Introducing the


Criterion 2:
Wage Enables Asset Building

A just wage offers disposable income, enabling savings and property ownership; provides benefits in the form of educational enrichment, professional development and skills enhancement; and promotes opportunities for advancement and income growth. Further, a just wage structure facilitates personal and community development.

What does CST say about wages enabling asset building?

Ever since Pope Leo’s groundbreaking 1891 encyclical Rerum Novarum, Catholic social tradition (CST) has emphasized the importance of providing workers a high enough wage to accumulate savings that can be put toward investment for personal and family growth. As Pope Pius XI elaborated in 1931, workers are entitled to “increase their property by thrift, that they may bear … the burdens of family life with greater ease and security …” 

The CST commitment to asset building is rooted in the belief that every person possesses an inherent dignity, which entitles them to a natural right to develop and flourish. As Pope John XXIII articulated in Mater et Magistra in 1961, “individual human beings are the foundation, the cause and the end of every social institution.” But, he continued, because humans are “by nature social beings,” that dignity must also be reflected in economic relationships and institutions that promote not only a decent life now but asset building for the future. As Pope Pius XI aptly put it three decades prior, workers are entitled to earn enough “that when their lives are ended they will provide in some measure for those they leave after them.” Asset building, in other words, should be viewed through both a social and an intergenerational lens.

Alarmed by massive gaps between the rich and the rest not only in income but also in property, proponents of CST have long argued against an extreme inequality that prevents savings and asset building by working families. As the US Conference of Catholic Bishops affirmed in their 1986 pastoral letter Economic Justice for All, “[CST] norms establish a strong presumption against extreme inequality of income and wealth as long as there are poor, hungry, and homeless people in our midst.”

CST defines asset building expansively, considering not only dollars and property but also skills and personal growth. A just society demands a “continuous effort to improve workers’ training and capability so that their work will be more skilled and productive,” Pope John Paul II argued in Centesimus Annus, his 1991 encyclical reaffirming the core CST principles first enunciated a century before.

As Pope Francis summarized core CST economic principles in a 2013 speech, “A way has to be found to enable everyone to benefit from the fruits of the earth, and not simply to close the gap between the affluent and those who must be satisfied with the crumbs falling from the table, but above all to satisfy the demands of justice, fairness and respect for every human being.” Asset building contributes to that goal by empowering individuals, families, and communities to achieve sustainable, long-term economic security.

For a detailed exploration of asset building and CST, see Duquesne University theologian James P. Bailey’s Rethinking Poverty: Income, Assets, and the Catholic Social Justice Tradition (Notre Dame Press, 2013).

Below you’ll find a sampling of official Catholic statements articulating CST’s commitment to a wage that enables asset building for the worker and the worker’s family. These are arranged chronologically to show both the continuity and evolution of Catholic thinking and language over time, especially regarding gender. Earlier CST statements in particular use as default the male pronoun, expressing a conventional (if modern) understanding of ideal households populated by male breadwinners, female homemakers, and their children. While more recent pronouncements reveal a greater commitment to gender equality at work, an enduring preference for the breadwinner model of one wage-earning parent and one (unwaged) home caring parent suggests unresolved questions confronting not only CST but all advocates for a just economy, especially amidst a social reality where two adult incomes are increasingly common.


“It is surely undeniable that, when a man engages in remunerative labor, the impelling reason and motive of his work is to obtain property, and thereafter to hold it as his very own. If one man hires out to another his strength or skill, he does so for the purpose of receiving in return what is necessary for the satisfaction of his needs; he therefore expressly intends to acquire a right full and real, not only to the remuneration, but also to the disposal of such remuneration, just as he pleases. Thus, if he lives sparingly, saves money, and, for greater security, invests his savings in land, the land, in such case, is only his wages under another form; and, consequently, a working man’s little estate thus purchased should be as completely at his full disposal as are the wages he receives for his labor.”

— Pope Leo XIII, Rerum Novarum (On the Condition of Labor), 1891(5)

“Yet while it is true that the status of non owning worker is to be carefully distinguished from pauperism, nevertheless the immense multitude of the non-owning workers on the one hand and the enormous riches of certain very wealthy men on the other establish an unanswerable argument that the riches which are so abundantly produced in our age of ‘industrialism,’ as it is called, are not rightly distributed and equitably made available to the various classes of the people. Therefore, with all our strength and effort we must strive that at least in the future the abundant fruits of production will accrue equitably to those who are rich and will be distributed in ample sufficiency among the workers – not that these may become remiss in work, for man is born to labor as the bird to fly – but that they may increase their property by thrift, that they may bear, by wise management of this increase in property, the burdens of family life with greater ease and security, and that, emerging from the insecure lot in life in whose uncertainties non-owning workers are cast, they may be able not only to endure the vicissitudes of earthly existence but have also assurance that when their lives are ended they will provide in some measure for those they leave after them.”

— Pope Pius XI, Quadragesimo Anno (After Forty Years), 1931 (60-61)

“Moreover, in recent years, as we have seen, the productive efficiency of many national economies has been increasing rapidly. Justice and fairness demand, therefore, that, within the limits of the common good, wages too shall increase. This means that workers are able to save more and thus acquire a certain amount of property of their own.”

— Pope John XXIII, Mater et Magistra (Christianity and Social Progress), 1961 (112)

“Furthermore, society and the State must ensure wage levels adequate for the maintenance of the worker and his family, including a certain amount for savings. This requires a continuous effort to improve workers’ training and capability so that their work will be more skilled and productive, as well as careful controls and adequate legislative measures to block shameful forms of exploitation, especially to the disadvantage of the most vulnerable workers, of immigrants and of those on the margins of society.”

— Pope John Paul II, Centesimus Annus (The Hundredth Year), 1991 (15)

This page was last updated on March 21, 2022. It was written by Dan Graff, Anastasia Reisinger, and Edward Prein, with research contributions from Clemens Sedmak.

wage enables asset building

A wage cannot be just if it only allows a worker to merely scrape by, surviving paycheck to paycheck. Beyond income enabling a decent life for the worker and the worker’s household (see Just Wage Criterion 1), a just wage should also facilitate asset building in the form of savings, property, skills, and some wealth to pass on to future generations. As a 2019 report from the Federal Reserve Bank of St. Louis correctly frames it, “Income allows a family to get by; wealth allows a family to get ahead.” Both are critical components of a just wage.

Researchers increasingly see wealth (what people possess) as important as income (what people earn) in shaping individual and family prosperity, as well as subjective well-being. Indeed, if increasing income inequality has characterized the US economy for the past several decades, increasing wealth inequality has grown at even more alarming rates. There is a plethora of accessible online research documenting wealth inequality, its negative impact on workers and households, and ways to counteract it; good places to start include the Organisation for Economic Cooperation and Development’s Library, the Poverty Solutions initiative at the University of Michigan, Washington University in St. Louis’s Center for Social Development, and the Pew Research Center.

The coronavirus pandemic has only exacerbated this wealth gap. At the same time poverty rates have spiked during the COVID-19 induced economic downturn, a recent report by the Americans for Tax Fairness and the Institute for Policy Studies reveals that the combined wealth of all US billionaires has increased by more than $1 trillion.

To characterize the wealth gap solely in class terms, however, would drastically distort the picture. As a 2020 Brookings Institution paper reports, “staggering racial disparities” in wealth reveal both the intergenerational legacies of slavery and white supremacy and the persistence of discriminatory policies today. As of 2016, for example, the net worth of a typical white family in the US was $171,000, compared to a typical black family’s $17,150, a shocking factor of ten. And again, the twin public health and economic crises prompted by COVID-19 have only made an alarming situation worse, as black and brown workers and households have borne the brunt of the decimation.

For generations, asset building has been the tool working families have used to achieve the American dream of upward mobility, and racialized access to that tool — in terms of job opportunities, income, workplace-based benefits, home ownership, or quality education — has produced the stark racial wealth gap we confront today. This is why a just wage must not only promote asset building, but also prohibit discrimination (see Just Wage Criterion 4).

If asset building is central to people’s well-being, then we must confront the alarming fact that the top 10% of American households own more wealth than the bottom 90% combined. In addition to the many policy solutions proffered in the studies linked throughout this brief essay, we close here with two concrete approaches to fostering asset building among workers.

One avenue to asset building is employee ownership, which can take many forms, from worker cooperatives to Employee Stock Ownership Plans, or ESOPs (company-sponsored retirement plans by which workers accrue stock in their own employer). ESOPs are the most common form in the US today, and a 2019 study by Rutgers University’s School of Management and Labor Relations argues their benefits. According to the report’s authors, ESOPs promote economic stability and security for workers, with multiple positive spillover effects both at the workplace itself and in workers’ households — and with especially pronounced impacts on lower-income workers and workers of color.

A second avenue, community wealth building, considers asset building at the city or regional level, an innovative approach to economic development pioneered by The Democracy Collaborative (TDC). As TDC members argued in a 2016 essay, “The mindset missing in traditional approaches is commitment to place, and a recognition that economic entities can be designed to benefit community. Community wealth building begins with a devotion to place, and with a respect for all those who live in a place.” The community wealth building model deploys a variety of interconnected institutions and strategies in order to keep the fruits of local economic development within the area, including anchor institutions, impact investing, community land trusts, and employee ownership of enterprises. For one important success story, check out The Cleveland Model (For other examples, see the “Who Does It Well?” resource tab on this webpage).

Conventional wisdom might suggest that asset building should run second to a living wage when assigning economic priorities; after all, one must have food, housing, transportation, and other contributors to a decent life today before considering amassing wealth for the future. As this brief essay suggests, however, the security, stability, and upward mobility promised by asset building profoundly shape the here and now, revealing the inextricable centrality of asset building to a just wage.

This page was last updated on March 21, 2022. It was written by Dan Graff, Anastasia Reisinger and Edward Prein.

wage enables asset building

In a country with so few legal protections for workers toiling on the job today — in 2019 Business Insider published an article titled “7 mind-blowing facts that show why employment in the US is the worst in the developed world” — it shouldn’t be surprising that federal promotion of workers’ asset building for the future is also quite limited.

To be sure, the Social Security Act of 1935 established a compulsory system to facilitate retirement savings for workers, while the Employee Retirement Income Security Act of 1974 provides minimum standards and safeguards for workers fortunate enough to have an employer-provided retirement account. However, social security benefits are quite modest, with the average retiree in 2020 receiving about $1,500 per month (or $18,000 per year). Further, since only about one-half of the American workforce have access to/participate in a private retirement plan through work, nearly 70% of the federal tax benefits for employer-based pensions and individual retirement accounts (IRAs) accrue to the top quintile of income earners, and nearly none to the bottom three quintiles.

In the USA, government promotion of asset building operates less through the employment relationship and more through the tax code via subsidies and incentives for homeownership and college saving. As a comprehensive 2014 report of the Tax Policy Center noted, because most “asset-accumulation incentives come in the form of deductions from income or deferred taxation … many low- and middle-income families for whom the policies are intended can make limited or no use of the subsidies.” For example, 70% of the tax savings from the mortgage interest and property tax deductions accrue to the top fifth of income earners, while the bottom two-fifths get next to nothing. Similarly, on the education front, while the Pell Grant program does help low-income students finance their undergraduate education, tax deductions for education expenses and student loan interest primarily benefit middle and upper-income earners. In short, then, federal tax policies to foster asset accumulation largely assist the already successful rather than those most in need.

Of course, assets take the form not only of nest eggs and property but also professional development and skills enhancement. Unfortunately, federal policies to promote workforce development, forge career pathways for historically disadvantaged groups, and retrain displaced workers have a mixed track record, at best, as documented by recent investigations at The Atlantic, The New York Times Magazine, and The Brookings Institution. The COVID-19 pandemic has revealed anew the urgency of both protecting front line workers and expanding their economic opportunities, spurring both private sector initiatives like the Aspen Institute’s Upskilling America program and bipartisan public efforts like the proposed Upskilling and Retraining Assistance Act.

Indeed, the pandemic has prompted several creative new directions in federal policymaking, as the just-passed American Rescue Plan Act reveals. While many of its provisions are framed in terms of poverty alleviation rather than asset building, many proponents hope to turn some of these temporary measures into permanent ones that will promote long-term stability, security, and investing among the poor.

For example, the child tax credit, which Washington Post columnist Catherine Rampell calls the “single most important element of the law,” provides payments of $3,000-3,6000 per child to low and moderate-income American families, regardless of their tax liability (unlike most of the asset building tax policies above, which take the form of credits applicable only to those with tax burdens). The Center on Poverty and Social Policy at Columbia University predicts that this law will cut US poverty by about one-third, and child poverty roughly in half.

Another asset-building component of the American Rescue Plan Act assists disadvantaged farmers who’ve experienced long-term debt, land shrinkage, and high rates of poverty. Fully a quarter of these farmers are African American, whose average farm size is 100 acres (vs. the national average of 440), and whose average annual farm income is less than $2,500 (vs. the average white farmer’s $17,000). As Tracy Lloyd McCurty, executive director of the Black Belt Justice Center, terms it, “This is the most significant piece of legislation with respect to the arc of Black land ownership in this country.”

The key question here (and in other American Rescue Plan Act targeted funding for nutritional programs, child care centers, and Head Start) is whether these antipoverty and asset building measures will outlast the pandemic. In the meantime, some state and local governments have launched their own initiatives to encourage asset building in a more inclusive and progressive vein.

For example, Hawaii’s state-level asset building initiatives have funded education programs, eliminated the asset test for the Temporary Assistance for Needy Families program, and introduced unique ways to split state tax refunds to promote long-term savings. At the city level, in 2014 Richmond, Virginia, created the Office of Community Wealth Building to promote local asset building initiatives in the realms of employment, schools, housing, and transportation. Additionally, more than two dozen local governments around the country have instituted community benefit agreements with business developers to enable community members to benefit more fully from local development.

This page was last updated on March 21, 2022. It was written by Dan Graff, Anastasia Reisinger, and Edward Prein.

wage enables asset building