earnings

Over 12% of the U.S. population has an income below the federal poverty level, in spite of the fact that many are employed, some with two or three jobs. The problem gets worse as we move closer to home. In Louisiana, over 20% of the population lacks basic economic security and faces a declining standard of living. Louisiana’s rates of poverty – particularly child poverty – are among the highest in the nation.

In order for our neighbors in poverty to increase their income, they must have the tools and strategies to fully access available public and employee benefits, reduce debt and increase credit ratings, learn how to budget and save, and seek workforce development opportunities to enhance job skills. Low to moderate income families often struggle to build their personal savings because immediate needs take priority over longer-term financial goals. Savings, however, would give individuals the flexibility to make financial decisions that benefit themselves and their families and are critical to helping families manage crisis.

Data that focuses on specific poverty thresholds miss the larger picture of being poor. Those who earn 125 percent, 150 percent, or even 200 percent of the federal poverty threshold still can be defined as low-income. Thus, a far greater percentage of Louisianans – 39.9 percent in 2003 – can be considered low-income, even if they do not meet the statistical definition of poverty. Their struggles for self-sufficiency can be as difficult as those living in poverty.

Low-income families and individuals have little hope of breaking the cycle of enerational poverty. Poverty persists in Louisiana because the poor have few opportunities to own productive assets.

Who are we helping?
Hard working, low-income families and individuals

What is our OBJECTIVE?
One of the most effective ways to improve people’s lives is to help families or individuals ecure their own assets—it reduces welfare dependency, bankruptcy rates, and enhances quality of life and economic well being. Simply increasing one’s income is no guarantee of financial stability. Asset building is a much larger anti-poverty strategy that helps low income people move toward greater self-sufficiency by accumulating savings and purchasing long-term assets such as a home, investing in higher education, or even starting a business.

Why is it important?
Gaining assets leads to a sense of independence that has many positive social and psychological effects. By accumulating long term assets such as a home, research shows that families demonstrate an orientation toward the future with a decrease in

marriage dissolution. With improved housing stability, families experience improved health and well being, increased civic and community involvement and decreased rates of transfer of poverty to the next generation.

Asset growth has a positive effect on school retention and teen pregnancy rates. It also helps decrease rates of depression, alcoholism and domestic violence.

What are the obstacles?
Credit card debt in America has tripled, from $238 billion in 1989 to $692 billion in 2001, with one out of three households using credit to cover basic living expenses – including rent, mortgage payments, groceries, utilities, and insurance. Today’s youth and young adults are projected to be the first generation in American history to fare worse economically than their parents.

While most recognize the importance of saving, they are often pessimistic about their ability to do so. The country’s personal savings rate in 2006 was a -1% the lowest in 73 years. Though savings is important for individuals and families at all income levels, it is especially critical for helping low-to-moderate income families, who often have no assets or access to credit, remain financially stable during changes in income precipitated by illness, job loss, or other events.

According to United Way research, the most significant elements of financial stability are whether or not a household has adequate disposable income to save after meeting basic needs; whether or not a household has the incentives and opportunities to accumulate long-term financial assets and build wealth; whether the household can afford and has access to adequate healthcare to maintain an ability to work and earn, and to survive financially in the event of a major illness or injury; whether – regardless of income – the household has the knowledge, skills and habits to manage their money well. All together, these components can result in a financially secure future.