The Ladder

A Blog from New America's Asset Building Program

Asset Building News Week March 18 - 22

Published:  March 22, 2013
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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 public assistance, employment, inequality, and personal finance.

Public Assistance

In a lengthy Washington Post article this week, the plight of low-income families in Woonsocket, Rhode Island served as a poignant example of the importance of SNAP benefits for many communities struggling with a lack of jobs in a down economy. The article follows low-income SNAP (food stamp) recipients and the businesses that serve them to draw attention to the “boom-and-bust cycle” of many local communities that rely on government assistance. Many businesses in the region such as independent grocers and supermarkets, some of which provide jobs to the very working poor population they serve as customers, count on the influx of government assistance at the beginning of each month to keep their businesses operating. Yet despite the obvious importance of these crucial government programs, some states are considering rules that would make them harder for families to get. Pennsylvania’s governor, for example, is considering the reinstatement of the commonwealth’s asset limit for food stamps, which could force some struggling families with minimal assets to lose access to nutritional support. At the federal level, a decades-old law that prohibits people convicted of drug felonies from ever receiving SNAP benefits or TANF assistance was featured in an editorial in the New York Times. Though states can opt out of the strict rules (and many do), the Times’s editorial board recommends completely clearing the rules because they are counterproductive and harmful to families and children.

Not surprisingly, perhaps, a recent survey by Demos shows the persistent (and understandable) pessimism among a large majority of low-wage workers who see their dire financial situations not improving in the present economy. On the more positive side, Hawaii’s legislature is considering a bill that would allow the state to join the now more than half of states around the country in offering a state Earned Income Tax Credit (EITC). The measure would help mitigate the effects of the “two-pronged economic spear” on the middle class in the state: “indiscriminately high taxes on one end and the nation’s highest cost of living on the other.” If the law passes in the state, the newly eligible citizens of Hawaii would be well served to heed the advice of a Canadian doctor who suggests a “prescription” for tax returns for low-income people.

In addition to the Washington Post’s up-close-and-personal look at the lives of the working poor in Woonsocket this week, the New York Times featured a beautiful and compelling photo essay on the life of a poor family in Orlando. Both articles offer important individual-level counterweights to the ivory-tower, philosophical debate about the moral obligation of the state to provide for its citizens now raging at the highest levels of American government. Steven Pearlstein, writing in the Washington Post, calls it a “war over morality” between supporters of the free market for its own sake and those advocating government’s role in providing for its neediest citizens.

Employment

Milwaukee Public Radio shares stories of the long-term-unemployed members of the middle class in that region who are unable to find work even for which they are overqualified and whose unemployment insurance has long since run out. As bad as that sounds, a recent report by the Wall Street Journal suggests that this demographic group may not have it as bad as so-called “Gulf War II era” veterans (Iraq and Afghanistan), who experience significantly higher unemployment rates than the larger population. Still, as a group of Huffington Post bloggers observe, “there is no current discussion in Washington DC over a basic right to employment.” The authors point to the 1978 Humphrey-Hawkins Act that authorized Congress to offer government-sponsored work in times of high unemployment. To their evident dismay, Congress has never made use of this provision, even in times like these when it could be of so much help.

Inequality

On the 50th anniversary of the well-known Supreme Court case, Gideon v. Wainwright, which mandated legal representation for the indigent, Colorlines reflects on the decision’s not-so-successful legacy. The article notes that a large majority of defendants who would benefit from greater access to quality legal representation are of color, the very population that is intended to benefit from the Equal Employment Opportunity Commission (EEOC) under greater scrutiny recently by Representative Elijah E. Cummings, the top Democrat on the House Oversight and Government Reform Committee. A report found that government agencies are not doing enough to ensure equal opportunities for employees of color. Inequality of a different, though related, kind was discussed in a Huffington Post Blog that pointed to the drastic wealth inequality in a single county in Maryland. Despite being one of the richest counties in the nation by median income, Montgomery County experiences high rates of food insecurity and poverty, largely along racial lines. There are also growing signs of an “aid gap” for post-secondary schooling that leads to education disparities between those that can afford it and those that can’t. The issue is especially problematic for those interested in certificate programs that offer more structured and specific job training because of the unavailability of financial aid like Pell Grants for these kinds of professional programs. Besides the wealth gap, income gap, aid gap, and opportunity gap between the rich and poor, The Atlantic ventures an explanation for the reasons behind the “charity gap,” a term that describes the much higher giving rate of low-income people compared to the rich as a percentage of income. The poor give nearly three times as much, it turns out.

Retirement

America is on track for “the greatest retirement crisis in American history,” according to Ted Siedle at Forbes. The collision of millions of Baby Boomers reaching retirement at a time of tightening budgets and a weakening safety net means a greater likelihood of millions of older adults falling into poverty in their retirement years. Marketplace has a similar message, offered under an ironic header, “How to retire on just $25,000 in the bank.” The radio program doesn’t actually recommend retiring on such a paltry sum, but rather glumly admits that retirees will have to “work longer, save more, and expect less” in retirement. The pessimistic report was based on a recent issue brief by the Employee Benefit Research Institute. This was a popular topic this week, with Rick Ungar also commenting at Forbes, Marketwatch, U.S. News and World Report, and others reacting.

Personal Finance

If you missed our event this week with author and journalist, Helaine Olen, check out the full coverage here. We've got the full event recorded and a shorter follow-up conversation in the form of a podcast.

A report published yesterday by the Center for Responsible Lending follows up on a 2011 study of bank payday lending. The current report details the recent developments in the on-going problem and reveals that every bank that offered them in 2011 is still offering them. The loans are harmful to consumers because of their exorbitant interest rates (APRs above 225 percent) and the leverage the banks have to withdraw money directly from a borrower’s bank account. The New York Times comments on and summarizes the report. Ironically, the day before this report was released, Marketplace produced a story that outlined the policies of some big banks that could actually help rein in payday lenders by refusing to allow predatory lenders to directly withdraw funds from a borrower’s account. In one bright spot for personal finance, Pew reports that young adults appear to be reducing their debt holdings by rates faster than their parents’ generation, despite high unemployment rates for that age group.

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