Introducing the

Just Wage

Just Wage Forum 2021

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.

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 subsidies 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 Institute. The COVID-19 pandemic has revealed anew the urgency of both protecting front line workers and expanding their economic opportunities, creating a moment of opportunity for 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, which provides legal representation to Black farmers, 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 18, 2021. It was written by Dan Graff and Anastasia Reisinger.


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