As we recover from the great recession, the need to create jobs is foremost in the minds of the public and the promises of politicians. But if too many jobs don’t pay enough to cover the basic needs of a family, we may only dig ourselves further into a hole and cripple our ability to support the next generation of Americans.

So what is an adequate income to meet those basic needs? The question is important, as it determines how we set goals, determine eligibility for public support, and understand many problems in society. Yet the tool most commonly used to measure this, the federal poverty level (FPL), is long out of date. It considers only cash income and expenses of three times the cost for a 1950s diet.  That was appropriate when the measure was created, as food took up a third of the typical household budget at the time. Today it is less than one-tenth. The measure also does not adjust for differences in the cost of living by region or family type. Read the rest of this entry »

A few weeks ago I had the opportunity to attend a conference hosted by the Ford Foundation and Howard University’s Center on Race and Wealth.  The three-day meeting was the first annual gathering of a diverse group of representatives supported by grants from the Ford Foundation’s Building Economic Security Over a Lifetime initiative.  The initiative promotes programs that help low-income families achieve and maintain economic stability throughout their lives.  The conference focused on a particular and troubling aspect of economic achievement in the United States:  the racial wealth gap.

Few ideas are more evocative of the American dream than wealth and economic security, yet opportunities to accumulate wealth and secure income have never been equally distributed.  In virtually every measure of wealth, non-white households are falling behind.  For example, homeownership, the primary vehicle for building wealth for most Americans, is more attainable for white households than their minority counterparts.  According to the U.S. Census, in 2008 only 47.5% of African-Americans and 48.9% of Hispanics owned their own homes, compared with 74.9% of whites.   White households continue to accumulate more savings, more assets (vehicles, houses, businesses), and more wealth, consistently maintaining larger net worths than minority households.  While some of this gap is attributable to higher incomes and educational attainment, it takes a longer view of history to understand and explain its persistence.  Historically, some of the largest expansions of American wealth were achieved through sacrifices disproportionately shouldered by the poor, the disenfranchised, and communities of color. Read the rest of this entry »

This post is adapted from an upcoming issue brief on savings from Oklahoma Assets, a statewide coalition committed to promoting financial security. Click here for other OK Policy blog posts on assets and financial security.

Most Americans recognize the value of savings, yet over time, American savings have declined sharply. Even before the losses incurred during the Great Recession, a large segment of the population in Oklahoma and across the nation had little or no savings with which to weather a setback or move ahead by investing in the future.  According to the 2009-10 Assets and Opportunity Scorecard, nearly one out of every four Oklahoma households (22.7 percent) lacked sufficient financial assets to subsist at the poverty level for three months. Minority households are also disproportionately prone to possess little savings – the asset poverty rate for minority households in Oklahoma exceeds 40 percent and is 2.75 times greater than for White households. Read the rest of this entry »

Saving money for college can have wide-ranging benefits for young people and families. Savings help pay for college expenses, which assists students stay in college and complete their education. Just as importantly, savings can have an important motivational effect in setting expectations that children can and will attend higher education, encouraging them to study harder and boosting educational attainment.

Oklahoma encourages and supports college savings through the Oklahoma College Savings Plan (OCSP), the state’s 529 Plan, which allows families to make contributions to an account for a wide range of educational expenses at any accredited higher education institution. Earnings in a 529 Plan grow tax-free, and Oklahoma allows a state income tax deduction for contributions up to $20,000 per year for couples filing jointly ($10,000 for individuals).  However, participation in Oklahoma’s 529 Plan, like most private savings programs, is very limited among low- and moderate-income households. Data from the Oklahoma Tax Commission shows that less than one out of every eight households claiming a deduction for a state 529 contribution in 2005 had income below $50,000, even though almost three-quarters of all households were in this income category (see the Chart on page 6 of this issue brief). Read the rest of this entry »

It is widely accepted that ownership of assets – a home, savings accounts, stocks and investments, a business – is a cornerstone of family financial security. Assets provide a cushion against temporary setbacks and allow for an investment in greater opportunities and economic success in the future. Government policies have long promoted asset building through a combination of direct expenditure programs and, especially, through preferential tax treatment in the federal tax code of home mortgages, savings account contributions, capital gains income, and other items.  States, too, promote asset building, in large part by “piggybacking” on federal itemized deductions for such items as the home mortgage deduction and property taxes on state income taxes.

A new report from CFED and the Annie E. Cassey Foundation (AECF) calculates annual federal expenditures on asset-building policies to be $384 billion. Of this total budget, ninety per cent of benefits, or $348 billion, is delivered through the tax code, while just 10 percent, or $37 billion, takes the form of direct government expenditures. Most of the latter is in the area of scholarships and grants for post-secondary education. Conversely, the vast majority of the total federal budget in the areas of homeownership, savings and investment, retirement accounts and business developments takes the form of tax credits, deductions, and lower tax rates.

Here’s the thing. These policies to promote savings, investment and ownership primarily subsidize the wealthy, and offer few, if any benefits to low- and moderate-income households. Take, for example, homeownership. According to the report: Read the rest of this entry »

Last week, I had the pleasure of attending the 2010 Assets Learning Conference that brought together over 1,000 participants for three days of plenaries, workshops and sessions exploring approaches to building an economy in which all Americans, including those of limited means, are provided opportunities to achieve household financial security through savings, investment, and entrepreneurship.

As I noted in my blog post reporting on the opening plenary, a major theme of the conference was the notion of “scale” – the need and opportunity to take policies, programs, and products that have been introduced and tested in modest ways up to now and expand them to serve a much greater number and range of individuals and families. In session after session, I learned about innovative practices that are already working at the local level or in pilot programs and that community organizations, government agencies, and financial institutions are gearing up to expand.  Here are just four of the policies, programs and products from the asset building field that seem poised for a larger impact:

• The Bank On Initiative: According to a 2008 FDIC survey,  one in four U.S. households is unbanked or underbanked, which means they do not have a checking or savings account, or rely on high-cost alternative financial services. In 2006, the city of San Francisco, in partnership with banks, credit unions and non-profit organizations,  launched the Bank on San Francisco project to make it easier for the unbanked to get into mainstream banking by providing consumers with  starter accounts and financial education. Building on the success of the San Francisco program and with the active involvement of the National League of Cities, the program has spread to over a dozen cities. The Administration has now proposed $50 million for a national Bank on USA initiative “to promote access to affordable and appropriate financial services and basic consumer credit products for households lacking such access.” Read the rest of this entry »

This week I am participating, along with over 1,000 other delegates from around the U.S. and a dozen foreign countries, in the biannual Assets Learning Conference hosted by CFED in Washington, DC (Click here to follow our Twitter feed from the conference). The conference brings together a genuinely broad range of participants – including community practitioners, policymakers, researchers, public officials, entrepeneurs, and businesspeople –  united by a shared interest in the ways that assets can help create prosperity and expand economic opportunity for all Americans.

In her opening State of the Field address, CFED President Andrea Levere laid out the case for why the assets movement  has reached a defining moment. She argued that an array of programs, policies, products, and financial strategies that the asset-building field has pioneered over the past 30 year are ready to be scaled and to lay the foundation for a more just and inclusive economy. Read the rest of this entry »

Last week, the Census Bureau released new data showing that one in seven Americans, including one out of every five children, are now living in poverty. This week, some one thousand advocates, program directors, community organizers, business owners, policy analysts and researchers are gathering in Washington for CFED’s biannual Assets Learning Conference to discuss emerging ideas for helping children and families achieve economic security and stability.

As part of the conference kick-off, several organizations that are leaders in the asset building field came together yesterday to release a new report, Lessons from SEED, a National Demonstration of Child Development Accounts. The SEED project is a comprehensive initiative, combining policy, practice, and research, designed to explore a national system of savings and asset-building accounts for children and youth. Child Development Accounts, or CDAs, are intended to give children in low-income families a “financial head start” towards economic opportunity by beginning savings from as early as birth. CDAs are generally “seeded” with an initial deposit from public or private funds, after which children and parents are encouraged to contribute to the account, often with the incentive of matching contributions. The accounts provide savings that can later be used as productive investments that provide the pathways to opportunity and security, by paying for college, buying a home, starting a business, or for retirement. Read the rest of this entry »

An front-page USA Today article last week reported that government anti-poverty programs – including Medicaid health insurance coverage, food stamps, unemployment benefits and welfare cash assistance – are now assisting one in six Americans and are continuing to expand.  Anyone who has been following the monthly releases of our Numbers You Need bulletin is unlikely to be surprised by the trends reported by USA Today.  Oklahoma continues to see ongoing growth and record caseloads for Medicaid (just under 695,000 recipients) and food stamps (over 585,000), with fewer individuals receiving cash payments for unemployment benefits (weekly average of 36,000 initial and continuing claims) and TANF (21,640).

It so happened that USA Today published its report the day before the Oklahoma Asset Building Coalition held the first of five regional meetings around the state. These gathering are bringing together a diverse group of stakeholders to talk about  challenges facing low- and moderate-income Oklahomans and strategies for achieving economic security. The meeting began with a presentation on the Oklahoma Self-Sufficiency Standard, a tool for calculating the amount of income that families of different sizes and compositions need to meet their basic household expenses – housing, food, child care, transportation, health care, taxes and miscellaneous – without public or private support or subsidies. For a single working adult with one infant and one preschool child, the hourly self-sufficiency wage is $16.43 an hour in Cherokee County and over $21.63 an hour in Tulsa County. For a two-parent family with kids that age, each working adult would need to make $10.28 an hour in Cherokee County and $12.39 an hour in Tulsa to meet its basic needs. It’s worth mentioning that this is a basic family budget with an austere set of assumptions – it includes no meals out or entertainment, no one-time purchases, no loan payments or money put aside for savings. Read the rest of this entry »

The Oklahoma Asset Building Coalition is hosting a series of regional meetings on asset building strategies for increasing the financial security of families and communities throughout Oklahoma. Anyone working in the private sector, public sector or a non-profit with an interest in how building assets can expand and strengthen economic security is invited to attend these meetings that will be held from 10:00 AM to 2:00 pm, with lunch provided, on the following days:

• Broken Arrow, August 31st;
• Durant, Sept. 14th;
• Oklahoma City, Sept. 28th;
• Lawton, Sept. 29th;
• Woodward, Sept. 30th Read the rest of this entry »

For many of us, the economic events of the past two years have eroded our savings and heightened our sense of economic fragility. Yet for many low- and moderate-income households, savings have long been out of reach. The 2009-10 Assets and Opportunity Scorecard, which OK Policy released in partnership with CFED, revealed that in 2006, more than one in five Oklahoma households was in “asset poverty”, meaning that it had insufficient net worth to subsist at the federal poverty level for three months if income were interrupted, such as due to a job loss. Without savings, any minor setback can turn into a full-fledged crisis. More importantly, perhaps, without access to savings to attend college, buy a home, start a business, or retire, the pathway out of poverty and towards economic security is blocked.

It is for this reason that an important and growing movement of anti-poverty advocates have focused in recent years on ways to support savings among low and moderate-income families. As we discussed in our issue brief, “More than Just Getting By, ” public policies in this country have long encouraged savings, ownership and wealth creation through such mechanisms as the home mortgage deduction and preferential tax treatment of capital gains and college 529 plan contributions. The problem is that most low-income households are not in a position to benefit from the asset building policies embedded in the tax code. As a result, one study found that 45 percent of the benefits from federal asset development policies went to the richest 1 percent of households, while less than 3 percent of the benefits went to the bottom 60 percent of households. Read the rest of this entry »

As the economic downturn continues to take its toll in Oklahoma and across the nation, how financially prepared are families to deal with extended periods of unemployment and underemployment. Newly-released data (PDF) from CFED that focuses on “asset poverty” confirms that many Oklahomans have little or no financial cushion on which to fall back.

Asset poverty is a measure that establishes a minimum threshold of wealth needed for household security:

A household is asset poor if it has insufficient net worth to support itself at the federal poverty for three months in the absence of income. Asset poor households would not have enough savings or wealth to provide for basic needs during a sudden job loss or a medical emergency. Read the rest of this entry »