A path to prosperity: allow more to save

By Jennifer Brooks

The recession’s lingering effects have taken an enormous toll on Georgia families. A report released last month by my organization, the Corporation for Enterprise Development, revealed more than half — 56 percent — of the state’s residents are living on the edge of financial collapse. They have little savings to fall back on in the event of a job loss, health crisis or other emergency.

What many may find surprising is that this group includes a significant number of families who would consider themselves middle class: 35 percent of households in Georgia earning between $51,061 and $82,992 per year have less than three months of savings.

Living on the edge of financial collapse is unsustainable for Georgia families and is not a path to long-term prosperity for the state. There is, however, much that can be done to write a different ending to the story of financial vulnerability that continues to play out in too many communities.

It is clear that not all Georgia residents start out on an equal footing. Having an inheritance or family support can help people weather bumps in the road and allow them to take advantage of opportunities, such as going to college, buying a home and saving for retirement. Fortunately, public policies can level the playing field for families who aren’t as lucky. The policies Georgia adopt can give families the tools to boost income, reduce debt and save for short- and long-term goals. For example, Georgia should:

• Adopt a refundable state Earned Income Tax Credit that allows all working families, even those without tax liability, to benefit. Tax credits help working families boost their income, making it possible to save for emergencies or future needs.

• Eliminate policies that penalize families who receive public benefits if they save for the future. Georgia’s cash welfare program limits eligibility to those with less than $1,000 in assets, essentially guaranteeing they will not be able to build a personal safety net of savings and become self-sufficient.

• Encourage savings by investing in Individual Development Account programs, which match the deposits dollar-for-dollar of low- and moderate-income families who are saving to buy a home, start a business or go to college.

• Expand health insurance coverage to more low-income people. Georgia’s decision not to participate in the Affordable Care Act’s Medicaid expansion misses the opportunity to ensure poor adults can get treatment when they are sick. Access to timely medical treatment protects against lost wages and prevents chronic or long-term illnesses that can send a person into debt and ultimately increase costs to the state.

Policymakers should remember their decisions will either set Georgia families up to succeed and put the state’s economy on a path toward greater prosperity, or will sentence more than half of Georgia’s residents to ongoing financial insecurity and little prospect of contributing to the state’s long-term growth. The choice should be an easy one.