Basics of Asset Building
Helping Michigan’s Working Families Achieve Lasting and Sustainable Financial Security
Asset-building policy – policy that enables families to build wealth for current and future generations – has long been part of the American political and economic landscape. However, these polices have not benefited all families. For example, households that earn over $50,000 a year receive more than 90% of all mortgage interest tax deductions.
Most policies that serve low-income families have focused on income maintenance rather than asset accumulation. In the last two decades, even as income poverty rates have decreased, asset poverty rates have increased.
Asset-building policies, as opposed to income-based policies that currently exist as supports for low-income families, strives to more closely align “welfare” policy with economic development policy and to prepare individuals and families to be successful in the New Economy.
Whereas traditional welfare policy has focused on income maintenance for the present, asset-building policy increases opportunities and incentives for low-income households to save for, plan for, and invest in the future, providing a “stake” or sense of ownership in their future and an individual connection to the economy.
Michigan Figures*
- In 2009, 23.4% of all Michigan Households were un- or under-banked
- 17.7% of White, Non-Hispanic Households were un- or under-banked
- 59.3% of Black Households were un- or under-banked
- In 2010, the unemployment rate in Michigan was 12.5%
- In 2008, 14.4% of the population was living in poverty.
- In 2007, 19.7% of Michigan residents were asset poor
- In 2006, 23.9% of all Michigan Households with children were asset poor
- 14.8% of White Households with children
- 63.3% of Black Households with children
*reflects the most recent available data for each statistical measure
Asset Building Terms
- Poverty Level: Federally defined minimum income needed to support an individual or family at a “minimum” standard of living. For 2011, $22,350 was the federal poverty level for a family of four.
- Low-Income: Families earning less than 200% of the federal poverty level per year.
- Asset Poverty: The inability to live at the poverty level for more than 3 months without income.
- Self-Sufficiency: The ability of a household to meet and sustain its basic needs without receiving public benefits. The real self-sufficiency level is considerably more than twice the federal poverty level.
- Asset: Refers to everything a person owns (cash, retirement savings, home, business, etc.) that has exchange for value. Human capital in the form of education and training is also considered an asset because it enables people to achieve economic security and mobility.
Updated July 1, 2011