America’s second-largest minority is probably not what you think.

It’s low-income workers. More than one in four working Americans is low-income according to the Census Bureau, even though on average they are working the equivalent of 1¼ full-time jobs.

To help these families, most of our social programs have focused on the income side of the equation, providing benefits to help families meet basic needs. But the history of prosperity clearly shows that what these families need is help overcoming their “asset poverty.” Education, small-business ownership and homeownership are what ultimately lift people out of poverty.

Given that, it’s encouraging that President Barack Obama has been talking up the Savers’ Tax Credit as he previewed his State of Union address. The Savers’ Tax Credit would provide a boost to low-income earners who are already saving and would make it easier for millions of Americans to save for a secure retirement.

This initiative is particularly important now, during the most severe economic downturn in a generation in which low-income earners have been especially hard hit.

But the Savers’ Tax Credit is only the beginning of what should be a very concentrated focus on the financial lives of low-income Americans.

With the landscape for employment shifting permanently away from well-paid manufacturing to other 21st-century industries, low- to moderate-income Americans will have to rely on critical assets such as a post-secondary education and other larger investments to negotiate the economic transition and to position themselves for future economic mobility.

None of that is possible unless there are opportunities for these Americans to save money. Yet, these opportunities are unevenly and sparsely available in the U.S.

The Savers’ Tax Credit is an excellent idea that should be accompanied by financial management training and should be among a range of financial products made available to low-income earners.

Matched savings accounts, for example, should also be among the financial products made available to low-income earners. Matched savings accounts that are specifically tailored to low-income American families would enable them to save, build assets and ultimately thrive in the financial mainstream.

With matching funds drawn from a combination of private and public sources, current versions of matched savings accounts have successfully helped tens of thousands of low-wage workers pursue post-secondary education and small-business growth, and even purchase a first home (with most keeping these homes).

These matched accounts also come with in-depth financial education courses that help savers continue to manage their money long after the matching savings comes to an end.

The concept of matched savings accounts, ideally offered by the private sector, is consistent with other programs that have been some of the greatest generators of wealth for average Americans in the history of our nation. From the G.I. Bill to the creation of the 401(k) and Roth IRA, our nation has been deliberate in choosing tools that help Americans build wealth — and prosperity has followed for those able to enjoy these government-led efforts.

Data show that matched savings accounts are good social and economic investments.

Savers with matched accounts were 35 percent more likely to own a home, nearly twice as likely to attend college and 84 percent more likely to own a business. Even more impressive, for each federal dollar invested in matched accounts, five dollars were pumped back into the national economy in various forms. In an environment where the Obama administration is focused on recouping billions of dollars in bailout funds, it is hard to argue against this kind of ROI.

Financial products like matched savings accounts should have bipartisan appeal. These wealth-building tools propel the efforts of hardworking families aspiring toward prosperity and security.

Our nation should meet them halfway to ensure the integrity of the American Dream.

Ben Mangan is president, CEO and co-founder of EARN, and Camille Busette is vice president of EARN.

This Op-Ed was published in AOL News.

OK, I’ll admit it. I am one of those people the president was talking about. If you have read any of my writings, you know that I am anchored by my optimism. But in the dark, rainy days of January in soggy San Francisco, I have been feeling crestfallen after so much hope in what an Obama presidency could mean to this country, uncertain that any real change was possible.

But last night’s State of the Union address moved me — back towards a place of hope. The president’s emotional, smart address positioned him to move from great orator to a visionary, populist reformer — reflected through making good on the policies he put forward. If you support Obama, the afterglow of a masterful speech, which drew legislators from both sides of the aisle repeatedly to their feet, makes it hard to imagine just how challenging it will be to give life to the many policies he proposed.

President Obama thinks we should have the government we deserve. Let’s earn something worthwhile.

One of his most compelling statements should tip us off to just how hard this will be. The president declared:

“…I refuse to pass this problem on to another generation of Americans…” He was speaking on one particular issue, but clearly feels this way about the ocean of economic and social ills that plague our nation. The president has said recently that one good term in office is better than two safe terms in which he failed to solve the greatest problems we face as a nation. This speech made that claim even more credible for me.

And this insistence to do the right thing is at the heart of the problem for Obama. You see, not everyone feels the same way. In fact, there are some who would say Washington is mostly filled with people who’d cut their granny’s prescription drug benefits to either secure their next election, or make partner at their lobbying firm.

But there are people in Washington who feel as Obama feels. And good people who vote in states around the nation, who agree with the president when he said:

“Generations of Americans were unafraid to do what was hard.To do what was needed even when success was uncertain. To do what it took to keep the dream of this nation alive for their children and their grandchildren…”

The president repeatedly hit upon the theme of Americans getting the government we deserve. To deserve the kind of change the president described — change that will ensure the integrity of the American Dream and America’s most important values — we, as a people must do our part and hold our elected officials accountable. For Democrats, this means ensuring that our representatives don’t turn and “run for the hills,” as the president quipped. For Republicans, it means demanding that legislators engage in good faith negotiations to find the middle ground on key proposals like health care, debt reduction and tax cuts.

Please, Mr. President, stick to your guns and gird for the fight you face to make good on your word. Embody the strength and resiliency you cited among the Americans surviving these very hard times. There are millions of Americans — as decent and strong as you described — ready to support you.

Earlier this month, Governor Arnold Schwarzenegger signed and vetoed a number of bills that aim to strengthen consumer protection, improve access to health care, and strengthen access to education.

Bills signed into law:

Consumer Protection and Accountability

• AB 260 (Lieu)will rein in mortgage brokers by requiring them to act in a borrower’s best interest and prohibit them from steering borrowers to loans with worse terms than other loans they qualify for.
• AB 1160 (Fong) will require mortgage lenders to provide translated mortgage summary documents to a borrower in the language in which it was negotiated.
• AB 119 (Jones) will prevent HMOs and insurers from charging men and women different rates for the same health insurance policies in the individual market.
• AB 329 (Feuer) requires lenders to give more and clearer information to those interested in reverse mortgages, which let seniors borrow again their homes’ equity.

Access to Health Care

• AB119 (Jones) prohibits health insurers from charging different premiums to women than to men.
• AB 108 (Hayashi) imposes a two-year time limit in which insurers have to rescind, cancel or limit individual health policies based on fraud.
• AB 359 (Nava) will make modern breast cancer screening available to low-income women. This measure will increase access to digital mammography in publicly supported breast cancer screening programs.
• AB 119 (Jones) will prevent HMOs and insurers from charging men and women different rates for the same health insurance policies in the individual market.

Access to Higher Education

• AB 669 (Fong) authorizes the University of California, the California State University, and community colleges to classify foster youth or low-income student as a resident for tuition purposes until her or she has resided in the state for the minimum time needed to become a resident.
• AB 1393 (Skinner) requires the University of California, the California State University and California Community Colleges to give priority for on-campus housing to emancipated foster youth.

Employment Access

• AB 287 (Beall) establishes a committee to examine strategies and incentives that increase employment and microenterprise opportunities for people with developmental disabilities.

Bills vetoed:

Consumer Protection and Accountability

• SB 20 (Simitian) would have required financial privacy security breach notices t inform potential victims of identity theft about the nature of the breach, and to include contact information for credit reporting agencies.
• AB 943 (Mendoza) would have prohibited a prospective employer from using consumer credit reports in the hiring process unless the report is related to job duties.

Access to Health Care

• AB 98 (De La Torre) would have required most insurers to cover maternity services. This is the third time Schwarzenegger has vetoed this bill.
• AB244 ( Beall) would have mandated most health insurers to provide coverage for all diagnosable mental illnesses.

California is taking important steps towards strengthening consumer protection, particularly in housing. We commend the legislature and the Governor in leading this effort. The picture in health access is mixed with some marginal improvements and some lost opportunities. There were also some positive improvements in educational access and interesting developments to study the employment and microenterprise opportunities in the state for people with disabilities.

“If you work hard your whole life, you ought to have every opportunity to retire with dignity and financial security,” stated President Obama in his weekly address on September 5, 2009. In the same speech, Obama announced new bold initiatives to expand the range of choices for workers who want to save for retirement.

The new initiatives will:

• Expand opportunities for automatic enrollment in 401(k) and other retirement savings plans
• Make it easier for more than 100 million families to save a portion or all of their tax refunds
• Enable workers to convert their unused vacation or other similar leave into additional retirement savings
• Help workers and their employers better understand the available options for tax-favored retirement saving through clear, easy-to-understand language.

We commend President Obama and Secretary Tim Geithner for their leadership in promoting financial security for millions of Americans who do not have access to a retirement plan at work.

A growing body of research indicates that adequate health insurance coverage is a key component of family financial security. In 2007, 62% of all bankruptcies were related to medical debt and approximately half of all mortgage foreclosures in the following year were also caused by medical debt or illness. This means, families without health insurance are an illness away from asset poverty as medical bills can quickly consume a lifetime of savings.

The recently released, Assets and Opportunity Scorecard, gave California a “D” grade because of the high levels of uninsured children and adults in the state. An Asset Support Center brief explores emerging opportunities as well as efforts underway to expand health insurance coverage at the county and state level.

CFED, a DC based think-tank with roots in the Bay Area has published their bi-annual Scorecard for Assets and Opportunity. With unemployment running over 12% in the Golden State, it’s hard to look beyond the traditional measures of prosperity. But as I have written about in past entries, we have to consider assets - like owning homes, college degrees, small businesses, and increasingly, health insurance - to fully understand how economically secure we are as individuals and as a state.

CFED (a long-time partner to my nonprofit EARN)has a team of researchers who methodically pull apart and grade the policies in every state. This analysis provides an invaluable view on how state policies create or restrain the creation of assets - and by extension - economic opportunity.

How did California do? A big fat C.

What do you think our grade should be? How do you believe state policies on business ownership, homeownership, health insurance and education impact your own personal prosperity? Cast your vote in the poll below.


As always, I will report back on the results.

Given the many current conversations about the plight of the California Dream, it shouldn’t be a surprise that we didn’t fare well. Personally, I’m surprised that the grade was this high. Have a look at the complete scorecard for California.
The scorecard also has a breakdown of different policy areas - and in some of these, California scored well according to CFED’s measures. In other areas, like homeownership policy? An unsurprising F.

As I ponder what this C means, there are several phrases that come to mind - cruddy policy, and constant crisis are a few. But being the optimist I am, I’m trying to focus on constructive criticism. Sometimes bad news is the first step toward something good. Here’s hoping I’m not cuckoo.

I suppose I should not be surprised. More than 75% of voters in my poll said they really did believe that renting was the new American Dream. After all, San Francisco is a city of renters (and dreamers), and the poll results below are close to the distribution of residents who own compared to those who rent.

The question of how much we should incent renting versus owning is among the most supercharged political lightning rods in the Bay Area. Accordingly, I received a range of comments from a readers, friends and colleagues.

Dennis O’Brien sent me a message wondering whether the huge subsidies we have for homeownership (including, as he pointed out, the temporary $8k incentive for home purchase in the stimulus bill) distort the market.

Nathan Nayman sent me this link to a Rasmussen Reports poll showing that 59% of Americans think buying a home is the best investment a family can make.

I know that Rasmussen polls often reflect a more conservative point of view. But these poll numbers would be unsurprising to me even if they had come from a source known to lean toward the left. I still see a very strong desire to buy homes among the thousands of families that we serve at EARN.

I heard from many folks who work in real estate. Many of them believe the results of this poll reflect the incredible frustration many Bay Area residents feel over the difficulty of buying a home.

The range of comments I received, combined with the overwhelming poll results, reminded me of a Rorschach test. None of the polls I post on this blog have any real scientific value. But they are legitimate reflecting points about mood and perspective.

This conversation will continue to rage as the economy, and our collective view of our futures continue to evolve.The poll results could mean that we are clear that huge mistakes were made in the way we shaped homeownership opportunities through public policy and market structure. The poll results may reflect deep frustration and resignation over how difficult it is to buy homes here. These results could mean that one really frustrated reader voted again and again 300 times to make a point (see my previous point). I’m quite curious to see what you think these poll results mean.

It would be a huge impediment to upward mobility among working class people if we, as a nation, downgraded the importance of homeownership. Before I go any further, let me make a few things clear. I’m not one of those people who hate renting. I have lived in rental housing for virtually my entire life, and it has suited me just fine. I didn’t own a home until 5 years ago. I have nothing against renting, and believe it is the right choice for anyone who makes that choice. It’s also the right choice for anyone who can’t really afford to buy a home.

Affordable rental options must remain an important part of creating prosperity for low and moderate income workers. But I believe that homeownership is an especially powerful sparkpoint for Americans. Particularly for moderate income workers who do homeownership right - with fixed rate, long term financing, and a realistic plan to pay the full cost of ownership.

Achieving the dream of homeownership is the kind of life-changing experience that galvanizes people of modest means to continue driving toward successes that had previously seemed impossible - like graduating from college, or beginning to save for retirement for the first time ever. In the case of homeownership, there are also strong corollary benefits - it can lead to greater civic participation, and it seeds economic success for the children who live in homes owned by their parents.

Have you noticed the growing chorus around the nation, questioning whether homeownership should still be the cornerstone of the American Dream? It would be tragic if the institution of homeownership were the baby thrown out with the particularly fetid bathwater brewed by the mortgage mess.

Should renting really be the new American dream?

How the engine of homeownership ought to be built, and ought to run is one of our most important national conversations. I don’t propose to have the answers to these questions here. I’m just making a case to keep ownership as one of our cornerstones for prosperity. I certainly agree that we need to align the carrots and sticks of policy and market power properly, so we don’t drive people to make poor choices when it comes to buying homes.

But let’s not move all the carrots toward renting. For millions of Americans who have moved into the middle class, homeownership was the catalyst in a formula for creating multi-generational prosperity for families. Success begets success. And the success of homeownership led millions of these folks to make choices they would not have had they not owned homes.

When done properly (and it can be done well. EARN, and groups like us, have astonishingly low foreclosure rates among our clients - far smaller than the national average) homeownership helps grow aspiration. It can make other dreams come into focus for folks who buy homes - especially people experiencing upward mobility for the first time.

What do you think? Do you believe in this formula I’m arguing for, or do you think this is just alchemy? Make your voice heard by voting in the poll below. As usual, I promise to blog on the results!

Postsecondary education is one of the most effective vehicles to help low-income earners escape poverty and promote upward mobility. However, a gap continues to exist between the promise of higher education and the rate at which low-income individuals pursue college education. Only one-third of families in the bottom income quintile enroll in college and of those only a portion actually graduate.

A recent report by the Economic Mobility Project finds that many low-income students miss out on college simply because they do not have good information about how financial aid can significantly reduce the cost of tuition. The report, Promoting Economic Mobility by Increasing Post Secondary Education, identifies the factors that are essential to boosting college enrollment and graduation rates of low-income students. Additionally, it lays out a plan to help enhance economic mobility particularly for those students.

In California, tools are being developed to help more low-income students’ access higher education by bringing together two worlds - postsecondary education and nonprofit organizations that offer Individual Development Accounts (IDAs). This project is led by the University of Southern California School of Education which aims to help educational leaders identify ways to collaborate with nonprofit agencies to increase the usage of education IDAs.

You can download the recently published report here: IDA-PAYS: Examining the Potential of Education IDAs

IDA practioners and financial aid administrators may also be interested in: IDAs and Financial Aid: Understanding the Puzzle and Sharing Best Practices.

Also, if you are a higher education or IDA leader interested in offering IDAs or improving your current education IDA program, download: New Strategies in Delivering Education IDAs: Rethinking Program Design.

Last September I had the opportunity to participate in a working group tasked with identifying legislative and administrative strategies that encourage CalWORKs clients to take full advantage of the Earned Income Tax Credit (EITC) and asset building programs that can help move families toward long term self sufficiency. This working group is the outcome of AB 1078 (Lieber), an EARN sponsored bill which was enacted in October 2007.

Policy recommendations presented by stakeholders at this working group have been compiled in a recently released report prepared by California Department of Social Services and has been presented to the Governor and legislature.

Recommendations made at this working group include:

• Change the CalWORKs program rules regarding savings to allow clients to save more money and to allow the savings to be used for varying purposes.
• Connect and encourage CalWORKs clients to take advantage of VITA sites, which offer free tax preparation service and connect people to the Earned Income Tax Credit.
• Connect clients to organizations that provide asset-building programs like Individual Development Accounts and other matched savings programs.
• Encourage county agencies to provide money management training and seminars.
• Provide financial education resources in multiple languages for non-English speaking clients.