Asset Limits

The much-anticipated official poverty rates for 2008 are out and they are not pleasant. According to the US Census Bureau, the percent of Americans living in poverty increased to 13.2. Nearly nine percent of Whites, 12% of Asians, 23% of Hispanics and 25% of Blacks make up the 40 million people who were living in poverty last year.

Almost one out of every five children living in this country fell into that category. Not only 19% of Americans 18 or younger but 12% of adults aged 18 to 64 and 10% of seniors aged 65 and over were identified as poor. The Brookings Institution expects poverty to rapidly rise through 2011 and 2012.

As depressing as these statistics are, this is not the time to lose hope. They lend timely perspective to current efforts to advance policies that provide low income Americans with the tools and incentives to build their personal savings.

In California's tough economic times, even small savings can go a long way for a low-income family. Assemblymembers Jim Beall and Felipe Fuentes are working hard to make sure that CalWORKs families have the opportunity to set aside savings that can help them cushion financial emergencies and become financially self-sufficient.

On Tuesday, the California Senate Human Services Committee passed Assembly Bill 1058 (Beall & Fuentes). The California Workforce Mobility Initiative (AB 1058) repeals the $4,650 vehicle asset limit for recipients and applicants and eliminates the $2,000 cash asset limit for recipients. Also, it allows applicants to have $2,000 in savings adjusted to the California Necessities Index.

If enacted, AB 1058 would help CalWORKs families build the savings necessary to become financially self-sufficient through work. It will also save the state $3 million dollars in administrative staff time, according to the Assembly Appropriations Committee. This money is otherwise spent conducting quarterly tests to verify that the families are indeed asset poor. States that have eliminated the asset test report a savings and no fraud cases.

The recession has undoubtedly shifted a lot of paradigms lately, and I think all would agree that it's gotten Americans to sit up and take notice-- both individually (challenging their own habits of consumption and saving) and societally (coping with cracks in the safety net system).  The New York Times has taken notice, as well-- two articles in this weekend's Times merit mention.

The first (Shift From Spending to Saving May Be Downturn's Lasting Impact) highlights the re-emergence of a culture of thrift-- and indicates that, unlike past recessions, it's here to stay for a while:

Today the LATimes published an article I wrote on the need to exclude cars from consideration when determining a family's eligibility for public assistance (for Ladder followers this should sound familiar).

sneak peak:

With the relationship between car ownership and employment so clearly documented, California should be working hard to provide low-income families access to a reliable car. And, in some areas, they do get help. Sacramento County, for example, is authorized to purchase 50 vehicles a year for county welfare recipients who lack access to public transit. If we're helping some families buy a car, wouldn't it make sense, then, to let people who have cars keep them?

Check it out. And if you're a California resident, call your state reps and make sure they are supporting AB2368.

Breaking news -- Asset limits to be reformed in the Food Stamp Program!

The conference committee formed to work out differences in the House and Senate versions of the 2007 Farm Bill has included provisions to reform asset limits in the food stamp program-- an issue championed by Chairman Harkin (D-IA) and Ranking Member Chambliss (R-GA).

The Farm Bill, if passed unchanged by the full House and Senate, will officially exclude savings in IRAs and 529 college savings accounts from consideration in determining eligibility for food stamp assistance.  

What's more, the existing asset limit, which is set at 2,000 for most families and has only been increased once since the late 1970's, will be indexed to inflation to prevent further erosion.

This is a tremendous victory for the entire assets community.  I'd especially like to recognize the Corporation for Enterprise Development, the Center on Budget and Policy Priorities, and the Retirement Security Project, who we've worked closely with to educate policymakers and push for change.

Last week I had the privilege of discussing asset building for lower income Americans in three very different settings: the annual Opportunity Economics Colloquium of the Hope Street Group, held at the Lansdowne Resort outside of Washington; an Assets Forum sponsored by the New America Foundation in the State Capitol in Sacramento, California; and with a group of financial services, social service and foundation representatives brought together by the City of Seattle. While the settings and audiences varied, the theme was the same: how to empower and encourage all Americans, particularly those who do not have funds either to cushion an economic setback or to invest to achieve economic security, to take sustainable first steps toward saving. Given the current financial crisis, one wishes these discussions had started ten years ago, but that same crisis makes it all the more important that they're happening now.

Imagine you are an unemployed single mother of two. In an effort to feed your kids-and keep a roof over your heads-you drive your ten year old beat-up Honda accord down to the local department of social services to apply for welfare.

After filling out a mountain of paperwork, the caseworker gives directions to some local employers that may be hiring. One catch though - you want the check to feed your family, you're gonna have to sell that car. Ya know, that car that you use to go to the grocery store, transport your kids, and....i dunno....get to work?!