Youth and Financial Assets

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Capitalism doesn’t worship the young for nothing. The teenage and tween buying market is huge, with kids spending $9.5 billion on personal care products alone. I knew this without looking it up: I just peeked into the bathroom shared by my two daughters, and marveled at the sea of personal care products.

While the private sector focuses incredible attention on young people’s buying habits, the nonprofit sector has focused little attention on how to prepare young people to accumulate financial assets for their futures. “Asset development” is an emerging concept in policy formulation circles, but much of the exciting intellectual and political work has not connected with actual youth development policy.

The Asset Development Institute, a Brandeis University think tank, has been researching and synthesizing work in the asset development field and thinking about the implications for majority politics. Its asset development framework calls on us to look at the needs that we all have in common which, if met, could fuel aspirations for economic achievement. The institute believes that a focus on shared needs, universal aspirations and equitable access to resources represents a way of thinking that departs from, but also builds upon, New Deal and War on Poverty concepts.

What are some examples of these shared needs for youth? The new paradigm and old school lists are nearly identical: work experience in the teen years; investments in education and training toward career development; social networks that support and provide opportunities in the nonschool hours; healthy family and neighborhood environments; and civic engagement opportunities to learn about and contribute to democracy. All of these can serve as points toward the accumulation of personal wealth and assets.

Nothing here is unfamiliar to youth workers. But dig deep into the new asset framework and we learn that new policies under construction – often by progressives in the Democratic Party – juxtapose anti-poverty, targeted approaches designed to address the preceding list of needs and instead promote new universal approaches connected to the tax system.

For example, the “old” way is to champion a national job-training program with disproportionate resources aimed at the poor (e.g., the Workforce Investment Act). The new asset development approach might favor a universal tax-deferred Child Investment Fund or Indivi- dual Development Account, funded voluntarily by families and used for such things as mentoring, substance abuse treatment or college.

Asset folks love the tax system as a tool of social policy. The basis for their enthusiasm is the dramatic impact of the homeowners’ mortgage interest deduction. This tax-related benefit lifted the poor and non-poor alike, and sent a policy signal across the land that was stigma-free and nicely connected to the virtues of hard work.

The youth field is replete with financial asset-building strategies, including micro-credit, youth entrepreneurship, youth financial literacy and youth credit bureaus. In fact, almost any youth program can be seen as a barrier-busting opportunity to help the young build financial assets. This is the world of many youth programs, including Junior Achievement, the National Foundation for Teaching Entrepreneurship, school-based businesses and financial literacy courses.

The question is whether the new proposed policies, with their focus on investment accounts and the tax code, will attempt to supplement the War on Poverty orientation still dominant in much of our work, or seek to replace it as a political movement.

Let’s hope for the former. After all, replacing one paradigm with another would leave the poor with little to “invest” in their development accounts. It’s not much fun to get a Fidelity statement while residing in a community that offers few publicly funded supports to help meet daily needs, much less any opportunities to contribute to the dream of wealth accumulation.

On the other hand, a marriage of old school targeted supports and progressive thinking that uses the tax code for all Americans could create a paradigm shift of enormous importance. Keep your eyes on this one. You will hear more about it as elections near.

Andrew Hahn is professor at the Heller School for Social Policy and Management at Brandeis University and the Howland Endowed Visiting Chairman for Youth Leadership Studies in the University of Minnesota’s 4-H Youth Development Center.