A significant number of households across the state lack enough income and assets to cover basic needs and unplanned expenses, and the federal poverty level inadequately measures how much it costs to be economically self-sufficient, according to a University of Virginia study.
The Weldon Cooper Center for Public Service report said the average two-adult, two-child family in Virginia needs about $44,000, or twice the federal poverty level, to pay for their monthly living expenses. The study shows that 24.2 percent of Virginia's families earn below $44,000.
"For a lot of households, they're trying and they're trying really hard, but in some cases the money isn't there," study researcher Rebecca Tippett said Tuesday. The study analyzed data from the U.S. Census and the Federal Reserve Board's Survey of Consumer Finances.
On average, families spend the largest proportion of their household budgets on housing and child care _ and in northern Virginia, those costs are substantially higher than in other parts of the state, according to the report, which breaks out estimated costs by region for housing, child care, food, transportation, taxes and other expenses.
The university researchers estimate the average household in northern Virginia would have to earn about $64,200 annually to cover basic expenses _ with no money left for restaurant dinners, children's birthday gifts or other "special" spending, study author Rebecca Tippett said.
In the Hampton Roads region, the self-sufficiency level is $47,700; in Richmond, about $47,000; in Central Virginia and the Shenandoah Valley, about $39,500; in Southside and Southwest Virginia, about $35,000.
Such variations in statewide living costs underscore the need to use self-sufficiency standards that vary by region and community, Tippett said, and that a single figure such as the percentage of households that fall below the federal poverty level doesn't fully illustrate all facets of economic insecurity.
The study also examined assets _ or the reserves from which a family can draw during times of increased expenses or decreased income, such as emergency medical bills, home or auto repairs, salary reductions or job loss. While income is a financial indicator at a given time, household assets can indicate future economic stability.
About 28 percent of Virginia's households lack enough cash savings, stocks or other financial assets to cover short-term emergency expenses, according to the study. That's defined as three months' income at the federal poverty level, or $5,439, for the average four-person family. But Tippett said Tuesday that projection is probably now too low, as it underestimates the average unemployment spell at 12 weeks _ the average is now 20 weeks.
Northern Virginia has the lowest rate of inadequacy in income and assets because of residents' high educational attainment and high incomes, while southwest and Southside Virginia have the highest rates.
Black and Hispanic households are asset poor at twice the rate of white households. Those who have low assets have a median net worth of $5,900 _ meaning half of such households have net worth less than that amount, the report said.
Virginia ranks sixth in the nation for household median net worth, while its poverty rate is 39th and its unemployment rate is 42nd, according to federal statistics. But the state ranks sixth in median credit-card debt, 19th in personal bankruptcy rate and 33rd in home affordability.
"Virginia is really doing well compared to the rest of the nation, but some of it masks what's going on," Tippett said. "There's a growing pattern of inequality, and the well-educated, wealthy segment of the population is driving the growth."
Policymakers should account for regional differences to improve income and asset adequacy, rather than just addressing temporary or income- or job-related hardships while overlooking longer-term solutions that potentially can reduce dependence on government programs, Tippett said.
Tippett said becoming more financially educated should be a major priority for all Virginians, but especially for those who risk economic insecurity.
"Being able to budget your income and prioritize budgeting needs" is important, as is understanding credit-card agreements and products from alternative financial-service providers such as payday and auto-title lenders _ companies that often target those who most need to hang on to their income.
"It's not going to solve the problem of the lack of a job, but when things improve it'll better situate people for the future," she said.