The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include poverty in politics, financial services, and asset poverty.
Poverty in Politics
Earlier this week, the Romney campaign aired a television ad accusing Obama of “gutting welfare reform by dropping work requirements.” Among many others, Deborah Weinstein, Executive Director of the Coalition on Human Needs, points out that the Obama administration has not gotten rid of work requirements, but instead has allowed states more leeway in determining which welfare programs are the most effective while still promoting employment “entry, retention, advancement, or access.”
In this lengthy New York Times Magazine piece, Paul Tough explores Roseland, a neighborhood in Chicago, which has been struggling with increasing poverty since the 1950s. President Obama worked as a community organizer in this area during the late 1980s, before leaving to attend Harvard law school. The article discusses Obama’s presidential commitments to communities like Roseland, along with his resulting successes and failures in achieving the initial goal of “cutting poverty in half in 10 years.”
California’s Bank On program is growing, reports the Sacramento Bee. Since 2008, 214,000 low-risk bank accounts have been opened through the Bank On model. In 2009, the FDIC estimated that 1 million California families remained unbanked. Having a bank account provides financial stability, as well as insurance against cash theft or natural disasters destroying money stored at home. Alana Golden, spokeswoman for the state Department of Financial Institutions, also points out that a bank account makes paying bills and saving easier.
Other states have also seen success in their Bank On programs, including Kentucky. Bank On Louisville reports 10,144 new accounts opened since the program’s launch in July 2010. The Bank On model partners local banks and credit unions with non-profits, thereby linking service providers with those in need of financial products. Mayor Greg Fischer stands behind the program, stating, “The innovative partnerships created by Bank On Louisville are working to improve the financial well-being of individuals and the entire community. Financially stable families help to create stronger neighborhoods, which in turn lead to stronger communities and new economic opportunities.” An estimated 76,000 households in Kentucky remained unbanked or underbanked.
According to a new study by the Greater New Orleans Foundation, Center for Enterprise Development, and the Ford Foundation, “37 percent of New Orleans households would not be able to survive for more than three months without falling into poverty if their main source of income were disrupted.” The vulnerability described here is also known as asset poverty. While asset poverty has, not surprisingly, increased since the recession, the struggle for asset development among many American families has been more long term. In addition, 24 percent of New Orleans families exhibit “extreme asset poverty,” or a lack of any assets.
City leaders are optimistic, however, in their efforts to improve the financial wellbeing of the city. Some of these efforts include encouraging employers to eliminate paper checks in favor of savings accounts with direct deposit. In addition, there are also plans to use regulatory powers such as zoning in order to keep the concentration of payday loan and check cashing businesses in lower income communities at a minimum.
A new study shows that most Americans understand that there is an income gap, but widely underestimate its size. When asked to estimate wealth concentrations, most guessed “around 9% for the bottom (40% of the population) and 59% for the top (20%).” In actuality, “the bottom 40% of the population has only 0.3% of the wealth, and the top 20% has 84%.” Most of the 5,522 study participants were in favor of a much smaller wealth gap, in which 32% of wealth was concentrated in the top quintile of the population while 11% of wealth resided with the bottom quintile.
Jordan Weissman for The Atlantic looks at the relationship between employment and education level during and since the recession. While many college graduates struggled, he writes, “a degree is pretty much the only reasonable insurance policy you can buy in this economy.”