Asset-Building News Roundup - November 15, 2013
By Sean Luechtefeld on 11/15/2013 @ 09:30 AM
Next week, the National Coalition for Asian Pacific American Community Development (National CAPACD) will host a Congressional briefing titled 'Spotlight: Asian American & Pacific Islander Poverty.' The event will take place on Tuesday, November 20 from 11 am-12:30 pm at the Capitol Visitor Center, Room SVC 200-201. To RSVP, email Kevin Sanada.
On December 10, CFED and the Center for American Progress will host a Capitol Hill Policy Forum featuring Senator Elizabeth Warren (D-MA). This timely discussion of tax incentives and retirement savings will take place in the Dirksen Senate Office Building, Room SD-G50. This event is free, but space is limited, so advanced registration is required. Click here to RSVP via email.
New Jersey became the latest state to raise its minimum wage in the absence of a federal effort to do the same. Starting in January, workers in New Jersey will earn a minimum of $8.25 per hour, with an automatic cost-of-living adjustment being assessed annually. Read more here.
Three states - Nevada, Idaho and Connecticut - launched their statewide asset-building coalitions. The Nevada program's website can be found here, while Idaho's is here. Connecticut's website is still under construction, but more information can be found here.
From the Assets & Opportunity Network
The Dallas Morning News yesterday reported that almost one in three children in Dallas County is growing up in poverty. Read more on the Assets & Opportunity Network blog.
The United Way of Greater Houston is hiring a Senior Program Manager for THRIVE, its family financial stability collaborative. Read more and apply here.
Census Poverty Report: America’s Working Poor Still Waiting for Recovery
By Lebaron Sims on 09/18/2013 @ 10:30 AM
Though the nation’s GDP has bounced back in the last six years, millions of Americans have yet to recover from the economic crisis.
Today the U.S. Census Bureau released its 2012 Income, Poverty and Health Insurance Coverage report and data, and the state of play for working Americans is as bleak as at the post-recession crest.
Median household income remained a full $4,500 (8.3 percent) below its pre-recession point, in real terms. The official poverty rate was 15%, representing 46.5 million Americans living below the poverty line. These trends are no different than 2011, highlighting the lasting effects of the Great Recession and the long road to recovery most Americans have yet to traverse. These findings only reinforce the importance of America’s safety net programs, like Social Security and the Supplemental Nutrition Assistance Program (SNAP).
Low- and moderate-income families have seen the largest proportional losses in family income over the last six years, and, as these latest Census Bureau data reiterate, little has changed over time.
Average family income for the lowest fifth of the income distribution (less than $20,600) has declined steadily since the 2001 recession, with that decline accelerating to greater than three percent annually after 2007. Families earning between $20,600 and $39,764 have seen annual declines in family income greater than two percent, and, like those in the lowest quintile, have watched their incomes slide downward since 2001.
The historical data on poverty rates by age serve as a brilliant illustration of our nation’s misplaced priorities regarding assistance programs. By the official poverty measure, 21.8% of all American children—over 16 million boys and girls—lived below the poverty level in 2012. In fact, only the age cohort 65 years and older has seen *any* decline in the poverty rate since the recession hit in late 2007. This disparity can be attributed, at least in part, to the success of Social Security and Medicare, the transfer programs in place specifically for older Americans. The importance of this safety net cannot be understated—without it, over 15 million more seniors would live in poverty. This protection, however, should not come at the expense of programs that assist low-income families.
The cuts to the SNAP already in effect, and the more extensive ones proposed by the House GOP as an addendum to the Farm Bill, would devastate low-income households that rely on these benefits to stave off poverty. The Census Bureau estimates that SNAP alone keeps 4 million low-income parents and children above the poverty line. The House GOP’s proposed cuts would almost entirely erase this benefit. In addition, the federal Earned Income Tax Credit keeps 3.1 million children out of poverty. Though neither estimate is included in the official poverty estimates released yesterday, both are included in the Census Bureau’s Supplemental Poverty Measure (SPM), to be released October 30.
Today’s data release only underscores the importance of America’s safety net. Until household incomes recover fully from the recession—which they continue to show no signs of doing in the immediate future—programs like Social Security, Medicare, SNAP and Medicaid are all keeping millions of children, working families and seniors out of abject poverty. Now, more than ever, is the time to strengthen our policies, and lend a hand to families working to climb out of poverty.
All-In Nation: Making the America that Works for All
We were delighted last month when the Center for American Progress (CAP) and Policy Link released All-in Nation: An America that Works for All. The book, edited by Vanessa Cárdenas and Sarah Treuhaft, is an eloquent explanation of how strong communities of color are the linchpin to a vital economic future in the United States. We were also extremely pleased to see that saving, college access, education, homeownership and so many other issues typically left out of the conversation were thoughtfully included in this treatise on inclusivity.
All-in Nation is noteworthy for how it advances the conversation about asset-based strategies that create pathways for economic security. As one example, we love the recommendation that Congress turn certain tax deductions into refundable tax credits as a method for incenting saving. Likewise, the proposal for a savings tax credit to be used for a variety of purposes such as retirement savings or health care is one that Congress ought to seriously consider if they want to move the dial on our country’s burgeoning racial wealth gap. It’s policies like these—moveable, meaningful and manageable—that actually have the potential to make a difference when it comes to ensuring fair financial footing for communities of color.
All-in Nation also gains kudos for including in its pages descriptions of many of the collaborative efforts to close the racial wealth gap and advance America’s assets agenda that are springing up around the country.
An additional example to consider is the Asset Building Policy Network, or ABPN. Made possible through support from Citi, who is also a member, the ABPN is a coalition of the nation’s preeminent civil rights and advocacy organizations—including CAP and PolicyLink—committed to improving economic opportunity and security for low- and moderate-income families and communities of color. The ABPN engages in policy advocacy, such as authoring several comment letters to federal agencies, which has resulted in action by the agencies that supports ABPN issues. The Consumer Financial Protection Bureau, for example, directly quoted the ABPN’s comment letter on financial education. ABPN members have also collaborated to conduct research, including the recent collaboration among member organizations National Council of La Raza, National Urban League and National CAPACD to study the financial access challenges facing low-income people of color in the financial marketplace.
These examples, and the broader message of All-in Nation, reaffirm one of CFED’s core values: collaboration. As a special organizational calling and competency, engendered by a conviction that our success requires the varied talents and contributions of many, that a rich diversity of race, gender, background and perspectives and a commitment to learning from others strengthens our work, collaboration has defined our work since the beginning.
As Dr. King reminded us some 50 years ago, change doesn’t roll in on the wheels of inevitability; it comes through continuous struggle. That struggle is as important now as ever before; CFED’s own research finds that about two-thirds of households of color find themselves living in asset poverty, meaning they lack the resources necessary to sustain themselves at or above the poverty line in the event that an emergency like illness leaves them without their primary source of income.
While we cannot undo past discrimination, we can change the trajectory of its future. This is the call that organizations like CAP and Policy Link and coalitions like the ABPN are heeding every single day. Books like All-in Nation are precious moments when that call is amplified, so we hope you’ll read it as soon as you have the chance.
How Food Stamps Keep Families in a Cycle of Poverty
By Mercedes White, Deseret News on 09/09/2013 @ 12:00 PM
EDITOR'S NOTE: This article originally appeared in Salt Lake City's Deseret News and you can read it here.
On a recent Monday evening, 6-year-old Esther lugged a jar of Nutella from the kitchen into the living room where her mother Melissa, nine months pregnant, rested on the sofa in their modest Utah County home. Esther held the jar out to her mother, smiling shyly as she asked for permission to have some. Melissa let out a gentle sigh as she unscrewed the lid. “Not too much,” she said as she handed the jar back to her daughter. In one week she may not be able to give her daughter luxuries like a spoonful of Nutella.
Until recently, Melissa and her husband Jimmy received $400 a month from the Supplemental Nutritional Assistance Program, also known as food stamps. Combined with the $21,000 Jimmy earns as a security guard at a local hospital, it was just enough to feed their four (soon to be five) children ages 2 to 10.
Since 2007, the number of Americans on SNAP has exploded, going from approximately 22 million people at the start of the recession in 2008 to more than 45 million in 2013. The program provides these families a much-needed safety net as they struggle to get back on their feet, according to Jennifer Brooks, policy director with the progressive Corporation for Enterprise Development based in Washington, D.C.
Jimmy and Melissa say they would like to get off food stamps altogether and be on their own, but the rules governing eligibility for the program make it hard. In particular, federal policy stipulates that no matter how small the income or how large the family, persons with assets more than $2,000 — which include savings accounts — are not eligible to take part in SNAP.
According to many social policy experts, this rule needs to be changed. “Asset tests impede the process of moving from dependence on government assistance to self-sufficiency,” said Michael Sherraden, professor of social work at Washington University in St. Louis. Savings are an important part of economic development, he said. “In order to develop capacity, families and communities must accumulate assets and invest for long-term goals.”
A safety net of three months worth of living expenses can ensure that low-income families have some cushion when their car breaks down or work hours get cut, said Brooks. “It will be the difference between going right back on government assistance when an unexpected expense comes up and being able to absorb the cost and remain self-sufficient.”
Wrong to save
Melissa and Jimmy didn’t know about the asset limitation when they decided to put a $3,000 tax refund into a savings account. The couple was eager to get off government assistance as soon as possible. “I never thought I would be in a position where we needed this kind of help,” Jimmy said. Putting some money aside for unexpected expenses and towards a down payment on a home seemed like important first steps.
Several months after depositing their refund, the couple received notice that their food-stamp benefits would be cut at the end of July. The couple understands why the rule exists, but they said it came as an unexpected blow. “You don’t want people with no income and $50,000 in savings taking government benefits,” Jimmy said, “but that isn’t what was going on here. They need to look at the totality of the situation.”
Melissa and Jimmy weren’t sure what to do. Without SNAP they’d need to use their nest egg to feed their family, defeating the purpose of saving in the first place. Not only would they lose their savings, their monthly food budget would go from $400 on SNAP to $250. As she looked at the numbers, Melissa wasn't sure if she could feed six people on that. Though the family eats modestly on SNAP, there is room for some fresh fruits and vegetables and the occasional treat. Without SNAP, the only way they could get by is by cutting out fresh produce altogether. Melissa is reluctant to go this route: "I'm worried this kind of diet will jeopardize my kids' health," she said.
The alternative is to spend some of their savings so they can again qualify for SNAP. “It felt like a no-win situation,” Melissa said, “like we were being forced to choose between what is good for our family in the long term and what our kids need right now.” Survival in the short term and financial security in the long term seemed completely at odds.
Melissa and Jimmy's experience is not unique — according to Reid Cramner, a director with the New America Foundation's Asset Building Program — it is how American welfare works. The rules force "families to choose between a small emergency cushion and putting food on the table," he said in a recent statement for the New American Foundation. "We're forcing them to accept long-term poverty in exchange for short-term assistance."
Prior to 1996, federal social assistance programs like food stamps focused on providing long-term income support to poor Americans. “Essentially, people could be on welfare indefinitely,” Brooks said. “In this context (when the goal of the program is to provide income support), an asset test makes sense,” Brooks added, explaining that it reduces the likelihood that individuals with the resources to support themselves will claim government assistance.
However, the “Personal Responsibility and Work Opportunity Reconciliation Act,” signed by President Bill Clinton in August of 1996, marked a fundamental shift in the American approach to social welfare programs. “The goal of the welfare reform was to move families off government assistance,” Brooks said. “You couldn’t be on welfare forever anymore.”
But when the federal government made these sweeping changes to welfare, the assets test remained in place. The problem with assets tests, however, is that they are “contrary to the goal of getting people off welfare,” according to Brooks. “If a program has the explicit goal of moving people from dependency to self-sufficiency, people need to have an opportunity to build up a safety net before they transition off government assistance.”
The states’ role in welfare
Welfare is federally funded, but it is up to each state to determine how to administer the programs, including SNAP, Medicaid and Temporary Assistance for Needy Families. Shortly after welfare reform, some states recognized that assets tests didn’t make sense anymore. Since 1996, 35 states eliminated assets tests for SNAP benefits. Five states (Nebraska, Pennsylvania, Texas, Michigan and Idaho) increased the amount of assets beneficiaries can hold from $2,000 to between $5,000 and $25,000. Ten states (including Utah, Wyoming, Virginia and Alaska) use the federal government’s $2,000 assets threshold.
Moving off dependence on government benefits is difficult everywhere, but the challenges are especially formidable in states with strict assets limits. In many circumstances it means that families, like Jimmy and Melissa, are getting pushed out of the nest before they can fly. "These programs are supposed to help people transition out of poverty," said Martha Wunderli, state director of the Fair Credit Foundation in Utah, a non-profit organization that provides financial services including education, debt management and asset building programs for low-income families. “Building assets is a big part of getting out of poverty ... and it is not fair to remove benefits that help them get out of poverty before they are ready."
Some states are reluctant to change their policies due to fears people will abuse the system. Brooks notes several states reinstituted assets tests after allegations of lotto winners and wealthy elderly retirees receiving benefits were made public by the press.
Brooks recommends that instead of re-instituting assets tests, governments change the rules about what counts as income. “The situation with the lottery winners could have been avoided if state law considered their winnings income, not assets,” Brooks said.
But not everyone agrees. Some conservative lawmakers want to hold all states to the federal assets limit. For example, Rep. Paul Ryan (R-Wis.) and Rep. Frank Lucas (R-Okla.) would like to add a condition to the Farm Bill that would force states to adhere to the federal government's assets test. This could result in millions of people losing benefits, Brooks said, adding that supporters of this policy consider it a way to decrease fraud.
Weeks away from delivering her fifth child, Melissa isn't in a position where she can work. Even after the baby comes she's unsure about whether she will be able to work. The couple's eldest daughter has a rare chromosomal abnormality, which requires extensive medical care and behavioral therapies. Someone needs to be there to take her to these appointments and communicate with the doctors and therapists about her progress. She'd love to take on some part-time work from home, but it will be some time before she's in a position to do that.
Jimmy is looking for better-paying jobs, too. He'd like to apply for the police force in their city, but at this point, his fitness level isn't where it needs to be to meet the requirements. He's working on it, but it will be a few months before he can apply for the police force and several more before he would start working — assuming he gets hired.
As they look at the numbers and their current situation, Jimmy and Melissa feel they don't have much of a choice but to spend some of the money they saved so they can again qualify for SNAP benefits. They would prefer the security and potential for leaving welfare that the savings represented, but as Jimmy puts it, ”When you have kids, you have to put the needs of your family before your pride.”
DOMA and Same-Sex Household Financial Well-Being
By Alicia Atkinson on 08/01/2013 @ 04:30 PM
On June 26, 2013, the Supreme Court struck down the federal Defense of Marriage Act (DOMA) that defined “marriage” and “spouse” only for heterosexual couples. The ruling has been hailed as a huge victory for gay and lesbian civil rights. However, there are larger implications of this Supreme Court decision that could also lead to greater financial and economic security for same-sex families, especially those of low and moderate income.
Last year, the Movement Advancement Project, the Family Equality Council and Center for American Progress released a report titled “Strengthening Economic Security for Children Living in LGBT Families,” which chronicles the diverse landscape of present-day American families. The report found that between 2 and 2.8 million children are being raised by lesbian, gay, bisexual and transgender (LGBT) parents—and that these children are twice as likely to live in poverty as those being raised by married heterosexual parents. Additionally, in 2009 the Williams Institute found that poverty rates for LGB adults were higher than rates for heterosexual adults (age 18 to 44). Specifically, they found that 24% of lesbians and bisexual women are poor, compared with only 19% of heterosexual women. Considering these statistics, same-sex families’ and individuals’ financial security is a concern.
In the broader population, many Americans are barely holding onto their financial footing. CFED’s Assets & Opportunity Scorecard finds that nearly half (43%) of American households—equivalent to 132.1 million people—have little or no financial “cushion” to prepare for emergencies or future needs. For same-sex families, the picture can be even bleaker, as historically these families have often missed out on key financial security opportunities, such as:
- Access to workplace benefits. Workplace benefits such as health care, paid sick days, paid maternity leave, tax-deferred retirement accounts and life insurance all offer workers not only a greater measure of financial security, but also a sense of mental ease and a key opportunity to access asset-building tools and services. However, these benefits are often exclusively offered to an employee’s spouse and children, which to date have largely excluded same-sex households. For example, a 2007 study by the Williams Institute found that under DOMA, same-sex couples paid $1,069 more per year in taxes on health care than opposite-sex couples.
- Access to public benefits. Many low- and moderate-income LGBT families (like their heterosexual counterparts) rely on government programs such as Medicaid or Temporary Assistance to Needy Families (TANF) to provide much-needed assistance during times of financial difficulty. However, government programs tend to define “family” narrowly—which can potentially alienate or make children of LGBT families’ non-eligible for assistance they both need and qualify for. For example, the Williams Institute found that many children living in LGBT families cannot access Survivors and Disability Insurance Benefits if a parent becomes disabled or dies.
Same-sex couples may also find themselves spending down their assets in order to meet needs that opposite-sex couples may not face, such as:
- Affording welcoming schools. Same-sex parents often have concerns about their children’s school environments. A 2008 survey of LGBT parents found that 40% of students with LGBT parents reported being verbally harassed because of their families. LGBT families might choose to re-locate to an area that is more welcoming to their children or pay for private school. This could result in the spending of assets.
- High legal fees associated with adoption. The legal arrangements associated with adoption can be expensive and burdensome for a same-sex family. This has implications not only for parents who might not be able to pass guardianship to a same-sex partner, but also for children who may not be written into a will in order to receive an inheritance or be unfairly taxed on an inheritance.
- Vulnerable to extra tax burdens. The federal tax code uses a narrow definition of “family,” which does not allow same-sex couples to file jointly. Additionally, they cannot access deductions related to having children if their adoptions are not legally recognized. This means that many same-sex families have been missing out on significant tax benefits, and the opportunity to increase their overall financial security.
LGBT families face financial barriers and potential wealth depletion across many different domains, including the tax system, legal system and in the workplace. DOMA being overturned takes a vital step in the right direction, as it will begin to allow same-sex families—particularly those of lower income—to access key asset-building opportunities and help them both build and preserve wealth.
Celebrate the Success of 2012 with Us!
By Roberto Arjona on 07/26/2013 @ 09:00 AM
‘Tis the season for organizations to release their Annual Reports, and you may have seen that we launched ours on Tuesday. If you’ve got a minute, you might want to download it to your iPad from the App Store. What makes this year’s Annual Report different from any that CFED has released in the past is that its interactive features means you can relive some of the greatest moments of 2012. Watch videos, listen to audio and flip through the photos that capture what the past year in the asset-building field has been all about.
If you don’t have an iPad, you can view CFED’s 2012 Annual Report online by clicking the arrows above, or you can download a PDF version, which is ideal for printing.
What were your organization’s big milestones for 2012? Use the comments below to share your thoughts!
Facing Challenges In The Health Insurance Marketplace
By Daniella Levine, Guest Contributor on 07/16/2013 @ 02:30 PM
EDITOR'S NOTE: This opinion piece originally appeared in the Miami Herald and you can read it here.
On Oct. 1, the federal government will open up a new health-insurance marketplace where an estimated 1.7 million Floridians will have new health-insurance options and financial assistance to help them purchase coverage.
However, many of the uninsured households in our state may face challenges purchasing coverage unless the marketplace adopts alternative payment methods. Many do not have checking or savings accounts and are effectively “unbanked.” The problem is that insurance companies often require individuals to pay their monthly premiums via automatic withdrawal from a checking account. No account, no insurance.
Federal officials at the Department of Health and Human Services have proposed requiring insurers to accept a menu of payment options, including cashier’s checks, money orders and prepaid debit cards so that families without checking accounts won’t lose the opportunity to purchase the insurance required by law.
Those proposed rules should become the law of the land.
But we shouldn’t stop there. We must also find ways to address the larger problems that prevent these households from joining the financial mainstream. More than one in five households in Miami are considered unbanked. An additional 21.4 percent are “underbanked,” meaning they may have a bank account, but still use alternative financial services like check cashers and payday loans. These numbers place Miami as the most unbanked and underbanked large city in the United States. Families have little opportunity to save for the future, build credit and turn their hard-earned cash into valuable assets.
We have witnessed firsthand the impact of programs and services that help families open bank accounts and achieve long-term financial security. Through the Prosperity Campaign, a flagship initiative of Catalyst Miami that has spread throughout the state, lower-wage individuals and families connect to quality healthcare programs and services, establish financial security and improve their quality of life. This past year, 845 people received financial literacy training, 2,831 were assisted with benefit enrollment and over 5,000 residents attended our free tax preparation sessions. These programs reach a mere handful of the households they could potentially help. Our government leaders need to play a stronger role in connecting residents to the financial mainstream by using public awareness campaigns to inform residents about the dangers of high-cost payday loans. They can also help bring together area banks, credit unions and community organizations to extend their services to the unbanked and underbanked residents of our community.
The gap in access to financial services is symptomatic of the wealth gap in our nation. If policymakers are to successfully increase health-insurance access, expanding opportunities to join the financial mainstream should be a key part of that effort.
Catalyst Miami is proud that its Prosperity Campaign has assisted many thousands and brought in millions in new revenue to our community. We will be joining efforts to promote use of the Affordable Care Act marketplace and increasing our financial counseling services to promote greater financial capability for our low and moderate income residents. Contact us at www.catalystmiami.org to see how we can assist you to increase your health and wealth.
Daniella Levine is President & CEO of Catalyst Miami.
15 Innovations for Municipal Leaders
By Sean Luechtefeld on 07/05/2013 @ 01:00 PM
Last month, NYU’s Wagner Graduate School of Public Service released Innovation and the City, an in-depth exploration of 15 municipal-level innovations to help city residents live better. From London to San Francisco and places in between, cities everywhere are doing great work to improve the lives of their citizens. The innovations documented by NYUWagner include:
- Boston & Chicago’s Updating 311
- San Francisco’s Kindergarten to College (K2C)
- Chicago’s Innovation Loan Fund
- Denver’s Peak Academy
- London’s Project Oracle
- London’s Spacehive
- San Francisco’s Zero Waste
- Philadelphia, Providence & Chicago’s Digital Badging
- Chicago’s Budget Savings Commission
- Seattle & San Francisco’s Open Data
- Oakland’s City ID Prepaid Mastercard
- Seattle & Santa Cruz’s Accessory Dwelling Units and Basement Conversions
- Michigan’s Prize-Linked Savings (PLS)*
- Los Angeles & Chicago’s Immigrant Export Initiative
- San Francisco’s Commuter Tax Benefit
Two of these innovations—numbers 2 and 13 above—identify asset-building innovations that have the potential to serve millions of low- and moderate-income families. San Francisco’s K2C program, for example, is a pioneer of the Children’s Savings Account movement and is working to create a college-going culture among families with children who face rising tuition costs against already-tight family budgets. Further, K2C’s visibility has helped pique interest around other initiatives, such as CFED’s very own 1:1 Fund.
Likewise, Michigan’s PLS initiative is a scalable means of giving families a hand up. Piloted in a number of cities across the country based on the exciting work of the Doorways to Dreams (D2D) Fund, PLS is the next generation of savings strategies. In essence, PLS offers incentives—like raffles and cash—for individuals who open savings accounts and make regular deposits into them. Not only does this increase the amount an individual or family saves, but it also brings un- and underbanked residents into the financial mainstream by connecting them with safe financial products.
These innovations and the other 13 listed above are chronicled in detail in NYUWagner’s report, which you should download here.
Asset-Building News Roundup - June 14, 2013
By Veronica Weis on 06/14/2013 @ 02:00 PM
On June 18, Senator Mary Landrieu, Chair of the Senate Committee on Small Business and Entrpreneurship & Small Business Majority will host a conference call to celebrate the 50th annual National Small Business Week. You can register here.
The federal Department of Housing and Urban Development released a study this week that concluded that discrimination against minorities looking for housing persists in subtle forms. The New York Times offers key takeaways but you can click here to read the full report.
A newly released report by the Center for an Urban Future at the New York University's Wagner School spotlights the 15 most innovative policies from cities around the U.S. and the world that could serve as a model. Notables are San Francisco's Kindergarten to College children's savings accounts program and Michigan's Prize-Linked Savings initiative.
The top cities in the U.S. for unbanked populations received considerable media coverage this week as outlets in Miami, Philadelphia and Memphis focused on the need to help the large number of unbanked and underbanked populations in their states gain access to reliable and safe financial products.
What's the biggest scandal in America? The Washington Post's answer might surprise you: "22 percent of children in the richest country in the history of the world live at or below the federal poverty line — and if it weren’t bad enough that more than 1 in five American children live at or below the federal poverty line nearly half live in low-income families that struggle to meet basic needs."
According to a CFPB report released on Tuesday, rules to curb overdrafts charges have produced mixed results.
From the Assets & Opportunity Network
Millennials Will Reinvent Charity
By John Bare, Guest Contributor on 06/13/2013 @ 02:30 PM
EDITOR'S NOTE: The following story originally appeared on CNNOpinion and is well worth the read for our friends in the micro and IDA fields. You can read the original post here.
My niece Sarah is one of the do-gooders with an entrepreneurial bent who's blurring nonprofit and for-profit activities.
Through micro-lending, Individual Development Accounts, creative marketing and a novel kind of stock offering, these disruptors are re-imagining charitable giving and re-purposing investment tools.
Now we need policies and financial instruments to catch up to the movement.
Sarah is one of more than 900,000 Kiva lenders who have made more than $440 million in loans to entrepreneurs in 68 countries. Kiva is a nonprofit organization that facilitates micro-loans. Amounts as small as $25 can help someone -- usually a woman -- start or expand a business. The effects can be life changing.
Starting with the $1,000 Kiva fund I gave her as a high school graduation gift, Sarah found time during college to make 30 loans totaling $1,700 to entrepreneurs in 17 countries, from Bolivia to Uganda.
As folks repay the loans, Sarah keeps making new loans and helping more people change their lives. A funding pool that replenishes itself gives Kiva an edge over typical charities. With most cash donations, when the receiving organization spends the money, it's gone for good.
There's a catch: Sarah can loan money to a grocer in Ghana, a farmer in Uganda and a weaver in India -- but she has not been able to loan money to entrepreneurs in the United States.
Because of technical and policy issues with the U.S. Securities and Exchange Commission, it's easier to help entrepreneurs in another country than in our own backyard.
The bright folks at Kiva are creating a work-around. Kiva Zip is an experiment in "person-to-person lending."
Using Kiva Zip, Tommy in West Helena, Arkansas, sought a loan to expand his barbecue and catfish restaurant. Tracy in Pittsburgh is seeking a loan to move her home hair salon into a commercial space. She expects expansion to create three or four jobs.
Kiva Zip comes along as Grameen America is bringing its micro-lending model to more U.S. cities.
Thirty years after Nobel Laureate Muhammad Yunus created Grameen Bank, which has extended micro-finance to 8 million people in Bangladesh, Grameen America now has branches in New York, Los Angeles, Oakland, Omaha, Indianapolis and Charlotte.
Some of the business-charity hybrids are counterintuitive. While many nonprofit groups ask local businesses for donations, the reverse is uncommon. Yet Ross Baird emerged from the University of Oxford in 2009 with just that notion. He created a nonprofit organization, Village Capital, that raises rounds of capital to invest in startup companies.
One foundation invented a new kind of stock offering to turn neighborhood stakeholders into real stockholders.
Fulfilling its commitment to "resident ownership," the Jacobs Family Foundation wanted to transfer a chunk of the equity in a commercial development project to residents living nearby. It took attorneys six years and 40 drafts to invent a way, and in 2005 Jacobs issued the first-ever Community Development IPO.
Residents purchased all 50,000 units of stock, priced at $10 per share.
In Philadelphia, Dr. Mariana Chilton began working with mothers who didn't have enough food. Through Witnesses to Hunger, she put the mothers in front of elected officials to advocate for federal nutrition programs.
Chilton discovered that women from Witnesses to Hunger were also entrepreneurs. Hustling to put food on the table for their kids, literally, these mothers were earning $50 here and there doing hair and nails or babysitting.
Problem is, no one treated these mothers as entrepreneurs. Their business activities were discouraged or penalized, either because of overly enthusiastic local government regulations or upside-down rules of federal assistance programs. The reporting requirements, intended to deter fraud, were not calibrated to accommodate modest income fluctuations associated with their entrepreneurial activities.
Chilton is chipping away at change. Her team is giving mothers technical assistance to bring their micro-businesses into the mainstream. She is connecting the women to bank accounts, and Chilton's nonprofit will match deposits the mothers make into savings accounts and Individual Development Accounts.
Policy changes could help. The federal nutrition benefits should diminish gradually over time, as folks get on their feet. At a moment when we need innovative thinking, the old rules still use a bright-line test to force mothers to choose between food and work.
Further, we need more technical and policy advancements that make social investing easy. Few organizations have the time and resources to chase legal solutions for six years. The next generation of leaders must generate breakthrough solutions that can operate at scale.
A good place to start is MCON13, which is hashtag-speak for a conference devoted to engaging the 80 million U.S. millennials in giving and volunteerism. Next month hundreds of professionals will gather in Indianapolis at MCON13 to crack the code on millennials.
Expect millennials to keep blurring the lines. If Sarah can loan $50 to a farmer in Paraguay, why not a hair dresser in Philadelphia?
Asset-Building News Roundup - June 7, 2013
By Veronica Weis on 06/07/2013 @ 11:00 AM
Join the National Disability Institute on Wednesday, June 12 for an Integrated Service Delivery webinar to learn how to integrate financial services and asset development strategies to assist individuals and families build financial security. This webinar will define the integrated service delivery concept, the spectrum of options to integrate services and provide best practices from two organizations that have effectively integrated financial services and asset development strategies in to their programs. CFED's Kate Griffin, Senior Program Manager for Savings & Financial Security is speaking on the panel.
Next Step staff will offer a day of training at the NeighborWorks Training Institute in Philadelphia August 19-23. The course, CP135 Successful Construction Using Factory-Built Homes, will be one day and will take place on Wednesday, August 21.
This week, the National Council of La Raza (NCLR) hosted an event to release “Latino Financial Access and Inclusion," a new report that takes a look at the relationship between comprehensive immigration reform and household financial stability for Latinos in the US. Hannah Emple of the New America Foundation offers a recap here.
A new report by the Center for American Progress, "Making the Mortgage Market Work for America’s Families," explores how to design a housing-finance system that effectively meets America’s housing needs and ensures access and affordability for all Americans while providing access to credit, enabling families to build wealth, build strong neighborhoods and support both the local and national economy.
From the Assets & Opportunity Network
The first ever King County Veterans Resource Fair & Stand-Down will take place on June 8 at the Green River Community College in Auburn, Washington. This event offers Veterans and their families access to a wide variety of free resources, including employment, housing, medical and dental, legal, and social services. Seattle-King County Asset Building Collaborative is sponsoring a "financial resources and services" area with partner banks, financial planners, and credit and housing counselors offering services. Click here for more information.
Southern Bancorp Community Partners has compiled a summary of family economic security efforts in 2013 Arkansas legislature. Check out the full report here.
This year, Illinois has taken some giant steps forward in combating poverty and creating greater opportunities for low-income individuals and families in Illinois. The spring legislative session of the Illinois General Assembly has come to a close and the Illinois Asset Building Group has compiled a complete spring legislative roundup.
Four Lessons Gleaned from the Children & Youth Finance International Summit
By Bob Friedman on 06/03/2013 @ 01:00 PM
One hundred million children in more than 100 countries with financial education and services by 2015.
When Jeroo Billamoria first suggested that goal for Child and Youth Finance International, the global facilitator toward this grand goal, I thought, frankly, it was crazy. Even if you could achieve anywhere close to those numbers, the actual access, education and services received by many might be minimal.
But then, I like round numbers, aspiration and inspiration, especially around a worthy goal. And worthy, this goal is. One-third don’t even have a legal identity in this world, let alone the integrity, respect, freedom and opportunity all people—including all children—deserve. Children and youth, worldwide, are even more likely to be poor than their elders, and they, arguably even more than their parents, will need financial understanding, savings and education to traverse the daunting economic gauntlet of the 21st Century global economy. Even if we accomplished a fraction of Jeroo’s goals, the journey would be worthwhile.
I agreed to join the Board of CYFI (pronounced Sci-Fi, to further endear it to children of all ages). After all, who can say “no” to Jeroo?
No one, it turns out: 400 adult delegates from 102 countries and 100 children and youth from more than 40 countries participated in the second Child and Youth Finance International Summit, May 7-9 in Istanbul, Turkey. The delegates represented powerful international, national, governmental, financial, educational authorities, internationally recognized NGOs as well as leading researchers, practitioners, and children and youth. It was about as diverse a group as one could imagine along all dimensions. But, it was clearly unified by one shared goal and value: to include the world’s next generation(s) with economic citizenship, financial education, financial access and financial services. Clearly, there is a global movement for child and youth financial inclusion. To be sure, the call for 100 million of the world’s children to be reached with financial education and services is fairly undefined and allows the possibility that not all counted will have received meaningful access, inclusion and empowerment. But, just as importantly, CYFI’s goal is articulated in a call for both financial education and financial services, including at least an account. CYFI commissioned a global consortium of leading researchers in the field to consolidate international learning, and concludes that a combination of education and services is necessary and effective, whereas financial education alone seems to have little effect.
Many takeaways from CYFI’s International Summit are worth mentioning here.
Global Learning is Crucial and Timely: While we in the US have much to teach (SF K2C, SEED, etc. draw interest can allow us to glean crucial insight), we have much to learn from developments and innovations on all other continents, including from developing and poor countries where the numbers of savings programs, institutions, and child and youth participants are much more numerous and where the use of technology and especially the mobile phone is far ahead. Among the countries where model initiatives are blossoming from which we can learn: Kenya, Uganda, Ghana and Nigeria in Africa; Philippines, Thailand, India and Sri Lanka in Asia; Brazil, Colombia and Mexico in South America; and Egypt and Turkey in the Middle East and North Africa. For example, the Government Savings Bank of Thailand, established 100 years ago to promote savings, has established 738 school banks with 1,392,000 accounts, 122 mobile service centers, and 54,682 village and community funds.
Scholarship/Resources: CYFI’s Research Committee (led by many of our friends including Margaret Sherraden, Deb Adams, Lew Mandell, Willie Elliott, Fred Ssewamala, Trina Shanks and Mat Despard) produced and released at the Summit two documents well worth anyone working on CSAs reviewing, including Children & Youth as Economic Citizens: Review of Research on Financial Capability, Financial Inclusion, and Financial Education, and its companion report, which reviews and summarizes leading programs across the globe. In addition, CYFI has issued Child and Youth Friendly Banking Product Certificate Guidebook, the National Implementation Guide: Child and Youth Finance Initiatives at the National Level Guidebook and Beyond the Promotional Piggybank: Towards Children as Stakeholders. Among the significant departures included in these documents, I note several. First, the inclusion of social education and a rights perspective in economic citizenship that is the stated goal of CYFI—“that all children and youth realize their full potential as economic citizens.” Second, though financial education is undoubtedly the most practiced element of financial capability, inclusion and empowerment, there is little evidence that financial education alone is effective, and there is too much variation in what is meant by it. Third, a conversely, there is significant evidence that financial education and inclusion together have significant savings, economic, social and financial effects. Fourth, there is a hunger for and need to establish a unifying theory, set of measures, definition of different kinds and doses of financial education, and (among researchers at least) impact evaluation which separates financial education, financial inclusion and the combination. Finally, Lew Mandell and Trina Shanks agreed to produce a paper accumulating what evidence exists justifying the combined effect of education and services together.
The Business Case is Weak (and maybe not the right case to make): I went to a session on Building the Business Case for CYF where there was no case really presented, certainly no cost benefit or ROI from a financial institution perspective. Lew Mandell, chair of the session, turned to me as someone else pointed this out, to invite me to talk about K2C and how the use of batched accounts might lower costs. I do think there are reasons and ways to reduce the cost of financial inclusion to financial institutions (e.g., by universal enrollment, use of mobile and other technology, offloading financial education to the education system, finding more effective and simpler products and distribution systems) and to increase their returns (e.g., longer-term tracking, government deposits, etc.). But, as the session progressed, I began to think that the better frame is societal ROI, since the returns are longer-term and not capturable by a financial institutions or business entities. The potential returns are huge—in skilled workers, entrepreneurs, savings, investment, productive work and more—but the real case for universal financial inclusion is like the case for universal public education—a rightful pursuit by government and society.
The Importance of Child and Youth Voice and Inclusion: During the final session of the Summit, people talked through an address by the head of the UNCTAD. But when José—an eight-year-old from Peru, shorter than the podium—talked, without notes, pausing professionally for the translator to provide an English version, there was not a sound other than his calm strong voice in the room. I cannot do justice to his exact words, but here’s some of what he said:
- “I don’t want to see any children working the streets."
- “I don’t want to see any children going hungry for want of food."
- “All kids should be able to afford books and clothes so that other kids won’t make fun of them."
- “You should only use savings in the case of emergencies."
- “We should recycle."
- “We should learn how to make chocolate and sew."
- “We kids can and should teach each other.”
The 100 kids who attended had their own sessions and made six recommendations to the adult delegates, including:
- Financial education should be available to all kids and compulsory.
- Adults should give their old cell phones to the kids of the world.
- All kids should have access to bank accounts without expensive fees or minimum deposits.
- All kids should have access to entrepreneurial training and jobs.
- Adults should speak to and treat kids as equals and with respect.
Perhaps most important, they noted, all the above should be done ASAP.
The involvement of the kids was important, and their voices were the most powerful we heard.
For CYFI's Summit Summary and Findings, click here.
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Asset-Building News Roundup - May 31, 2013
By Veronica Weis on 05/31/2013 @ 11:30 AM
June 5-7 is the 8th Annual Underbanked Financial Services Forum. Presented by the Center for Financial Services Innovation (CFSI) and SourceMedia, the publisher of American Banker, the Forum provides an opportunity for organizations to share their successes and challenges in the underbanked marketplace.
The San Francisco Smart Money Network is hosting an upcoming professional development workshop “Student Financial Concerns and Solutions: Dealing with College Debt" on Thursday, June 6 in San Francisco. The training is intended to enhance the capacity of financial education practitioners to coach their clients toward successful resolution of student debt issues. Click here to register.
The Illinois Senate passed legislation that would save nearly $1 million annually and removes a significant barrier that prevents Illinois’ poorest families from saving money. HB2262, which passed out of the House with bipartisan support last month, will eliminate the “asset test” in the Temporary Assistance for Needy Families (TANF) program. Sponsored by Representative Gabel and Senator Hunter, this legislation encourages savings and will allow families to gain financial independence. The bill now heads to the Governor's desk.
Heidi Moore, reporting for The Guardian, argues that the $1 trillion 2013 farm bill currently being reviewed by Congress would harm the poor while promoting unhealthy food.
Income inequality has been in the news this week after the release of the National Bureau of Economic Research's paper "The Top 1 Percent in International and Historical Perspective." As both the Huffington Post and The Atlantic note, tax cuts might be driving income inequality across the country.
From the Assets & Opportunity Network
The Coalition for a Prosperous Mississippi tipped us off to a new report by the Mississippi Health Advocacy Program and the Small Business Majority offers a small business perspective on medicaid expansion.The report is just part of a growing body of evidence that shows that Medicaid expansion is a vital economic and public health opportunity that should not be left on the table.
Jose Quinonez, Executive Director of the Mission Asset Fund, shared a blog post reflecting on the Consumer Financial Protection Bureau’s (CFPB) Consumer Advisory Board (CAB) recent public meeting in Los Angeles and shared an important call to action for advocates.
Asset-Building News Roundup - May 24, 2013
By Veronica Weis on 05/24/2013 @ 11:00 AM
Next Step is offering a day of training at the NeighborWorks Training Institute in Philadelphia on Wednesday, August 21. The course, Successful Construction Using Factory-Built Homes, will cover tools designed specifically to assist nonprofits with the factory-built housing construction process. They’ll cover steps from home ordering to planning to turn key completion of manufactured and modular homes. Participants will leave equipped to translate site-built construction expertise into supervising successful construction using factory-built homes. Click here to register before the June 24 deadline.
Next Wednesday is 529 Saving for College Day. As part of the campaign, nationally recognized "529 Guru" Joe Hurley will be presenting a live webinar open to anyone wishing to learn more about 529 plans.
Good news from the Illinois Asset Building Group: The Illinois Senate passed legislation that saves our state nearly $1 million annually, while removing a significant barrier that prevents Illinois’ poorest families from saving money. HB2262, which passed out of the House with bipartisan support last month, will eliminate the “asset test” in the Temporary Assistance for Needy Families (TANF) program, commonly known as “welfare.” Read more here.
According to "Confronting Suburban Poverty in America," a new book released this week by researchers Elizabeth Kneebone and Alan Berube of the Brookings Institution, suburban poverty has increased by 64 percent in the last decade. For coverage of this troubling trend, the Washington Post offers an interesting read.
From the Assets & Opportunity Network
In a blog post earlier this week, Ed Sivak, Director of the Coalition for a Prosperous Mississippi, explains why pitting education against expanding Medicaid omits a number of important facts in a way that is misleading to readers and presents a false choice between two of our state’s most critical priorities.
In this issue brief, the Ohio CASH Coalition makes the case for why expanding Medicaid would be good for Ohio and good for Ohioans.
CFED Notes: A Foot in the Door to the American Dream
By Jeremie Greer and Emanuel Nieves on 05/21/2013 @ 02:30 PM
A Foot in the Door to the American Dream: A Forum on College Savings Accounts
Nearly every parent aspires to see their child walk across the stage in a commencement ceremony to receive their college degree. Undeniably, access to a quality college education has proven to be essential in climbing the economic ladder out of poverty and into the middle class. Unfortunately, soaring tuition and the burden of out-of-control student debt have threatened to make this important pathway to economic security out of reach for far too many young people.
On Thursday, May 9th, CFED and Opportunity Nation joined forces with Senators Christopher Coons (D-DE) and Marco Rubio (R-FL) to host a lunchtime policy forum to bring attention to an extremely powerful tool for enhancing access to a college education for millions of low income young people: Children’s Savings Accounts (CSAs).
At the event, Senator Coons announced the reintroduction of the American Dream Accounts Act, which uses existing Department of Education funds to create expand college access opportunities to low-income students by monitoring higher education readiness through a personal online savings account.
To watch videos of the event, visit our Youtube page here.
Introducing CFED’s Newest Fact File: Microbusinesses – America’s Invisible Job Creators
As Congress continues to work on how best to create jobs in America, high-growth small businesses receive much attention. But a vast majority of small business owners (26 million, more than 95% of all small businesses) are running firms with five or fewer employees (often called “microbusinesses”), and their firms have not been the targets of many small business policies. This invisible majority of entrepreneurs are cafe owners, construction contractors, bookkeepers, child-care providers and other Main Street businesses.
- 22 million small-business owners are self-employed and generate almost $1 trillion in economic activity per year.
- An additional 4 million microbusinesses employ 1-4 people.
- While their overall economic impact is large, a majority – nearly 74% – of microbusiness owners do business in their local communities.
Unfortunately, 13 million microbusiness owners are financially vulnerable. Federal small business policies aren’t working for the smallest businesses, where and when it comes to research and policy that focus on small business, most emphasize the minority (fewer than five percent) who employ more than 20 workers. As a result, the majority of government programs and resources meant to assist small businesses are unavailable to these microbusiness owners.
For more information on the facts on Microbusinesses, click here.
Rethinking Pell Grants: Enhancing Access to a College Education for Low-Income Students
For more than 30 years, Pell Grants have made the dream of a college education a reality for millions of low-income young people. However, rapid growth in the uptake of Pell Grants has caused some to question the fiscal sustainability of this powerfully important program.
The College Board recently released a report that recommends linking two extremely powerful tools to enhance access to a college education to millions of low income young people: Pell Grants and Children’s Savings Accounts (CSAs). In this report, The College Board recommendations center around the creation of “education accounts” aimed at narrowing the financial and information gaps between low-income youth and young people that grow up under more privileged circumstances. The College Board’s recommendations of linking these two important tools would begin to put college back within reach for millions of low-income young students.
To read the full report, click here.
The Racial Wealth Gap in America
Recently, our colleagues at the Urban Institute released a powerful three-minute video explaining just how pervasive the growing racial wealth gap is, which uses CFED's findings in our Upside Down report to illustrate how, despite spending $400 billion on asset-building incentives, the federal government still fails to reach the populations who need support in building wealth and financial security.
We invite you to view the three-minute video here.
Blogtakes: CFED Viewpoints
- Read Jeremie Greer’s, CFED’s Director of Government Affairs, blog post about putting college back within reach for millions of low income young people.
- Take a look at The Center for an Urban Future’s blog post about the Importance of Entrepreneurship Programs.
- Read Ethan Geiling's, CFED's Program Manager for Policy & Research, blog post about Hawaii Becoming the Seventh State to Eliminate TANF Asset Test.
- Check out Ethan’s blog post about the CFPB’s recently released white paper, which examined payday and deposit advance loans.
Asset-Building News Roundup - May 17, 2013
By Veronica Weis on 05/17/2013 @ 12:00 PM
June 5-7, 2013 participate in the 8th Annual Underbanked Financial Services Forum, the country’s only conference that brings together bank and credit union executives, technology entrepreneurs, retailers, investors, regulators, nonprofit providers, and consumer advocates to discuss market opportunities for advancing innovative efforts and reaching the financially underserved. Presented by the Center for Financial Services Innovation (CFSI) and SourceMedia, the publisher of American Banker, the Forum provides an opportunity for organizations to share their successes and challenges in the underbanked marketplace. Register here to attend the Forum and use code PTNR13 to receive $200 off of the current rate.
NCLR is hosting an event on Tuesday, June 4th from 10am-11:30am at the National Press Club in Washington, DC. The event will feature the release of a new NCLR report focused on Latino access to financial services, and will highlight immigrant inclusion in the financial market, and the ways in which citizenship provides new opportunities for individuals to build their financial capacity. The event will also feature remarks by Elizabeth Garza, Managing Director of Citi Global Consumer Banking, Governance, Regulatory and External Affairs, Janet Murguía, President and CEO of NCLR, and Janis Bowdler, Director of Wealth-Building Policy Project at NCLR. You can RSVP here.
After a decade of advocacy, the Colorado legislature passed SB 13-001, which makes the EITC permanent set at 10% of the federal credit and also includes a Child Tax Credit. The bill, however, includes triggers that mean the credits will only be paid out of revenue above the current General Fund expenditures.
According to the National Conference of State Legislatures, 25 states have bills pending on predatory small-dollar lending. In good news, the Texas House Investments & Financial Services Committee held a public hearing on SB 1247, which has already passed the Senate and would regulate payday and auto-title lending. Washington legislators defeated HB 2040, which would have replaced the payday loan system with an equally predatory high-interest installment loan system.
Senators Coons (D-DE) and Rubio (R-FL) introduced the American Dream Accounts Act, which would open college savings accounts for low-income students and monitor college readiness online. For more info, check out our President Andrea Levere's op-ed in Politico with Opportunity Nation's Mark Edwards here.
From the Assets & Opportunity Network
The Ohio CASH Coalition shared a blog post earlier this week with highlights from their recent brief, "Mothers and Medicaid: Expanded health coverage would help Ohio families."
The Assets & Opportunity Network developed five recommendations to curb predatory short-term, small-dollar lending for the Consumer Financial Protection Bureau.
The Washington Asset Building Coalition, an A&O Network Lead Organization, is accepting proposals for workshop presentations at their statewide conference in Yakima from September 18-19, 2013. The deadline for proposals is May 24.
Asset-Building News Roundup - May 3, 2013
By Veronica Weis on 05/03/2013 @ 06:00 PM
Join us next Thursday in Washington, DC for "A Foot in the Door to the American Dream: A Forum on College Savings Accounts." This lunchtime policy forum is sponsored by CFED & Opportunity Nation. For more information, click here. Can't make it but still want to follow the conversation? We'll be tweeting with #CFEDforum.
Our friends at the Urban Institute released a powerful three-minute video this week explaining just how pervasive the growing racial wealth gap is. It uses CFED's findings in our Upside Down report to illustrate how, despite spending $400 billion on asset-building incentives, the federal government still fails to reach the populations who need support in building wealth and financial security.
Sean Reardon’s op-ed in this past Sunday’s New York Times,“No Rich Child Left Behind,” takes a look at how and why educational success gaps between high- and low-income students has steadily increased over the past three decades. The 1:1 Fund's Executive Director, Carl Rist, shares his summary of the piece here.
From the Assets & Opportunity Network
United Way of Greater Houston has launched Tweet My Jobs, Houston a new citywide online jobs platform to help Houstonians find work using innovative technology to combine the popularity of social media and the convenience of a smart phone application. This free service already has more than 150,000 Houston job postings from entry level to senior level corporate positions. Tweet My Jobs, Houston is available at www.houston.tweetmyjobs.com.
United Way of Northeast Florida (Real$ense Prosperity Campaign) shared a great tax-time story about Thelma Small, 82 years old, who attended a March tax preparation services in Jacksonville with her daughter.
The Community Action Agency of Southern New Mexico recently published findings from a year-long study from a W.K. Kellogg Foundation grant to explore the feasibility of scaling asset building in rural Doña Ana County. Click here to read their research.
It's the Economic Mobility, Stupid!
By ThinkProgress on 05/02/2013 @ 04:00 PM
The conservative trickle-down approach to the economy assumes that maximizing rewards for those at the top is the path to both growth and prosperity for the society as a whole. If inequality rises, that does not matter, runs the conservative argument, because absolute levels of prosperity will rise for everyone even if the top gains more.
The progressive approach to the economy is radically different. This approach posits, based on a mass of accumulating evidence, that inequality is not a benign byproduct of growth, but rather a toxic barrier to both middle class prosperity and strong growth in general. In other words, high levels of inequality interfere with the both the quality and quantity of growth experienced by a society. Hence the idea that an economic agenda must concentrate on lifting up the middle class to generate both broadly-shared prosperity and fast growth. The two goals are inextricably linked and one cannot be attained without the other.
Of course, the progressive agenda may be the correct one, but that does not mean it can be easily sold to the public and politicians. It would require a serious reorientation of national priorities and considerable investments in areas like education and infrastructure–spending that is likely to meet considerable resistance in the current environment. Therefore, the question of how to frame the agenda in the political marketplace is key.
One obvious approach is to frame the agenda directly as a means of reducing inequality. Call this the redistributionist approach. This approach is not without merit. Start with awareness of and views about economic inequality.
There is no doubt Americans are aware of rising inequality. In the Pew Research Center’s 2012 American Values survey, respondents were asked if they agreed that today the rich get richer while the poor get poorer. About three-quarters (76 percent) agreed, while just 23 percent disagreed. And the public believes it’s not just the poor who are losing ground to the rich—it’s the middle class as well. In the same survey three-quarters (76 percent) also say the gap between the standards of living of the middle class and the rich grew over the last decade, compared to just 16 percent who think it narrowed.
No wonder that a poll from October 2011 conducted by Pulse Opinion Research for The Hill found that two in three Americans believe that the middle class is now shrinking. And in a Democracy Corps post-2010 election survey, the public endorsed the idea that America is no longer a country with a rising middle class by 57-36. Finally, an October, 2007 poll conducted by political scientists Benjamin Page and Lawrence Jacobs for their book, Class War: What Americans Really Think about Economic Inequality, found 81 percent of the public saying that the gap in wealth between wealthy Americans and the middle class has grown over the last 25 years, compared to just 10 percent who said it has remained the same and 8 percent who said it had gotten smaller.
Of course high awareness of inequality does not necessarily mean that Americans disapprove of it. But further data show that Americans’ high awareness of inequality is indeed matched by high levels of disapproval. For example, in a Pew poll in December, 2011, 61% said our economy unfairly favors wealthy Americans, while only 36% thought the system was “generally fair.” And in an ABC News/The Washington Post poll from January of this year, 55% of Americans said that economic unfairness that favors the wealthy is a bigger problem than overregulation by the government that hurts economic growth. Only 35% of respondents believed the latter was the bigger problem.
Moreover, in an October, 2011 nationwide survey conducted by Greenberg Quinlan Rosner Research and the Center for American Progress Action Fund, the public expressed the following views:
- 81 percent of those surveyed agreed that “Regular people work harder and harder for less and less, while Wall Street CEOs enjoy bigger bonuses than ever,”
- 75 percent agreed that “Our economy works for Wall Street CEOs but not for the middle class. America isn’t supposed to only work for the top 1 percent”
- 72 percent agreed that “right now, 99 percent of Americans only see the rich getting richer and everyone else getting crushed. And they’re right.”
In earlier data from the Page/Jacobs survey, 72 percent agreed that differences in income in America are too large, compared to only 27 percent who disagreed. And 59 percent disagreed that large differences in income are necessary for America’s prosperity. In an October 2008 Gallup poll, 58 percent thought money and wealth should be more evenly distributed among a larger percentage of the people, compared to 37 percent who thought it was fairly distributed.
None of these survey findings are idiosyncratic. Careful academic reviews of public opinion on inequality over time by sociologists Lane Kenworthy and Leslie McCall indicate that Americans have typically been aware of inequality, sensitive to its increase over time and generally disapprove of the levels it has reached on our society.
So, beyond a shadow of a doubt, the public is both aware of rising inequality and disapproves of it. Naturally enough, given these sentiments, the public would also like to see something done about this problem. In a November 2011 poll from the Public Religion Research Institute, 60 percent agreed that “our society would be better off if the distribution of wealth was more equal.” And 63 percent believed that “we need to dramatically reduce inequalities between rich and poor, whites and people of color and men and women.”
But it does not follow from all this–awareness, disapproval and the felt need for action–that the public would necessarily be happiest with a direct attack on inequality as implied by the redistributionist frame. On the contrary, in the February, 2009 Pew economic mobility survey, by an overwhelming 71-21 margin, respondents though it was more important to ensure everyone has a fair chance of improving their economic standing than to reduce inequality in America.
That preference for economic mobility over direct mitigation of inequality is also suggested by results of another question in the same survey. By 71-27, Americans agreed that greater economic inequality means that it is more difficult for those at the bottom of the ladder to move up the ladder. That is what Americans object to most vigorously about economic inequality: that it makes economic mobility more difficult. In other words, for most Americans what we have is not an inequality crisis but a mobility crisis. This is confirmed by results of a recent series of focus groups on inequality conducted by Greenberg Quinlan Rosner. Participants tended not to connect their economic difficulties with wealth and income inequality but bemoaned, more than anything else, the rising cost of middle class expenses like housing, transportation, medical care and college relative to lagging wages and salaries. This middle class squeeze, which prevents them from moving ahead in life, is what primarily concerns them.
The mobility crisis touches something very, very important to Americans. Americans retain a deep faith in their personal ability to get ahead even in adverse circumstances, provided they have a fair opportunity to do so. Here are some results from a survey I helped conduct for the Economic Policy Institute in March, 2006. That poll found that 69% thought they had already attained the American Dream or would attain it in their lifetimes (note: this figure was actually higher–75%–in a CAP poll conducted in February, 2009 after the financial crisis had hit). And while 60% rated themselves between poor and middle class now on a 10 point economic scale (1-5), 59% said they would be between middle class and wealthy (6 to 10) within 10 years. Finally, while 80% described themselves as working class, middle class, or lower class today, 44% believed it was very or somewhat likely that they would become wealthy in the future.
This personal optimism can and does co-exist with negative views about the overall state of the economy. In the EPI poll, respondents were asked whether economic uncertainty and inequality or success in achieving the American Dream characterizes the economy today. Here is the choice posed by the question:
- Most people today face increasing uncertainty about employment, with stagnant incomes, paying more for health care, taxes, and retirement, while those at the top have booming incomes and lower taxes
- Our economy faces ups and downs, but most people can expect to better themselves, see rising incomes, find good jobs and provide economic security for their families. The American dream is very much alive.
By 2:1 (64%-32%), respondents selected the first statement about increasing uncertainty as coming closer to their views. But of that group that said that increasing uncertainty, rather than achieving the American Dream, characterized the economy, an amazing 63% nevertheless thought that they themselves would achieve the Dream.
This personal optimism and aspirational outlook is broadly shared across social groups. For example, 69% of the white working class and 74 % of the white middle class believed they have reached or will reach the American Dream, as did 67% of women, 72% of men, 66% of blacks, and 74% of Hispanics (blacks and Hispanics were less likely than whites to believe they had already attained the Dream, but made up for it by being more likely to believe they will attain it in the future).
This aspirational outlook helps explain a stunning finding from the Page/Jacobs survey. A whopping 97 percent agreed (including 85 percent who strongly agreed) that everyone in America should have equal opportunities to get ahead. This is as close to a consensual viewpoint as you find in American public opinion, suggesting the power of a mobility, rather than redistributionist, frame for the progressive economic agenda.
The mobility frame has a strong connection in the public mind to the need for government action. In the 2011 Pew economic mobility survey, an overwhelming 83 percent said they wanted the government to either provide opportunities for the poor and middle class to improve their economic situation or prevent them from falling behind or both. In the same survey, education, a central part of the progressive economic agenda, loomed especially large as a way the government should help provide those opportunities. Ensuring all children get a quality education was rated the highest among options to help people get ahead (88 percent rated it as one of the most important/very important). And improving the quality of elementary and secondary education and making college more affordable were two of the top four options for preventing downward mobility (84 and 80 percent, respectively, one of the most effective/very effective).
Other options that rated highly in this or the 2009 Pew economic mobility survey included promoting job creation, providing basic needs to the very poor, reducing the costs of health care, helping small businesses and business owners, more job training programs and education for adult workers, making it easier to save for retirement and early childhood learning programs. All these mobility-promoting steps are central, of course, to the progressive economic agenda.
In conclusion, the mobility frame lends itself to an “aspirational populism” that makes explicit the argument that current levels of inequality are not just unfair but directly interfere with mobility and economic growth. Not only is there a growing body of economic evidence for the argument but it accords well with the common sense of voters. And perhaps the common sense of an increasing number of politicians. As the President himself has remarked (April, 2012 speech in Florida):
"In this country, prosperity has never trickled down from the wealthy few. Prosperity has always come from the bottom up, from a strong and growing middle class. That’s how a generation who went to college on the GI Bill — including my grandfather — helped build the most prosperous economy that the world has ever known. That’s why a CEO like Henry Ford made a point to pay his workers enough money so that they could buy the cars that they were building. Because he understood, look, there’s no point in me having all this and then nobody can buy my cars. I’ve got to pay my workers enough so that they buy the cars, and that in turn creates more business and more prosperity for everybody."
That about says it all.
Asset-Building News Roundup - April 26, 2013
By Veronica Weis on 04/26/2013 @ 05:00 PM
For those looking for an Asset Building 101 webinar, register today for "What is Asset Building?" It's being offered on two dates, April 25 & 29, and will share information such as asset-building tools and resources for programs and clients, information about assets as a way to build financial stability for low-income communities of color and more.
What's it like to live on $1.50 a day? Join the Live Below the Line challenge and try it for five days. The initiative is meant to simulate what it’s like for the 1.4 billion people worldwide who live in extreme poverty.
The Center for Financial Services Innovation (CFSI) is hosting an event, "Improving Americans' Financial Capability: Early Lessons and Emerging Innovations for Changing Consumer Behavior" this upcoming Tuesday on Capitol Hill. There's a great list of speakers so make sure you drop by. For more information, click here.
Last week, Hawai`i Governor Abercrombie signed HB 868 into law, eliminating the asset test in the state’s Temporary Assistance for Needy Families (TANF) program, making Hawai`i the seventh state to do so. To read more about this positive development, check out an earlier blog post.
The Consumer Financial Protection Bureau released a new white paper examining payday and deposit advance loans. This study is more comprehensive than almost any other study ever conducted, since the CFPB was able to acquire data on millions of borrowers directly from banks and small dollar lenders. For a full summary and key findings, click here.
From the Assets & Opportunity Network
The Illinois Asset Building Group recently published a blog post that argues that while our student loan system is wrought with deep problems, there are options to allow students to borrow at lower rates and payback their loans easier and safer.
Asset-Building News Roundup - April 19, 2013
By Veronica Weis on 04/19/2013 @ 05:00 PM
The UW-Madison Center for Financial Security and the University of Wisconsin-Extension, Cooperative Extension, are pleased to announce the 2013 Pathways Conference Financial Security over the Life Course, taking place online the week of June 3-7, 2013. The conference planning committee has organized a program that aims to inform your work and provide new ideas and resources related to family financial security.
To mark Financial Literacy Month, tonight's episode of WNET's Need to Know, which airs nationally on PBS, will offer a thoughtful account on the Mississippi College Savings Account Program, an innovative collaboration between CFED, the Center for Community Economic Development at Delta State University, the Mississippi Community Financial Access Coalition and Hope Credit Union, with support from the W.K. Kellogg Foundation. The episode chronicles a single mother of three-year-old twin girls who are saving for college with the help of the Mississippi CSA program, supported by the new 1:1 Fund. To watch the full episode online, visit the Need to Know website later this evening. To watch on television, check your local listings.
June 5-7, 2013 participate in the 8th Annual Underbanked Financial Services Forum, the country’s only conference that brings together bank and credit union executives, technology entrepreneurs, retailers, investors, regulators, nonprofit providers, and consumer advocates to discuss market opportunities for advancing innovative efforts and reaching the financially underserved. Presented by the Center for Financial Services Innovation (CFSI) and SourceMedia, the publisher of American Banker, the Forum provides an opportunity for organizations to share their successes and challenges in the underbanked marketplace. Register now to attend the Forum.
A new guide by the Insight Center for Community Economic Development, Measuring Up: Aspirations for Economic Security in the 21st Century, shares innovations for measuring economic security via poverty measures.
Next Tuesday is Teach Children to Save Day, a national program of the American Bankers Association that organizes banker volunteers to help young people develop a savings habit early in life. Since the program started in 1997, some 123,000 bankers have taught savings skills to more than 5 millions students.
A bill sponsored by North Carolina State Representative Nathan Ramsey seeks to increase the supply of affordable housing by creating restrictions that say that counties cannot adopt or enforce zoning regulations that exclude manufactured homes from being located on individual lots in areas zoned for single-family residential use.
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