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Oct 1, 2014

2014 State of the Field Address

CFED President Andrea Levere’s 2014 State of the Field address, as prepared for delivery at the 2014 Assets Learning Conference, September 17, 2014 in Washington, DC.

I. Welcome

It is my special honor to welcome you to the 12th Assets Learning Conference. This is the most diverse, most enthusiastic and largest crowd ever assembled, and we would like to thank you for joining us to make this the best Conference ever.

I will open the 2014 ALC this morning by sharing CFED’s thoughts on the state of the asset-building field, and then by inviting four of our most visionary and respected leaders to offer their insights on where we are and where we should go in the future. Then I will follow their remarks by describing how we have shaped the conference’s agenda to reflect what you have told us you want to learn, share and invent while you are here. Finally, I will close by introducing and thanking the extraordinarily generous group of sponsors, speakers and organizers who together have made this conference possible.

II. What is the state of the world in which we are all working?

As much as I want to start us on a happy note, the economic and financial realities that surround us can be defined by three words: inequality, insecurity and immobility.

Since great keynote addresses use data sparingly and well, I will limit myself to three sources of data on these topics:

First, inequality. Our most current assessment of the state of income and wealth inequality in the nation comes from the Federal Reserve’s report on the 2013 Survey of Consumer Finances. I summarize the findings in three headlines:

  1. No one got a raise except the top three percenters. The highest earners have the highest earnings: the top three percent of all earners now command 30.5% of all income in the country. The top 10% of earners take home almost half of all income at 47.3%, while the remaining 90% percent split what is left.
  2. Wealth inequality is accelerating even faster than global warming. Between 1989 and 2013, the top three percent of earners went from controlling 45% of all net worth in the US to controlling 54% of all net worth. In the same time period, the bottom 90% of earners went from holding 33% of wealth in the United States to only holding 25% of all wealth.
  3. Finally, when it comes to the racial wealth gap, I rely on the wisdom of visionary economist, Chris Rock, who said, “It’s all right, ‘cause it’s all white. I ain’t talking about rich, I am talking about wealth.” Ninety percent of all wealth is held by white households with Black and Hispanic households each holding less than 3% of the nation’s wealth.

Second, insecurity. We know that sheer fact of inequality only tells part of the story for families and households, and it is measures of financial insecurity that capture how financial data shape our lives.

The Scorecard’s measure of Liquid Asset Poverty shows that 44% of American households live in a state of persistent financial insecurity, without the liquid savings to exist at the poverty level for three months if their main source of income is disrupted by a job loss or illness. This percentage increases to 61% for households of color. These data have produced two major reactions for us to consider:

  1. It is not just about “those poor people” any more, but rather, it is about half of us. Suddenly, we can speak for and with a much larger constituency.
  2. Our focus on savings—which is how this movement started—has not only become a means for wealth creation, but an essential ingredient for economic growth in terms of its contribution to financial stability.

During the conference, CFED will release new data that measures financial insecurity at the local level. We found that it varies from a low of 11% in Irvine, CA to a high of almost 75% in Newark. Thus, we can see the huge range in insecurity across geographies. In the words of newlywed Kanye West, “Having money’s not everything; not having it is.”

And third, we must pair this focus on inequality and insecurity with data on the prospects for economic mobility—the defining characteristic of the American dream. About 62% of Americans (male and female) raised in the top fifth of incomes stay in the top two-fifths, according to research by the Pew Charitable Trusts. Similarly, 65% born in the bottom fifth stay in the bottom two-fifths.

Even more stunning to those of us who were taught that the US was the world’s land of opportunity is a study published by the Russell Sage Foundation, which found that among the major developed countries, only households in Italy and the United Kingdom have less economic mobility than we do in the US.

We know that these problems were not created overnight. They are the result of centuries of racial discrimination; decades of labor market transformation and transfer of power from workers to owners; and years of slow recovery from the biggest recession since the Great Depression, which contributed to the massive loss of wealth, rocketing financial insecurity and historic loss of faith in the American dream.

For most of you in this room, these trends are not new, but what has changed is the attention they are getting at the highest levels of government, business and the media. After the relatively rapid rise and fall of Occupy, who could have imagined just two years ago that a 700 page economics treatise by Thomas Piketty called Capital in the Twenty-First Century would become a best-selling book? The media focus such as the “Great Divide” series in the Times has succeeded in turning the spotlight onto the very solutions that the asset-building movement has been promoting for more than two decades. And last week, in a review of Henry Kissinger’s newest book, Hilary Clinton made our case in global terms:

“Our country is at its best, and our leadership in the world is strongest, when we are united behind a common purpose and shared mission, and advancing shared prosperity and social justice at home. Sustaining America’s leadership in the world depends on renewing the American dream for all our people.”

III. Why is our field designed to create a more just and prosperous future?

Our field starts by addressing three of the major realities of the 21st century world: inequality, insecurity and immobility.

The War on Poverty’s great accomplishment was the creation of the safety net. Today, that singular contribution is necessary, but not sufficient, to address our challenges. Our country’s unfinished business is to add savings and assets to the equation.

Our field is designing, testing and scaling the solutions that address these realities, all based on three core principles:

  1. Our values. A belief in the capacity of ALL people to be productive if given the opportunity and structure. We have seen the consequences of opportunity denied in places like Ferguson, and we know that Ferguson is just one of many communities like this.
  2. Our commitment to innovation. We are trying things that have never been done before or have never been connected before—this entire Conference is a showcase for innovations that cross sectors, methods and markets with a commitment to sharing learning and practices far beyond these three days
  3. Our methods. We understand that there is no silver bullet, and it takes an approach that integrates and connects multiple strategies such as is embodied in the theme of this Conference, Platforms for Prosperity. We connect community practice with public policy and private markets while building evidence and knowledge of what works through applied research.

So, what have we accomplished since we last met that sets our course?

We have created new knowledge through applied research that provides profound insights into the financial realities of our lives through the Financial Diaries projects, books like Scarcity: Why Having So Little Means So Much, and the development of the first consumer-driven definition of what financial well-being means and how we can measure it.

We are building new and creative partnerships with the private sector through product innovation, creating new savings and transaction accounts, promoting employee savings and retirement platforms, expanding impact investing and applying technology to meet market needs in ways that were impossible just a few short years ago.

We have pioneered new community-based solutions to support entrepreneurs; promote integrated service delivery; power social ventures that support businesses, homeowners and college savings; and activate the ability in all of us to build savings for emergencies and for the long-term.

We have seen state and municipal policymakers create the first universal, scaled children’s savings programs; applauded the State of California for making small dollar loans affordable and safe; stood by the CFPB as it regulated predatory behavior in the consumer, housing and student loan marketplaces; and watched some of the most influential Congressional leaders take up the assets banner once again.

So much of the infrastructure that supports this innovation is built by philanthropy. Over the past two years, we have expanded the depth and breadth of our relationship with philanthropy to bring in new funders from the corporate and individual donor communities, create innovative collaborations that leverage the strengths of funders and practitioners, align philanthropy with business for greater impact, and connect policy and practice to achieve enduring change.

But even these accomplishments are not enough to change the trajectory of the economic lives of the asset poor: to create impact at scale, we have to change the structure most responsible for income and wealth inequality—the U.S. Tax Code.

Over the past several months, CFED has updated our research on the upside-down tax budget. Today you received our newest report on federal asset building policy, From Upside Down to Right-Side Up, which finds:

  • Our government spends a lot to help Americans Save, Invest, and Build Wealth. And when I say a lot, I mean $540 billion in 2013 alone.
  • However, an analysis of this spending shows that the top one percent get more support from these programs than the entire bottom 80% combined.
  • This means that a household in the top 0.1%—one that earns upwards of $7.6 million per year—would get a benefit conservatively estimated at $33,391. Meanwhile, a household in the bottom 20%—one that earns around just $14,000 per year—would get a benefit of only $77.
  • To put into perspective just how upside-down this system really is, our data show that a top-income family could buy a Cadillac with their annual benefits, whereas a bottom-income family could barely fill the gas tank.

To make a dent in the rising inequality, insecurity and lack of mobility, the work starts now to develop a bold new campaign to transform the tax code into a platform for prosperity, one that scales savings and asset-building opportunities for the asset-poor majority. With right-side up reform, the tax code can be a platform that empowers all in our country to:

  • Start saving at birth—for college, homeownership, starting a business or another wealth-building asset.
  • Own a home that is safe, healthy, environmentally friendly and that appreciates in value.
  • Access the tools and services they need to start or grow a business.
  • Create a nest egg for an emergency or for retirement, to be free from the fear that one mishap could be the rabbit-hole toward financial disaster.

We must do this all within an institutional structure that makes it easy to save, offers incentives that work, eliminates barriers to participation and ensures that all of us have the bandwidth left to live successful lives.

As CFED blows out the candles to celebrate our 35th birthday tomorrow night, we commit to work with all of you who are here, as well as those who could not join us, to expand the movement for economic and racial justice.

In the words of visionary leader Gloria Steinem, upon receiving the Presidential Medal of Freedom: “Don’t listen to me. Listen to yourself. People often ask me at this age, ‘Who am I passing the torch to?’ First of all, I’m not giving up my torch, thank you! I’m using my torch to light other people’s torches. If we each have a torch, there’s a lot more light.”

As you embark on these next three days, I want you to consider this Conference as the place where your torch was lit. The more torches we have, the brighter we will shine, and together, we can create a world that is more equal, more financially secure, and provides more economic mobility.

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