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.

Postsecondary education is one of the most effective vehicles to help low-income earners escape poverty and promote upward mobility. However, a gap continues to exist between the promise of higher education and the rate at which low-income individuals pursue college education. Only one-third of families in the bottom income quintile enroll in college and of those only a portion actually graduate.

A recent report by the Economic Mobility Project finds that many low-income students miss out on college simply because they do not have good information about how financial aid can significantly reduce the cost of tuition. The report, Promoting Economic Mobility by Increasing Post Secondary Education, identifies the factors that are essential to boosting college enrollment and graduation rates of low-income students. Additionally, it lays out a plan to help enhance economic mobility particularly for those students.

In California, tools are being developed to help more low-income students’ access higher education by bringing together two worlds - postsecondary education and nonprofit organizations that offer Individual Development Accounts (IDAs). This project is led by the University of Southern California School of Education which aims to help educational leaders identify ways to collaborate with nonprofit agencies to increase the usage of education IDAs.

You can download the recently published report here: IDA-PAYS: Examining the Potential of Education IDAs

IDA practioners and financial aid administrators may also be interested in: IDAs and Financial Aid: Understanding the Puzzle and Sharing Best Practices.

Also, if you are a higher education or IDA leader interested in offering IDAs or improving your current education IDA program, download: New Strategies in Delivering Education IDAs: Rethinking Program Design.

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.

Recent Census Bureau data finds that incomes declined and poverty increased for low -and middle - income Californians in 2007.

This reversal in trend is exacerbated by steadily increasing unemployment rate. In July 2008, California’s unemployment rate reached 7.3% —the highest level in 12 years. That’s not all; to cope with the current economic downturn, employers are cutting workers’ hours. This has profound implications in a state where nearly 29% of its households are asset poor - in other words, living paycheck to paycheck. Because many households lack the savings necessary to weather unexpected financial emergencies like job loss, we are seeing more and more families turning to public assistance programs like CalWORKs, Food Stamps, and Healthy Families program to make ends meet.

As California faces what many economists expect to be an extended period of slow economic growth, it seems our state’s workers and their families have little to celebrate this Labor Day.

To learn more, download California Budget Project’s new report, Labor Day 2008: Little to Celebrate.

A new documentary produced by the California Reinvestment Coalition (CRC) entitled “Mo’Money, Mo’Money, Mo’Money” shows how foreclosures destroy the dreams of California families and threaten the stability of small businesses, city governments, and neighborhoods.

The film reveals how this disaster could have been avoided if regulators and government officials had not ignored predatory lending practices.

California accounts for a quarter of all foreclosures in the country and seven of the state’s cities are consistently in the list of top ten foreclosure rates in the nation. Earlier this year, seven bills were introduced in the California legislature to address the mortgage foreclosure crisis. Despite strong support from community groups, the legislature only passed one meaningful bill.

To view the documentary and learn more click here.

California fares poorly—receiving an overall “C” grade—in the 2007-2008 Assets and Opportunity Scorecard, a biannual report released by the national Corporation for Enterprise Development (cfed). This report presents a comprehensive look at wealth, poverty, and the financial security of families on a national and state level. The 50 states, along with the District of Columbia, are assessed on 46 performance measures in five major areas: financial security, business development, homeownership, healthcare, and education.

According to the report, California is at the forefront of small business development, receiving an “A” grade for Business Vitality. However, California still has a long way to go in areas of asset poverty, homeownership, and access to health care. For example, California ranked:

• 39th in asset poverty
• 50th in affordability of homes
• 51st in median mortgage debt
• 49th in homeownership rates
• 42nd in percentage of uninsured low-income children
• 39th in percentage low income parents without health insurance

Overwhelming new data for the golden state indicates a need for:

• More asset-building saving programs
• State earned income tax
• A public health insurance programs to cover all low-income residents
• Eliminating asset limits on public benefit programs such as CalWORKs and MediCal

Grim data such as this is just the beginning if legislatures and advocates fail to respond to California’s growing insecurity.

Matt Fellowes from the Brookings Institution argues that it costs a lot to be poor. Fellowes notes that low-income communities pay a high premium for financial services simply because mainstream banks and credit unions effectively ceded this market to high-cost financial institutions. You can read more about the consequences of such neglect here.

Yet another aspect of financial neglect is the fact that financial institutions are not developing competitive products to meet the needs of low-income communities. Take payday lenders for example. Payday lenders provide loans and charge the most that they can charge according to state law. In California, the law allows payday lenders to charge up to 459% APR. So, what’s the incentive for payday lenders to provide competitive products that would drive down such costs? None. They can charge top dollar. Why change that? As long as competition from banks and credit unions is kept at bay - and state law is not changed - business for payday lenders is, well, good.

Slowly, this may be changing. A report by the Woodstock Institute release earlier this year notes that some credit unions are developing products to compete with payday lenders. Indeed, competition may well be what drives down the high-cost of being poor. But until all banks and credit unions jump in and compete, life for neglected borrowers will continue to be more expensive.