California prides itself on being the land of opportunity. It is a place where people from across the nation and around the world have joined together, generation after generation, to achieve their dreams and create the promise of continued opportunity for future generations. This legacy was built on hard work, ownership,entrepreneurship, and a great deal of sacrifice.
Today, this legacy faces major challenges. Jobs are less secure, family incomes are more volatile, college costs are rising sharply, and job-based systems of health insurance and retirement are disappearing. Currently, over 30 percent of California households are asset poor, meaning they do not have adequate personal savings to subsist for three months at the poverty level if their income were to stop unexpectedly. They have no cushion against a financial emergency caused by the loss of a job, a disabling accident, or unexpected medical bills. But in crisis comes opportunity: the opportunity to renew thrift as a central value and virtue in California and create new paths for saving and financial security.
Financial security and mobility depend not just on one’s job and income, but increasingly on one’s ability to accumulate a wide range of assets. Broad asset ownership has the potential to connect opportunity with economic security and ensure that every member of society has a real stake in the commonwealth. Families accumulate assets in different forms and proportions: a savings account, a college degree, a skilled trade, a stake in a small business, a college savings plan, a retirement pension or nest egg. But assets of all kinds provide common benefits. They provide a buffer against family financial emergencies, they offer an opportunity to produce income and accumulate wealth, and they promote psychological well-being and civic engagement.
This policy paper provides six asset building and protection policy recommendations to begin addressing these issues in California.