007) CFED calculation based on U.S. Census Bureau, Non-Employer Statistics, 2006; and 2006 County Business Patterns. Health Insurance Uninsured Rate Percentage of non-elderly population without health insurance U.S. Census Bureau, Small Area Health Insurance Estimates (2005) Uninsured Low-Income Uninsured Low-Income Children Percentage of non-elderly population at or below 200% or 250% (depending on the state) of the federal poverty line without health insurance Percentage of children under 19 years of age at or below 200% of the federal poverty line without health insurance U.S. Census Bureau, Small Area Health Insurance Estimates (2005) U.S. Census Bureau, Small Area Health Insurance Estimates (2005) 7
CFED: ASSETS & OPPORTUNITY PROFILE Housing & Homeownership Data Measure Measure Description Source Homeownership Rate Percentage of occupied housing units that are owner occupied Cost Burdened Renters Cost Burdened Owners Affordability of Homes Percentage of renter-occupied units spending 30% or more of household income on rent and utilities Percentage of mortgaged owners spending 30% or more of household income on selected monthly owner costs Median housing value divided by median household income Average Mortgage Debt Average mortgage debt per mortgage borrower TransUnion (Q1 2009) High-Cost Mortgage Loans Percentage of all conventional first lien home purchase loans (1-4 family, owner occupied dwelling) with interest rates three percentage points or more above the yield on a comparable term treasury security CFED calculation based on U.S. Census Bureau, 2005-2007 American Community Survey data Calculation by Center for Responsible Lending based on Home Mortage Disclosure Act (HMDA) data (2007) Foreclosure Rate Percentage of all mortgage loans that are in pre-or postsale foreclosure NeighborWorks America (March 2009) Less than High School Percentage of population 25 and older who have not completed high school Educational Attainment High School Degree Associate's Degree Bachelor's Degree Graduate or Professional Degree Percentage of population 25 and older who have at least a high school degree Percentage of population 25 and older who have at least an associate's (2 year college) degree Percentage of population 25 and older who have at least a bachelor's (4 year college) degree Percentage of population 25 and older who have a graduate or professional degree about cities for financial empowerment CFE provides a platform for municipal governments to advance innovative financial empowerment initiatives both locally and nationally, leveraging resources in the service of at-risk communities. CFE members have a unique role in the field of Financial Empowerment by utilizing cities access to residents through multiple touch points and their unique ability to employ municipal tools like zoning, licensing, and local regulation to implement effective programs and policies. Coalition members work together to pursue promising strategies and programming in their own cities, and in collaboration with public, private, and nonprofit sectors. Member cities have made measurable commitments to increase public awareness of critical issues, create pathways for financial stability, and advocate for policy changes at the federal level. www.cfecoalition.org about CFED CFED (Corporation for Enterprise Development) expands economic opportunity by helping Americans start and grow businesses, go to college, own a home, and save for their children s and own economic futures. We identify promising ideas, test and refine them in communities to find out what works, craft policies and products to help good ideas reach scale, and develop partnerships to promote lasting change. We bring together community practice, public policy and private markets in new and effective ways to achieve greater economic impact. www.cfed.org We gratefully acknowledge support for this profile from Living Cities. 8 MUNICIPAL profile: newark PUBLISHed June 2010