Legislation
It has been a big week in the asset building field, as legislation has moved forward at the state and national levels. Deirdre Shesgreen reported on the House passing the ABLE Act on Wednesday: “The measure would allow people with disabilities to set up savings accounts — with no tax on the earnings, similar to 529 college savings accounts — to cover housing, transportation and other expenses.” These accounts would permit people with disabilities to build a financial cushion without jeopardizing their Medicaid and Social Security eligibility due to asset limits.
Wednesday also saw the introduction of new legislation to reform asset limits and support Children’s Savings Accounts. Ezra Levin of CFED gave an overview of the bill: “Rep. Matt Cartwright (D-PA) and Rep. Reid Ribble (R-WI) introduced the CSA Opportunity Act. This bipartisan legislation would eliminate savings into 529s and other CSAs from the asset tests for the main federal mean-tested programs. In short, the legislation would allow families on welfare to save for their children’s future without fear of losing the essential benefits that help them make ends meet today.”
At the state level, the Illinois General Assembly passed the Secure Choice Savings Program, the nation's first state-based, automatic enrollment retirement plan for workers who are not offered a plan by their employer. Reid Cramer, Director of the Asset Building Program at New America, described the policy as a “bold step to build greater financial inclusion and economic security for [Illinois’s] entire workforce.” The bill provides access to IRAs to 2.5 million workers in Illinois who are currently left out of the federally subsidized retirement savings system.
Education
Socioeconomic status is directly correlated with educational achievement. Students from low-income families graduate from secondary and post-secondary schools at lower rates than their peers with higher socioeconomic backgrounds. Matthew Lynch, author of “The Call to Teach” reported that “students from low-income families are 2.4 times more likely to drop out than middle-income kids, and over 10 times more likely than high-income peers to drop out.” The Atlantic’s Phillips Matthew weighed in on the subject, noting that while there is a near universal consensus that economic equality will be driven by reform of the education system, the “system is itself only an offshoot of an increasingly class-driven society.” Richard Reeves of the Center on Children and Families as Brookings gave insight into this chicken or the egg quandary: “I think the danger is that an unequal society can become a stratified society, and that inequality can begin to perpetuate itself almost automatically.”
Racial Segregation
New research on racial segregation and poverty was published this week. Neil Shah of The Wall Street Journal explored the findings of a Brown University study on racial sorting in suburban America. The study found that “suburban blacks and Hispanics live in much higher-poverty neighborhoods than non-Hispanic whites and Asians—even when they earn the same or even more.” According to the research, “black and Hispanic households making over $75,000 a year live in neighborhoods with a higher poverty rate than white households earning less than $40,000.” A study by researchers at the University of California, Berkeley, provides deeper understanding into the effects of this kind of sorting. The research linked income inequality to mortality rates, finding an inverse relationship between black Americans, who experience higher mortality rates, and white Americans. "This tells us that racial segregation has a significant impact on both income inequality and health inequality among blacks, but not among whites," said Nuru-Jeter. "For blacks, addressing the negative impact of racial segregation will be important for improving overall population health."
Blake Nicholson and Nedra Pickler reported on a new initiative by the Obama Administration called Generation Indigenous that aims to better prepare young American Indians for college and careers. The White House also released a report Wednesday acknowledging the failure of federal policy to address needs of young Native Americans.
Quick Hits
The New York Time’s Patricia Cohen wrote on increasing rates of financial volatility among low- and middle-income families.
Derek Thompson of The Atlantic reported on falling wages among young people and its impact on their economic behavior.
Bloomberg’s Matthew Philips covered the jobs report: “November saw the strongest pace of hiring in nearly three years as businesses added 321,000 jobs to their payrolls last month.”
