Financial Inclusion

Poverty, Inequality, Mobility, Oh My!

November 21, 2011
How are families really doing since the Great Recession? That's a question we're going to try to answer at an event tomorrow.
A flurry of new data are calling attention to the pervasive poverty and growing inequality that are markers of the post-recession economy. According to a recently released supplementary measure from the U.S. Census Bureau, 49.1 million Americans were living in poverty in 2010. The Congressional Budget Office reports the income gains made during times of economic growth were heavily concentrated at the top 1 percent of the distribution scale. While the income picture is bleak, some have countered that trends in mobility, rather than income, are the best indicator of economic health. What about trends in and the impact of wealth inequality? 

Tomorrow we're going to explore the strengths and weaknesses of these different approaches to learn how families are really doing, and how we might design more effective public policies.

RSVP to join us in person on Tuesday, November 22nd at 3:30pm.

The event will also be webcast live and speakers will be taking questions from our online audience during the event via email and Twitter. Please send questions or comments to or Tweet them @AssetsNAF.

Podcast: Wealth Inequality and Occupy Wall Street

November 17, 2011

In this podcast, Reid Cramer, director of the Asset Building Program at New America, describes the new dynamics of inequality that emerged in the wake of the Great Recession and have given rise to the Occupy Wall Street movement.  Without dramatic changes to the housing market and policy efforts designed to get families out from under the overhang of debt, significant wealth inequality will persist for years to come. This is particularly apparent when recognizing  the staggering growth of the racial wealth gap. Today, November 17th, marks the two month anniversary of the protests, which should be applauded for initiating a national conversation about equality, mobility, and opportunity.

Comments on Treasury’s Financial Access Activities

November 17, 2011
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On Monday, the New America Foundation Asset Building Program submitted comments to the U. S. Treasury’s Office of Financial Education and Financial Access (OFEFA) on its financial access activities.

The Asset Building Program Comments on Treasury’s Financial Access Activities

November 16, 2011

On November 14, 2011, the Asset Building Program of the New America Foundation submitted a response to the U.S. Treasury’s Office of Financial Education and Financial Access (OFEFA) request for feedback on its financial access activities.

Oregon Asset Builders' Conference 2011

November 15, 2011
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Last week I had the opportunity to participate in the 2011 Oregon Asset Builders' Conference, which convened a range of practitioners working in the field. Topics ranged from applying behavioral economics to poverty reduction to developing a youth targeted IDA program. I was perhaps most excited about a hands-on session I attended on financial education and children where I used glitter glue and construction paper for the first time since elementary school.

Recovery and Resiliency

November 14, 2011

CASA of Oregon, Neighborhood Partnerships, and NeighborWorks Umpqua hosted Rebuilding the Path of Opportunity: An Oregon Asset Builders' Conference on November 9-10. Rachel Black presented "Recovery and Resiliency" at a plenary exploring the landscape of policy options to expand savings opportunities among lower-income households from the local to the national level. In the presentation, she gives a federal policy perspective and argues that helping households build financial resiliency through savings should be a core part of the economic recovery agenda.

Culture or Policy?

November 11, 2011

That's a question I waved at in a post yesterday about the Equity Summit 2011, specifically in reference to the roots of the massive inequality of wealth we see in the US. I wrote:

The Equity Summit 2011

November 10, 2011
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I just returned from Detroit where I was happy to attend part of The Equity Summit 2011 (#equity11 on twitter). There were more than 2000 people in attendance and an excellent group gathered to discuss economic security including colleagues of ours from CFED, CBPP, the Insight Center, Aspen Institute and many many more. I wanted to take a minute to point out one of the big highlights of the event which was yesterday's plenary featuring Geoffrey Canada and Shaun Donovan.

Beyond Barriers

  • By
  • Pamela Chan,
  • New America Foundation
November 14, 2011

Every cloud has a silver lining. In the case of the Great Recession, that silver lining is an increased awareness that Americans—especially those in lower-income households—are better off when they have access to a stock of liquid savings to weather unexpected events.  Without these precautionary savings, families are economically insecure. The process of building up these savings largely depends on access to an array of financial products and services, such as low-cost and high-quality savings accounts.

Occupy Wall Street's Powerful Critique: The Widening Wealth Gap

November 9, 2011

The Occupy Wall Street protests that have popped up across the country may lack a uniform set of demands, but they undoubtedly possess a singular and powerful critique. High finance has been allowed to assume a disproportional role in our society and, as a result, we see widespread and debilitating inequality. The protesters have found creative ways to publicize a number of contributing factors, including skyrocketing CEO pay and corporate consolidation, flat wages for average Americans, and diminishing employment opportunities. While the financial sector’s share of GDP rose to 40%, with a set of practices that plunged the global economy into a deep recession, the prospects of the top 1% have materially diverged from those in the bottom 99%.

Perhaps the most visible indication of receding opportunity is the growing disparity in incomes. The story of income inequality has been playing out for decades and it features wage stagnation despite growing productivity, with almost all the income gains captured at the very top. New analysis from the nonpartisan Congressional Budget Office confirms that the top 1% saw their average real after-tax income grow by 275% between 1979 and 2007, over six times the gains of everybody else. Economist Paul Krugman calls this the Great Divergence, which corresponds to a 20-year period when more than 80% of the total increase in income went to the top 1%, despite productivity gains of around 20%. The recession has likely narrowed this gap a bit as incomes for the top 1% have come down from their highs. Yet this is just part of the tale.

The surge and persistence of inequality in the aftermath of the Great Recession is most apparent when we shine the spotlight on wealth rather than income. As with income, the gains in wealth which occurred during the aughts (the 2000s) largely flowed upward. Those in the top ten% saw their assets rise 24% between 2001 and 2007, far outpacing gains of everybody else. In 2007, the richest 1% of households owned 34.6% of the nation’s wealth; by 2009—after the recession took hold—this rose further to 35.6%. This degree of concentration has occurred at the expense of those in the middle. Economist Sylvia Allegretto estimates that top 1% of households by wealth had net worth 225 times greater than the median household in 2009. This is the highest ratio of wealth inequality on record and an increase of 24% since 2007.

The skewed distribution of wealth is perhaps more consequential that that of income. This is because one’s prospects for future growth and mobility are not just determined by what someone earns but importantly by how many resources they have at their disposal. Assets can be tapped to help families weather unexpected events, such as when incomes decline through job loss or a health problem, but they can also be strategically deployed to make investments that can pay off down the line. Without access to these resources, families will have a harder time navigating through economic uncertainty or seizing the opportunities offered by our economy.

The Great Recession has only further skewed the distribution of wealth. When the housing bubble burst and the stock market tumbled, the distribution of the nation’s wealth became more equal. But these losses have been short-lived since security prices have rebounded and wealth holdings at the very top have been largely recouped. This wasn’t the case for most families, where home equity was the largest item on the family balance sheet. Home values will remain low for the foreseeable future as foreclosures continue to spread. Many families will find it difficult to rebuild their portfolios.

The current divergence between housing values and security prices will be one of the mains drivers separating the lower, middle, and upper-middle from those at the very top. Without dramatic changes to the housing market and policy efforts designed to get families out from under the overhang of housing debt, such as large-scale loan modifications and principle reduction, significant wealth inequality will persist for years to come.

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