America’s second-largest minority is probably not what you think.

It’s low-income workers. More than one in four working Americans is low-income according to the Census Bureau, even though on average they are working the equivalent of 1¼ full-time jobs.

To help these families, most of our social programs have focused on the income side of the equation, providing benefits to help families meet basic needs. But the history of prosperity clearly shows that what these families need is help overcoming their “asset poverty.” Education, small-business ownership and homeownership are what ultimately lift people out of poverty.

Given that, it’s encouraging that President Barack Obama has been talking up the Savers’ Tax Credit as he previewed his State of Union address. The Savers’ Tax Credit would provide a boost to low-income earners who are already saving and would make it easier for millions of Americans to save for a secure retirement.

This initiative is particularly important now, during the most severe economic downturn in a generation in which low-income earners have been especially hard hit.

But the Savers’ Tax Credit is only the beginning of what should be a very concentrated focus on the financial lives of low-income Americans.

With the landscape for employment shifting permanently away from well-paid manufacturing to other 21st-century industries, low- to moderate-income Americans will have to rely on critical assets such as a post-secondary education and other larger investments to negotiate the economic transition and to position themselves for future economic mobility.

None of that is possible unless there are opportunities for these Americans to save money. Yet, these opportunities are unevenly and sparsely available in the U.S.

The Savers’ Tax Credit is an excellent idea that should be accompanied by financial management training and should be among a range of financial products made available to low-income earners.

Matched savings accounts, for example, should also be among the financial products made available to low-income earners. Matched savings accounts that are specifically tailored to low-income American families would enable them to save, build assets and ultimately thrive in the financial mainstream.

With matching funds drawn from a combination of private and public sources, current versions of matched savings accounts have successfully helped tens of thousands of low-wage workers pursue post-secondary education and small-business growth, and even purchase a first home (with most keeping these homes).

These matched accounts also come with in-depth financial education courses that help savers continue to manage their money long after the matching savings comes to an end.

The concept of matched savings accounts, ideally offered by the private sector, is consistent with other programs that have been some of the greatest generators of wealth for average Americans in the history of our nation. From the G.I. Bill to the creation of the 401(k) and Roth IRA, our nation has been deliberate in choosing tools that help Americans build wealth — and prosperity has followed for those able to enjoy these government-led efforts.

Data show that matched savings accounts are good social and economic investments.

Savers with matched accounts were 35 percent more likely to own a home, nearly twice as likely to attend college and 84 percent more likely to own a business. Even more impressive, for each federal dollar invested in matched accounts, five dollars were pumped back into the national economy in various forms. In an environment where the Obama administration is focused on recouping billions of dollars in bailout funds, it is hard to argue against this kind of ROI.

Financial products like matched savings accounts should have bipartisan appeal. These wealth-building tools propel the efforts of hardworking families aspiring toward prosperity and security.

Our nation should meet them halfway to ensure the integrity of the American Dream.

Ben Mangan is president, CEO and co-founder of EARN, and Camille Busette is vice president of EARN.

This Op-Ed was published in AOL News.

OK, I’ll admit it. I am one of those people the president was talking about. If you have read any of my writings, you know that I am anchored by my optimism. But in the dark, rainy days of January in soggy San Francisco, I have been feeling crestfallen after so much hope in what an Obama presidency could mean to this country, uncertain that any real change was possible.

But last night’s State of the Union address moved me — back towards a place of hope. The president’s emotional, smart address positioned him to move from great orator to a visionary, populist reformer — reflected through making good on the policies he put forward. If you support Obama, the afterglow of a masterful speech, which drew legislators from both sides of the aisle repeatedly to their feet, makes it hard to imagine just how challenging it will be to give life to the many policies he proposed.

President Obama thinks we should have the government we deserve. Let’s earn something worthwhile.

One of his most compelling statements should tip us off to just how hard this will be. The president declared:

“…I refuse to pass this problem on to another generation of Americans…” He was speaking on one particular issue, but clearly feels this way about the ocean of economic and social ills that plague our nation. The president has said recently that one good term in office is better than two safe terms in which he failed to solve the greatest problems we face as a nation. This speech made that claim even more credible for me.

And this insistence to do the right thing is at the heart of the problem for Obama. You see, not everyone feels the same way. In fact, there are some who would say Washington is mostly filled with people who’d cut their granny’s prescription drug benefits to either secure their next election, or make partner at their lobbying firm.

But there are people in Washington who feel as Obama feels. And good people who vote in states around the nation, who agree with the president when he said:

“Generations of Americans were unafraid to do what was hard.To do what was needed even when success was uncertain. To do what it took to keep the dream of this nation alive for their children and their grandchildren…”

The president repeatedly hit upon the theme of Americans getting the government we deserve. To deserve the kind of change the president described — change that will ensure the integrity of the American Dream and America’s most important values — we, as a people must do our part and hold our elected officials accountable. For Democrats, this means ensuring that our representatives don’t turn and “run for the hills,” as the president quipped. For Republicans, it means demanding that legislators engage in good faith negotiations to find the middle ground on key proposals like health care, debt reduction and tax cuts.

Please, Mr. President, stick to your guns and gird for the fight you face to make good on your word. Embody the strength and resiliency you cited among the Americans surviving these very hard times. There are millions of Americans — as decent and strong as you described — ready to support you.

CFED, a DC based think-tank with roots in the Bay Area has published their bi-annual Scorecard for Assets and Opportunity. With unemployment running over 12% in the Golden State, it’s hard to look beyond the traditional measures of prosperity. But as I have written about in past entries, we have to consider assets - like owning homes, college degrees, small businesses, and increasingly, health insurance - to fully understand how economically secure we are as individuals and as a state.

CFED (a long-time partner to my nonprofit EARN)has a team of researchers who methodically pull apart and grade the policies in every state. This analysis provides an invaluable view on how state policies create or restrain the creation of assets - and by extension - economic opportunity.

How did California do? A big fat C.

What do you think our grade should be? How do you believe state policies on business ownership, homeownership, health insurance and education impact your own personal prosperity? Cast your vote in the poll below.


As always, I will report back on the results.

Given the many current conversations about the plight of the California Dream, it shouldn’t be a surprise that we didn’t fare well. Personally, I’m surprised that the grade was this high. Have a look at the complete scorecard for California.
The scorecard also has a breakdown of different policy areas - and in some of these, California scored well according to CFED’s measures. In other areas, like homeownership policy? An unsurprising F.

As I ponder what this C means, there are several phrases that come to mind - cruddy policy, and constant crisis are a few. But being the optimist I am, I’m trying to focus on constructive criticism. Sometimes bad news is the first step toward something good. Here’s hoping I’m not cuckoo.

Last September I had the opportunity to participate in a working group tasked with identifying legislative and administrative strategies that encourage CalWORKs clients to take full advantage of the Earned Income Tax Credit (EITC) and asset building programs that can help move families toward long term self sufficiency. This working group is the outcome of AB 1078 (Lieber), an EARN sponsored bill which was enacted in October 2007.

Policy recommendations presented by stakeholders at this working group have been compiled in a recently released report prepared by California Department of Social Services and has been presented to the Governor and legislature.

Recommendations made at this working group include:

• Change the CalWORKs program rules regarding savings to allow clients to save more money and to allow the savings to be used for varying purposes.
• Connect and encourage CalWORKs clients to take advantage of VITA sites, which offer free tax preparation service and connect people to the Earned Income Tax Credit.
• Connect clients to organizations that provide asset-building programs like Individual Development Accounts and other matched savings programs.
• Encourage county agencies to provide money management training and seminars.
• Provide financial education resources in multiple languages for non-English speaking clients.

The country is watching as California law makers attempt to balance the state’s staggering 26 billion dollar budget deficit. Just as the unemployment rate rose to a record 11.5% in May 2009, Governor Arnold Schwarzenegger revealed an aggressive plan to solve the budget deficit by reducing state spending for virtually all departments receiving state funding: Education, state workers, Health and Human Services, State Parks, Local Governments, and Corrections. From the perspective of supporting low-income families who have been especially hard hit during this recession, the most alarming aspect of this budget crisis is the severe cuts in funding for the department of Health and Human Services, which is the state department that administers safety net programs.

Two plans emerged to close the budget deficit, one proposed by the governor and the other approved by the Democratic-Controlled Conference Committee. This is a snapshot of the two proposals as it relates to safety net programs.

As part of a larger plan to reduce state spending, the governor proposed to eliminate funding for core programs like CalWORKs and Healthy Families, while the Democratic-Controlled Conference Committee tried to retain these programs by reducing benefits and limiting certain components to the most needy. CalWORKs is the states welfare-to-work program, which helps move low-income families out of poverty by helping unemployed parents find work, underwriting child care, and providing cash assistance as they move toward self-sufficiency. Healthy Families is a program that provides affordable health insurance to very low income children. Millions of low-income Californians who are already struggling to make ends meet in this tumultuous economy now face added uncertainty about their future as vital safety net programs shrink or are eliminated.

During economic downturns safety net programs play an essential role in helping stabilize low-income households and preventing moderate-income households from spiraling downward. When low-income households receive job assistance, affordable health insurance, or child care, they are better positioned to begin saving and moving out of poverty. If households living at or near the federal poverty line lose benefits that supplement their income, they are left to make difficult trade-offs among basic necessities like food in lieu of health insurance. California’s growing ranks of low-income households face a turbulent future as they deplete their savings, fall into greater debt, bankruptcy, and perhaps even face homelessness to get by in this high cost state. This is harmful to the well being of children and their prospects for economic mobility.

Before the current recession, poverty rates were already high in California. The Working Poor Families Project reports that 32% of children in the state were raised in low-income working household in 2006; meaning, nearly one third of children in California come from households that earned less than $41,228 a year for a family of four. The number of children and families in poverty is probably much higher now given the mounting foreclosure and unemployment rates in the state. Recognizing the vital role safety net programs play in stabilizing families during economic downturns, the federal government enacted the American Recovery and Reinvestment Act in March 2009. This landmark bill sends billions of dollars to states to protect safety net and asset-building programs. By cutting funding for safety net programs, our state leaders are not only walking away from billions of federally matched dollars but they are also allowing millions of families to slide deeper into poverty.

California should not radically rewrite its social contract at a time when families face more economic uncertainty and require more help than ever. Our state leaders should, instead, consider solutions that involve increasing revenue to bridge this budget shortfall. According to Peter Orszag, Director of the Office of Management and Budget, and Nobel Laureate Joseph Stiglitz, “… tax increases on higher-income families are the least damaging mechanism for closing state fiscal deficits in the short run.” New Jersey’s recently approved budget has enacted this advice by temporarily raising personal income tax on wealthy families, earning more than $400,000 a year. Additionally, they are increasing taxes on cigarettes and alcohol. A growing number of prominent individuals and groups like the Center on Budget and Policy Priorities, Economic Analysis and Research Network, Nobel Laureate Paul Krugman, and 200 Economists from various parts of the country are urging state leaders to protect safety net programs and raise taxes to bridge budget deficits if necessary.

Yesterday, President Obama released his detailed budget for FY 2010.

In addition to healthcare reform, efforts to strengthen the economy and strategies to decrease the national deficit, the President has more than doubled funding for some programs and fully funded new programs that provide economic opportunity to low-and moderate-income Americans.

The budget supports asset-building by allocating:

• $24 million for Assets for Independence, the federal program that funds Individual Development Accounts (IDAs).
• $5 million for the Beginning Farmer and Rancher IDA Program, this is a new program with full funding.
• $25 million for microloans as well as support for technical assistance programs that give entrepreneurs access to counseling and business development expertise.
• $7 million to make Pell Grant funding mandatory and increase as well as index maximum awards.
• $2.5 billion Access and Completion Incentive Fund, a new five-year program to support innovative state efforts to help low-income students succeed and complete their college education.
• $2 million to pilot housing counseling program.

Within the next two years, the budget also proposes to expand the Earned Income Tax Credit, make the American Opportunity Tax Credit for higher education permanent, expand Child Tax Credit, and increase retirement security through auto enrollment.

We are especially pleased to learn that the administration has expressed an interest in working with Congress to revise asset limits for federal means-tested programs. It also takes steps to reverse the system of upside-down wealth subsidies by capping the mortgage interest, property tax and other deductions at 28%.

Advocates can learn more about this tremendous opportunity to promote policies that help low-income families build and maintain wealth by attending a webinar hosted by CFED. Click here to learn more and register.

For more information on the budget, click here.

The gap in income between the wealthiest Americans and all others has grown considerably in recent decades. According to a new report released by the Center on Budget and Policy Priorities, between 1979 and 2006 the income gap between the rich and the poor tripled. A growing body of data suggests greater income concentration at the top than at any time since 1929.



Regressive federal tax polices are partially responsible for this growing inequality. The report cites that legislation enacted under the Bush administration have provided tax payers with about 1.7 trillion in tax cuts through 2008. These large tax reductions have made the distribution of after-tax income more unequal. In fact, high-income households received by far the largest tax cuts—not only in dollar terms but also as a percentage of income—the tax cuts have increased the concentration of after-tax income at the top of the spectrum.

State leaders can begin to address the widening income and wealth gap by:

• Creating state funding for Individual Development Accounts, a successful program that provides incentives for low-income families to save and build wealth.

• Establishing a State Earned Income Tax Credit (EITC) which supplements earnings of low-wage workers by reducing their tax burden.

• Funding microenterprise support programs that can provide entrepreneurs with skills necessary to successfully establish a microenterprise or small business.

• Eliminating asset limits in public benefit programs. States have full discretion to eliminate the asset test that families are required to undergo in order to qualify for public assistance like CalWORKs, Food Stamps, Medical and more.

The widening income gap threatens the promise of the American Dream, the belief that if you work hard and play by the rules then you can move up the economic ladder and live the American Dream of owning a home and enjoying financial security. If the United States is to remain the land of opportunity then policy makers must consider these policy solutions.

To download the report click here: Income Gaps Hit Record Levels In 2006, New Data Show Rich-Poor Gap Tripled Between 1979 and 2006

APIC has recently released a new white paper entitled American Dream 2.0: Safe and Sound First-Time Homeownership Strategies for Working Families in California. This paper offers a series of actionable strategies on homeownership policy for California’s business, nonprofit, and government leaders. At the Assets and Homeownership Symposium, APIC and the Federal Reserve Bank of San Francisco convened thought leaders across sectors and industries to engage in a conversation that lead to some of the strategies outlined in this report.

Despite the turmoil in the state’s housing market, we believe there are innovations in the asset-building field for renters, in lending for first-time buyers, and in employer-sponsored benefits, all of which have successful homeownership track records. This year we hope to see California’s leaders seize this moment and take a thoughtful approach to how the state responds to the current crisis. We believe the American Dream 2.0 on homeownership innovations can help further this conversation.

President-elect Barack Obama has announced the creation of a White House Task Force on Working Families. His announcement comes at a crucial time when nearly 23 million families are at risk of falling out of America’s middle class, according to a Demos study. The task force will be a major initiative targeted at raising the living standards of middle-class, working families.

Some of the goals for the task force include:

• Expanding education and lifelong training opportunities
• Restoring labor standards, including workplace safety
• Helping protect middle-class and working-family incomes
• Protecting retirement security

“President-elect Obama and I know that economic health of working families has eroded, and we intend to turn that around” said Vice President-elect Joe Biden, who will be the chairman of this task force. In addition to producing annual reports, we are pleased the task force will function in a transparent fashion where outside groups have the opportunity to chime in.

How would you define the point at which a family is poor in this country? How about in San Francisco? Most people are shocked when they learn how the federal government measures poverty. If you’re unfamiliar with this number you too will be shocked. Especially if you are a Californian.

According to the Feds, a family of three has to be earning under $17,600 per year to be poor. Let’s put this into perspective: The average family income in San Francisco is $94,000 per year, according to HUD, and the average is about $50,000 per year for the entire United States. But there is no allowance to adjust poverty levels locally. In addition to being unfair, this is unreasonable.

The Federal Poverty Rate is an absolute dinosaur of policy tool. It might even be funny if its obsolescence didn’t make it so harmful for tens of millions of poor Americans. Mayors across the nation have long bemoaned this discrepancy – because it has shortchanged cities of cash they’ve needed to serve the huge number of poor people the federal government won’t recognize, due to where the poverty line rests.

But it appears local efforts at redefining a definition of poverty, by Mayors, has created some new momentum at the national level.

A September 1st, 2008 NY Times article describes a meaningful, bi-partisan effort in Congress to redefine the poverty line. According to the article, “Democrats and Republicans alike say [the federal policy level] is hopelessly outdated…This month, Representative Jim McDermott, the Democrat from Washington who is the chairman of the House subcommittee on income security, plans to introduce legislation that would require the government to develop a more modern and accurate method to determine who is poor.” For more click here.

What is now unclear is how the staggering $700 billion price tag on the bailout package might make reasonable legislators think twice before they expand the universe of people who become eligible for federal aid.