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The Ladder

A Blog from New America's Asset Building Program

Asset Building News Week, November 5-9

Published:  November 9, 2012
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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 Hurricane Sandy, inequality, retirement, employment, and financial education.

Hurricane Sandy

The devastating effects of hurricane Sandy, compounded with this week’s nor’easter, continue to be felt across the Northeast. As reported by many news agencies, and addressed last week on this blog, the weather’s harmful effects have been felt especially acutely by low-income populations. The Wall Street Journal reminds us that “wealthy New Yorkers were generally safe during the storm, while poorer residents tended to be vulnerable.” Wealthy Manhattanites of the Upper East Side maintained a relative state of normalcy during and after the storm, while poorer residents of Brooklyn’s Red Hook, Queens' Far Rockaway, and people living on the lower parts of Manhattan remain without electricity or heat. WNYC reports, for example, that parts of the East Village, the site of hard-hit public housing projects, have no heat, no hot water, in some cases no running water at all, and many of the buildings continue to be flooded, preventing crews from restoring energy and services to the buildings. In response, NYC Mayor Bloomberg has appointed a housing recovery chief to serve as a point of contact for needy residents. In the longer term, FEMA has announced new robust rental assistance programs for affected families, which offer rental assistance of 125% of HUD’s determined Fair Market Rates. The assistance will be provided for three months to aid in the recovery effort. A similar program to help homeowners, which would freeze foreclosures in affected areas, has also been proposed. An unfortunate aspect of many post-storm recovery efforts, price gouging is becoming a serious problem in hard-hit areas of New Jersey. The state’s Division of Consumer Affairs has been inundated with complaints and is actively working to eliminate the effects of such predatory tactics on the fragile recovery effort.


Josh Freedman, of New America's Economic Growth program, published a fascinating, exploratory article last week on the actual effectiveness of widely-favored tax breaks to achieve their purported purpose of helping the middle class. These tax expenditures, including those for mortgage interest deductions and tuition credit, are thought to embed policies favorable to the middle-class into the tax code, but the Atlantic argues instead that the current tax code represents one of “the most regressive and least efficient middle-class welfare states possible.” Though many economists disagree over the supposed economic benefits of inequality (“a rising tide lifts all boats”), most economists are beginning to agree that, whatever its benefits under certain circumstances, it is never good when the poorest have little or no access to opportunity. And that equality of opportunity is less and less a part of the social fabric of the U.S. A recent conference at Brandeis University’s Heller School for Social Policy and Management explored the argument that the war on poverty is being lost, and a new study from the Urban Institute (reported by Virginia Commonwealth University’s Project on Social Distress) shows the intergenerational effects of poor educational attainment: a parent's educational attainment is more predictive of childhood poverty than employment or household status. Furthermore, a new study traces the psychological effects of poverty to the ingrained, cognitive tendency of low-income people to save less even when they have the resources, or even when the currency to save is virtual, as in a video game. On an individual level, a local paper from rural northwest New York state offers a compelling story about the hardships of a working-poor family living on $30 worth of food per week as they navigate a society hostile to recipients of government assistance programs. Finally, the Atlantic explores the pattern of women living in poorer situations than men in developed countries around the world. The gap is wider than average in the U.S.

Retirement and Employment

While inequality remains at record levels, the hopes of today’s workers for future wealth creation and retirement security are bleak. Young workers just entering the workforce are struggling to get ahead, while their prospects for pensions and other secure retirement options fade away. Many national corporations like IBM and Verizon have discontinued their pension plans for new workers, the Washington Post reports, putting more responsibility on the new worker, who also faces higher education costs and rising student debt. Kodak, which recently filed for bankruptcy, received approval by a bankruptcy court to cancel its promised pensions and long-term health-care plans for loyal former employees, who may now lose their life savings with nothing else to fall back on. Adding to the financial woes of today’s workers, the Society Pages puts a different spin on the supposedly good news of rising employment nationwide: while jobs continue to be added to the economy, average hourly earnings for those positions are dropping.

Financial Education

The Center for Financial Services Innovation (CFSI) commenced its ninth Underbanked Solutions Exchange meeting in Huntsville, Alabama this week. That state has an especially high unbanked population (10.2%) compared to the national average (8.2%), but in line with the rates of the unbanked in the south as a region (10%). South Carolina saw a decrease in its unbanked population recently, which the Charleston Regional Business Journal attributes to successful financial literacy campaigns by local credit unions and bankers associations. Forbes calls for more such efforts to educate Americans about financial capability, which have proved their effectiveness in places like South Carolina. By comparison, our neighbor to the north seems to be doing a better job at raising awareness of personal finance issues: it’s financial literacy month in Canada. The Minister of State for Finance in Canada, Ted Menzies, describes the awareness month as “an opportunity to raise awareness on the importance of acquiring life skills that can allow Canadians to act knowledgeably and with confidence when managing their personal financial affairs.” One would hope that a similar initiative would be just as successful at raising awareness in the U.S. In the meantime, other efforts are being made to improve financial capability domestically, like a program in Chicago, described by WBEZ, that aims to improve the credit scores for lower-income Americans, or a program in Yuma, Arizona, sponsored by the Family Self-Sufficiency Program, that helps residents gain self-sufficiency, start on the right track towards homeownership, and achieve their citizenship.

Quick Hits

New America's Early Education team published a post on their guesses and hopes for a second Obama term.

We are now accepting guest blog submissions for the Ladder! Read more here and consider submitting a post.

Check out "In Between His Lines" a New America podcast which features the reactions of some of our experts as they listened to President Obama's election night speech.

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