Last week Social IMPACT Research Center released their analysis of U.S. Poverty Data from the Census Bureau’s Current Population Survey and the release of the 2012 Poverty Commission Annual Report. The reports painted a startling picture of poverty in our state, find that more Illinois residents are sliding deeper into poverty with 235,472 more residents living below half of the poverty line than in 2008
When you look at “liquid asset poverty” the numbers are even more devastating. If a household is asset poor than it does enough resources (i.e., net worth) to live at or above the federal poverty level for at least three months if it’s income is lost. Liquid asset poverty excludes assets that cannot be easily converted to cash like a home or a car. According to a 2011 report by the Pew Research Center, 27% of American households are asset poor and 43% are liquid asset poor. Among households of color, the report finds that 44% are asset poor and 65% are liquid asset poor.
The 2012 Poverty Report addresses this growing asset poverty by shedding light on key aspects of generational poverty and the systems that prevent people from building wealth over a lifetime. Programs like Auto IRAs and Children’s Savings Accounts, both highlighted in this report are tools that provide opportunities for people to save for their futures and find a pathway out of poverty. Auto IRAs will be discussed in the second part in this two-part blog series on the Poverty Report.
The Need for Children’s Savings Accounts
Children’s Savings Accounts work at the beginning of a life to provide educational opportunities and financial stability from birth through early adulthood. As the table below illustrates, children are more likely to live in extreme poverty than adults, but CSAs and other policies can stagger the onward march of generational poverty by providing opportunities to receive training or education as a ladder out of poverty for themselves and their children.
Policies and Legislative Efforts
Policy recommendations in the 2012 Poverty Report were generated from three public hearings, hosted by Commission on the Elimination of Poverty, throughout the state. The Commission heard testimony from the public about how budget cuts to vital programs are impacting their lives and what resources are needed to address growing disparities. Policies and legislative efforts aimed at strengthening education, housing, healthcare access, TANF, SNAP, workforce development, asset building initiatives, and more are presented throughout this report. Under asset building, Children’s Savings Accounts are listed as a key anti-poverty legislative effort that would provide families with access to a vital tool they need to support their child along the path to post-secondary education.
In Chicago, over 115 people attended a public hearing and lent their voices to the policies they believe most influenced the rise and prevalence of poverty in their community. During this hearing, IABG and COFI testified to the need for Children’s Savings Accounts as a direct response to generational poverty and the racial wealth gap.
“Many lower income households have not participated in the program due to barriers to enrollment. Illinois should simplify the enrollment process and exempt 529 college savings accounts from the list of assets used to determine eligibility for both TANF and SSI. Savings and safety net programs should go hand-in-hand to help people meet their basic needs in the short-term, and gain the tools to plan for moving out of poverty in the long-term.”
Universal Children’s Savings Accounts in Illinois would mean a brighter future for every child – a future that provided the opportunity for college, a good job, and a financially stable future. As our state continues to struggle with a poor budget environment, we must make incremental changes that to the 529 college savings accounts that expands access to this savings opportunity and creates a greater possibility for universal CSAs in our future.