The recent recession has forced Washington residents to rethink the ways in which they realize prosperity. Those who were once financially secure are losing the foundation on which their economic stability once rested: personal assets. Such assets are diminishing due to lost jobs, spent down savings, failed businesses, lost homes, delayed retirement, and forgone investments in higher education for their children.
The key to economic recovery and prosperity for hardworking Washingtonians is to build security on a strong foundation of assets. Assets enable Washington families to weather economic crises and achieve long term financial prosperity. The economic downturn has revealed a troubling number of Washington families lack access
to programs and policies that promote asset building and enable them to build a foundation for financial independence.
- Over half of families with incomes under $24,800 do not have enough financial resources to subsist at the poverty level for three months in the event that they lose their source of income;
- One in four families with incomes between $48,801 and $68,800 do not have enough financial resources to subsist at the poverty level for three months if they were to experience a loss of income;
- The median credit card debt level is $3,459, third highest in the nation;
- Foreclosure starts have increased by 316 percent since 2006;
- Only one-third of workers complete a four- year degree; and
- Just over half of all workers participate in an employer-sponsored retirement plan.
The economic outlook for Washington reveals a need for investment in institutions and policies that promote prosperity and enable hardworking Washingtonians to thrive. Asset building strategies help families create, manage, and protect assets to improve their economic futures and achieve financial independence. Research shows that asset building programs:
- Help families survive economic crises. Households with liquid assets who experience a negative event such as job loss or health emergency are 14 percent less likely, regardless of income, to face hardships like food insecurity, eviction, lack of medical attention, or disconnected utilities than non-asset poor families.
- Increase household income. Within the first two years of starting a microbusiness, the median household income of entrepreneurs increases by 78 percent. Within five years, the median increase is 91 percent.
- Improve future outlook for children. Asset holding has been associated with more stable marriages and home life, better health across individual life spans, and higher enrollment and success in postsecondary education.
- Generate long term upward economic mobility. Seventy-one percent of low income parents who save at high rates for their children’s education see those children move up to higher income quartiles when they grow up, compared to only 50 percent of low income families with little savings.
As Washington State seeks to recover from the present economic downturn and build prosperity for future generations, it is critical to invest in policies that promote a strong and stable middle class.
This Blueprint outlines policy opportunities to help Washingtonians build, leverage, and protect assets in order to create a durable economic recovery.
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