Fifty Years Since the War on Poverty, We Need an Assets Perspective

Today marks the 50^th anniversary of President Lyndon B. Johnson’s declaration of an “unconditional war on poverty in America.”  The big, predictable question seems to be: so, did we win?

But are we even on the same battlefield?

The short answer is no. Since the 1960s, our understanding of poverty has evolved and changed dramatically – and it’s time to apply a more modern perspective to our solutions.

Today, 50 years after President Johnson’s speech and nearly 25 years since Michael Sherraden published Assets and the Poor, we’ve learned a few things about the role of assets and savings as an anti-poverty tool.  Assets support economic mobility and respond to a multiplicity of needs across the life course – and can have a true intergenerational impact. We’ve learned that access to savings, even in small amounts, can enable low-income families to look beyond their immediate needs and plan for the future, and provide a crucial buffer against income shocks. We’ve learned that children with savings accounts are far more likely to attend college. We’ve learned the importance of stable housing for children’s health and development, and the necessity of reliable transportation for finding and keeping a job.

Most fundamentally, and perhaps most importantly, we’ve learned that building wealth is not just for the wealthy, and that asset building policies actually matter most for families who have less. And research has shown that families with low incomes can and do save, if provided with the type of supportive structures and incentives wealthier families have long enjoyed.

But we’ve yet to fully apply these lessons – and it shows.  Income inequality is staggering, but wealth inequality is even worse, and racial wealth disparities have grown significantly over the past few decades. Due largely to the shift from traditional pensions to 401(k)s, millions of workers, especially at the lower end of the income scale, have little to no retirement savings. Support for short-term, flexible use savings is non-existent, leaving many Americans at risk of facing overwhelming debt in the event of an emergency.

The next generation of the War on Poverty should add these findings to its arsenal. We need a tax code that provides incentives for all families to develop resources, rather than one that disproportionately benefits those at the very top. We need an automatic, universal retirement savings system to connect more low-income workers with opportunities to save, as well as a mechanism to encourage savings right at tax time. And we need a strong safety net that promotes saving and opportunity, rather than requiring families to live on the edge of financial disaster.    

Going forward, we need to consistently apply an assets lens to our anti-poverty efforts to truly achieve President Johnson’s vision of a policy framework that “give[s] our fellow citizens a chance to develop their own capacities.” Over the next week, we’ll be taking a more in-depth look at some of the ways that assets matter for mobility, education and household resilience.