Fifty Years into the War on Poverty, the New Battle is for Economic Mobility

Last week, Aleta Sprague set the tone for our asset-based reflections on the 50th anniversary of the War on Poverty. Much has changed since the 1960s – so much, she concluded, that we’re not even on the same battlefield. Yet we’re still fighting with the same, old weapons in a new and challenging theater. When Lyndon Johnson declared war on poverty, he mobilized the best forces available at the time: school funding, a stronger minimum wage, health insurance, a comprehensive social safety net. The new programs that emerged from this commitment have improved the lives of millions of Americans over the decades and have contributed to significantly reducing poverty. 

But as we know, the battlefield has changed. Research shows that just helping certain people edge over the poverty line isn’t enough to break the cycle of poverty. The fight now is for economic mobility: giving everyone an equal chance to build wealth, develop financial security, and attain lasting self-sufficiency. The problem is that the methods employed in the War on Poverty are ill-suited for this new fight. Though the programs serve an essential function in our society today by preventing millions of families from falling further into poverty, the programs’ inordinate emphasis on income alone means that wealth building is at best neglected and at worst discouraged. What policymakers overlooked throughout the development of these programs was that mobility is assets. Income is crucial for survival, but assets are indispensable for climbing the economic ladder.
 
We have come to realize over the past fifty years that the hard work of lifting families out of poverty for the long-term and making them upwardly mobile takes more firepower than income supports alone can provide. This is where assets come in. Economic mobility is most accurately measured by a family’s change in asset holdings, not by income earned. Income never tells the whole story about a family’s economic condition. If liabilities like crushing college debt, an underwater mortgage, and past-due credit-card bills consume the lion’s share of a family’s income, it hardly matters what the raw figure representing total family earnings is.
 
Wealth, on the other hand, is the difference between liabilities and assets. It’s a measure of a family’s economic security. It’s also a measure of prosperity, and it’s how we can tell if a family’s improvements in economic mobility are here to stay. We take it to be a shared goal, for example, that people in their advanced years should be able to live for a decade or two or three and enjoy retirement without earning anything. That’s the kind of economic success we say people should strive for – and it’s made possible through a strong commitment to building assets. Income may be a means to an end, but it’s not the goal itself.
 
And yet government policy has been painfully inept at fostering this kind of asset building among all families. Few supports exist for low-income families working towards building the level of assets necessary for a secure retirement. The pro-saving programs in place like the 401(k) and the IRA offer almost no benefit to those at the bottom of the wealth ladder, and the very public assistance programs designed to help families at the bottom often actively discourage saving and asset building through strict asset limits.
 
If our poverty-fighting programs are to achieve the long-term goal of fostering upward mobility as opposed to solely the short-term goal of facilitating immediate consumption, we must pivot the emphasis of key programs towards an assets approach. We should eliminate asset limits and design pro-savings policies that actually help low-income families. The Financial Security Credit is one such idea. Removing barriers to saving is an obvious first step, but designing policies to actively promote savings among low-income and low-wealth households would transform our government programs into a powerful force for upward mobility.