Assets and "The Other America"

Earlier this week, Demos held a great conference commemorating the fiftieth anniversary of Michael Harrington’s The Other America. The conference coincided with the publication of The American Prospect’s new issue focusing on poverty. During his introduction, Demos President Miles Rapoport acknowledged that the one-day event could not and would not be a comprehensive account of poverty in America; in fact, he specifically noted that there would not be any presentations focusing on the asset-building approach. Nevertheless, throughout the day, panelists touched on some core themes of the asset building field, particularly with respect to two areas of focus: investment in early childhood and the role (and limitations) of job creation in reducing poverty.

Several presenters noted that children now make up the largest percentage of Americans in poverty, which is reflected in Demos’ new data visualization. 26.1% of children under five are living in poverty, compared to a national average of 15.2%. Some of the statistics are even more startling; for example, 2.8 million children live in households reporting an income of less than two dollars a day (though this figure is reduced by half when taking into account SNAP income). In the last panel of the day, focusing on education, the presenters described how there are very early appearances of differences between children in low-income families and those in middle- or upper-income households. For example, Wendell Hall, Deputy Director for the Institute of Higher Education Policy, described how by the age of three or four, kids in families with higher incomes have a vocabulary about three times as large as their low-income counterparts. Likewise, Larry Aber of NYU discussed the tremendous effects of growing up in poverty on the brain and nervous system. Living in poverty elevates children’s stress hormones, which in turn makes it more difficult to regulate attention and behavior. Consequently, Aber recommended greater investments in the first three or four years of life.

Recent key research in the asset building field has reached similar conclusions about the psychological ramifications of poverty—and the correlative effects of having access to assets— and the importance of early interventions. On the most basic level, having resources saved up and accessible can mitigate the circumstances of poverty by allowing families to put food on the table and provide basic necessities, thus maintaining children’s health and development. Among families that experience a job loss or health condition that limits their ability to work, at least forty percent of liquid-asset poor families reported increased hardship, such as food insecurity or inability to pay bills, but for families that had liquid assets, this number was below twenty percent. Additionally, Willie Elliot has written extensively about how awareness of funds set aside for higher education at an early age can trigger “college-bound identity,” which in turn inspires the type of behavior and school performance that would make this identity actionable. Dana Goldstein’s recent article “The ‘Assets Effect’” highlights some of this research, describing the “powerful aspirational effect” that a college savings account can have. The creation of a universal children’s savings account, seeded at birth and with matching funds according to income level, would be one large-scale way to establish these college-bound expectations and counter the psychological consequences of poverty, which is the goal of the ASPIRE Act.

Second, a primary focus of the conference was, understandably, on the economy and job creation. A closely related but distinct concern was the quality of the jobs in the market; half of the jobs currently available in the U.S. pay less than $34,000 a year, and many low-wage workers don’t receive benefits or paid time off. Meanwhile, the social safety net has eroded since welfare reform, particularly with respect to cash assistance; in Wyoming, for example, a mere six hundred people are receiving TANF. Panelists emphasized the need for greater skills development, investment in healthcare jobs, and support for unionization and collective bargaining rights.

Nevertheless, as noted in the Asset Building program’s recent event “Jobs Are Not Enough,” severe economic conditions existed for the lower and middle classes long before the job losses of the Recession, and more long-term, structural solutions will require policies that help families save for the future. Between 1990 and 2007, average household debt grew from 77% of disposable income to 127%. The Recession compounded the situation by triggering a drop in median family wealth of 40%. Adding jobs alone, or even increasing the average wage, won’t create the type of resilience that families need to weather future economic downturns or personal emergencies; these types of interventions need to be supplemented by policies that will help families save. Despite its focus elsewhere, this idea was not lost during the conference; during one of the panels, Eugene Steuerle of the Urban Institute called attention to the need for a comprehensive approach to fixing the labor market that includes promotion of asset building.

“Fifty Years Since the Other America” was an excellent and well-attended event that featured a range of important (albeit sobering) conversations about the extent of our progress to work to end poverty over the past several decades. These efforts will continue to require collaboration from individuals and organizations working across disciplines. Asset building’s primary contributions are policies that would help families build wealth and disrupt the cycle of intergenerational poverty. For a description of some of the most promising of these policies, check out Reid Cramer’s recent article, The Assets Agenda.