Academic journal article Journal of Family and Consumer Sciences

Assets: An Opportunity for the Working Poor

Academic journal article Journal of Family and Consumer Sciences

Assets: An Opportunity for the Working Poor

Article excerpt

Scholarship and Practice


Individual development accounts (IDAs) are designed to help low-income workers build an asset base to achieve goals and increase family well-being. In 1997, funding for the American Dream Policy Demonstration (ADD) established demonstration projects at 13 sites that are now being extensively evaluated for best practices. This article provides an overview of IDAs and examines the first year evaluation of ADD sites.


Individuals who must live without adequate food, housing, clothing, and medical care experience constant stress as they try to obtain a basic level of goods and services. This struggle affects their children, their jobs, and their communities. Results from the National Survey of America's Families show that approximately 50% of children in low-income families (families below 200% of the poverty level) experience some worries about, or have difficulty, affording food (McKenzie and Bell, 1997). When children are poorly nourished, unhealthy, and inadequately sheltered, they are likely to have poor attendance at school, perform poorly in school, and score lower on tests of cognitive ability (Brown and Pollitt, 1996; Conger, Conger, and Elder, 1997; Sherman, 1997). Adults who regularly deal with hardship are less productive employees, have fewer effective parenting skills, and are less likely to participate actively in their communities (Arnaud, 1993; Griffin and McKinley, 1994; Haveman et al., 1994).

Education is not the only answer in addressing issues of the working poor. Braun, Bauer, and Olson (1999) found that although low-income mothers knew a variety of ways to stretch their resources, it was still not enough to make ends meet. Effective strategies include offering a variety of community resources, providing interesting and motivating educational programs, working with employers to provide work skills that will sustain good jobs, and using incentives such as individual development accounts (IDAs) to encourage and reward goal setting and asset accumulation.


Communities throughout the nation are forging collaborative partnerships, extending the hope of self-sufficiency to thousands of working poor Americans. Through programs designed to offer individual development accounts (IDAs), public assistance recipients and the working poor are offered an opportunity to save toward the American dream of homeownership and a better future through postsecondary education or selfemployment. This paper presents a brief introduction to the background and policy that are fueling the IDA movement.

Individual development accounts present a new approach to social welfare theory. Michael Sherraden (1991), primary contributor to the theory behind IDAs, points out there have been conflicting goals in welfare policy. Traditional welfare policy emphasized basic needs and participants were penalized for any attempts to accumulate assets. At the same time, the nonpoor were subsidized through various tax programs such as the preferential capital gains policy, employer-sponsored and personally held retirement pension accounts, and tax subsidies for home ownership. To demonstrate this imbalance further, Sherraden (1991) describes the distribution of wealth in the country: the top 10% of Americans hold 40% of the national income, with the top 1% controlling 90% of the assets. National policy reinforces this inequity by subsidizing the nonpoor by over $200 billion in the form of various tax deductions. Public assistance recipients, on the other hand, have been denied benefits if their assets exceeded $1,000.

Asset-based welfare policy begins to correct this inequity. Rather than providing support for the poor based on income consumption alone, MAs support asset accumulation through matched savings accounts. The savings accounts are created specifically to save for asset goals that foster strength and self-sufficiency such as a down payment on a home, funds for postsecondary education, and funds to capitalize a business. …

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