from Pew Charitable Trust
In a previous study, The Pew Charitable Trusts examined the effects of neighborhood context on American families’ economic mobility. That analysis found that neighborhood poverty is associated with downward mobility, reinforcing other research that has shown a link between high-poverty neighborhoods and unemployment, poorer performing schools, and increased violence, all of which pose risks to residents’ economic security.
This chartbook draws on data from the Survey of American Family Finances, commissioned by Pew in November 2014, to illustrate the health of family balance sheets in high- and low-poverty communities across the United States and to examine how neighborhood context influences people’s attitudes toward the economy.
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34% of those living in high-poverty neighborhoods are middle- or upper-income.
Not all residents of high-poverty neighborhoods are low-income.
57% of those in low-poverty neighborhoods rate their financial situation as good or excellent.
Regardless of income, neighborhood poverty matters for financial security. Even when holding constant household income, net worth, homeownership, and demographic characteristics, families in high-poverty neighborhoods rate their financial situations lower than those in low- and medium-poverty communities.
19% of those in low-poverty neighborhoods make less than $40,000 a year.
Low-income residents in low-poverty neighborhoods tend to have more financial security than similar households in higher-poverty communities. For example, low-income households in high-poverty neighborhoods have almost no wealth, while comparable families in low-poverty communities have some accumulated wealth.
71% of those in high-poverty neighborhoods break even or spend more than they make.
Not surprisingly, those living in low-poverty neighborhoods are more financially stable. Families in these communities are more likely to own their homes and to have checking and education savings accounts than those in high-poverty neighborhoods.