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The Ladder

A Blog from New America's Asset Building Program

Guest Blog Post: States Fail to Make the Grade When Providing Economic Security

Published:  May 28, 2013
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Editor's Note: This blog post is written by Matt Unrath, Director of National Projects at Wider Opportunities for Women. Matt oversees WOW’s national projects—The Family Economic Security Project, the Basic Economic Security Tables™ Initiative (BEST), the Women and Work project and the Economic Security for Survivors project. He serves as the principal contact for WOW’s state and local partners across the country and represents WOW in national advocacy efforts.

This week, Wider Opportunities for Women released its Economic Security Scorecard, a national report card on how well state policies promote the financial well-being of its residents.

The Scorecard grades and ranks over 80 individual state policy choices (including a state’s minimum wage, EITC, funding for preschool attendance, funding for job training, access to public assistance and unemployment insurance, family paid leave policies, and much more) which fall within 5 basic elements of economic security: income, job quality, education and job training, public supports, and savings and asset building. The Scorecard also examines and grades each state for the affordability of the basic costs of living, such as housing, health care and transportation, for working-age and senior households – an important determinant of households’ ability to make ends meet.

WOW’s research finds that most states fall far short of adequately promoting economic security for working families and seniors. No state earned higher than a B- (Washington State topped the ranking), and most states earned grades lower than a C. Alabama, Mississippi, Tennessee and Utah ranked last with D+.  

The Scorecard measures several state policy areas related to savings and asset building, including whether states institute asset limit tests on public assistance programs, the strength of 529 savings programs, participation in retirement savings programs, consumer protection policies (e.g., regulation of payday loans) and more. Some states score well on a few of these policies, while others perform poorly across the board. Ultimately, the greatest criticism of states’ performance in this area is not just the weakness or inadequacy of current policies, but that there are so few to be graded. States are not distinguishing themselves by advancing innovative strategies for addressing or promoting savings and asset building.

Of course, the economic security of households, and their capacity to build wealth, is not limited to programs labeled as ‘asset building’. A strong minimum wage and effective tax credit policies, access to public assistance,  universal preschool and proper job training, and flexible workplace policies all play a critical role in enabling families to not only make ends meet, but put money away for emergencies, retirement and investment. Those concerned with families’ capacity to build wealth must also consider the strength of these policies.

Drilling down within state and policy area grades, WOW’s research also reveals that state’s efforts to promote economic security on certain fronts can be undermined by other, weaker policies. For example, a state may succeed in expanding unemployment insurance to a greater proportion of their residents, but may replace a lower proportion of their pre-unemployment earnings. In states with stronger minimum wages, workers may still lack job security and access to earned sick time. States’ grades also vary across element areas; states may receive A’s in expanding asset building programs or public assistance but fail in promoting strong educational systems, or vice versa.

This fact reveals one of the Scorecard’s key findings: states are not employing a systematic approach to promoting family or elder economic security. Instead, policies seem to be more likely a result of circumstances and politics. The Scorecard, then, can serve as a valuable tool and guide for lawmakers in employing a more comprehensive economic security strategy, and constructing better policies to meet the needs of their state’s economy and constituencies.

Similarly, a state’s grade on the Scorecard is not strongly related to its budget size, fiscal health, or median income. In other words, the capacity of a state to enact economic security policies is much more a factor of political and public will. In every state – from Massachusetts to Mississippi, and regardless of the size of their tax base or partisan affiliation – lawmakers and citizens have the choice and the power to invest in workers and families and create a future economy based on and driven by good jobs and economically secure families.

Like any grade, those earned in this index assess performance at a specific time based on a specific set of conditions. It is our hope that advocates and policymakers will use the Economic Security Scorecard to target effort and resources to change the policies necessary to improve the economic wellbeing of the families in their state.

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