August 21, 2012
That poor people don't have assets does not seem to be a complex assertion, but looking at the asset base of poor communities is one way of divining new ways not only to fight poverty but to expand opportunity.
"If a family had an emergency and had to live off its assets, how long could it last?" asked Kasey Wiedrich, an analyst at the Corporation for Enterprise Development, which conducted an in-depth look at the assets available to New Orleans families.
More than a third of families do not have enough resources -- savings, a car or home equity -- to survive for three months if the income of the main breadwinner were disrupted.
That is higher than the national average, and we suspect similar results would obtain in other Louisiana cities. The New Orleans study was commissioned by the Greater New Orleans Foundation and the Ford Foundation.
The study now will look at liquidity in households -- how much free cash is available, and the level of banking and other financial services available to poorer households. The Greater New Orleans Foundation calls the data a "call to action" on poverty.
As we noted above, that poor people don't have assets is hardly surprising. What works to build assets?
One obvious factor is savings, including access to banking services such as savings accounts. The lack of general banking services that better-off neighborhoods take for granted is a concern. Ida Rademacher, chief program officer at the Corporation for Enterprise Development, said getting employers to eliminate the paper checks that often lead workers to usurious payday lenders would make a big difference.
Another issue is access to work, and that involves the strangely controversial -- at least in Baton Rouge -- challenge of public transportation.
The finances of a working family can be crippled by costs of transportation. Efficient and cost-effective bus services are obviously a vital part of any asset-building strategy for the working poor.
Another issue is taxation. As state government cuts back aid to public services of all kinds, local governments -- heavily dependent on sales taxes in Louisiana -- have to fill in the gap.
Sales taxes hit the poor harder as a percentage of income. And state income tax breaks under Gov. Bobby Jindal skewed more heavily toward better-off taxpayers, not the worker trying to get ahead.
The solutions to poverty are complex, because human beings are themselves a complexity. Some are not going to work to get ahead, no matter what. But most respond to reasonable incentives to do so.
Those families can benefit when even small steps are taken to provide a leg up, not just a handout.