Asset-building and social inclusion: A qualitative analysis of families’ perspectives

Abstract

Summary

Social inclusion has historically been one of the key goals of the welfare state. Over the past two decades, an increasing number of policies have aimed to promote inclusion by connecting low-income families to mainstream financial services and enabling them to save and acquire assets. Building on the concept of the “paradox of inclusion,” this article examines whether and how policies that aim to include low-income families in asset accumulation do so in ways that risk reinforcing their exclusion. The article focuses on a case study of a matched savings program in the heart of a major American city, gathering evidence through in-depth interviews with 24 clients in the program and ethnographic observations at the agency implementing the program.

Findings

Findings show that the program enhances families’ feelings of social inclusion, but it also creates the possibility for social exclusion in two distinctive ways: teaching families to save even under challenging circumstances and encouraging them to pursue the risky venture of homeownership.

Application

This research suggests that addressing the structural sources of poverty and training social workers to be more sensitive to low-income families’ distinctive circumstances are necessary to ensure that they are included as full members of society.

Keywords

Social work poverty social inclusion social policy case study social work practice

Introduction

Social inclusion has historically been one of the key goals of the welfare state. By the middle of the 20th century, a comprehensive system of programs and services was created by governments in the United States (U.S.) and Western Europe to protect families’ economic well-being and ensure that they are included as full and equal members of society (Garland, 2016). Over the last few decades, however, welfare policy in these countries has moved toward a work-based path to inclusion (Brodkin & Larsen, 2013). Workfare programs focus on increasing the participation of low-income families in the labor market, mainly by requiring them to engage in work-related activities as a condition of receiving benefits. Joel Handler (2004) discovered an important paradox that is embedded in workfare programs—the paradox of inclusion. Handler argues that workfare programs in the U.S. and Western Europe operate to integrate low-income families into the labor market in ways that paradoxically reinforce their marginalization (e.g. families take low-paying jobs that keep them in poverty). An important but understudied question that arises from Handler’s analysis is to what extent the paradox of inclusion exists in other contemporary social welfare policies.

The burgeoning international interest in asset-building programs offers an opportunity to address this question. Championed by many social work scholars and practitioners, asset-building emphasizes saving and acquiring wealth as a key route to inclusion (Sanders, 2014; Sherraden, 1991). It rests on the assumption that once low-income families set aside money in the form of savings to help finance investments in homeownership or education, social inclusion will be promoted because these families will have a stake in society. Much of the literature on asset-building programs has examined the effect of these programs on families’ financial behavior and material conditions as well as on their psychological well-being (e.g. Grinstein-Weiss et al., 2013a; Hogan, Solheim, Wolfgram, Nkosi, & Rodrigues, 2004; Shobe, Christy, Givens, Murphy-Erby, & Rand, 2017). Far less attention has been given to revealing what is hidden behind these quantitative evaluations, especially the tensions and contradictions that lie at the heart of such programs. Addressing this issue matters because if asset-building programs have the potential to sustain families’ exclusion, then this has implications for the development of social policies targeted at low-income families. This issue is also of importance to practitioners, who deliver asset-building programs and work closely with families on increasing their savings and wealth. Building on Handler’s conceptualization, the goal of this article is to examine whether and how programs that aim to include low-income families in asset accumulation do so in ways that risk reinforcing their exclusion. To do so, the article draws on a case study of a community-based matched savings program in a major city in the U.S. Evidence comes from in-depth interviews with clients in the program and ethnographic observations at the agency implementing the program. The article sheds new light on the debate surrounding asset-building strategies among low-income families and helps promote a better understanding of such interventions.

Background and literature review

Over the last few decades, social inclusion, as well as its antonym social exclusion, have become the topic of considerable academic and political attention, especially in Europe and to a lesser extent in the U.S. The World Bank (2013, p. 3), one of the strongest proponents of social inclusion, defines it as the “process of improving the terms for individuals and groups to take part in society—improving the ability, opportunity, and dignity of those disadvantaged on the basis of their identity.” The concepts of social inclusion and social exclusion have also featured prominently in policy prescriptions of the European Union (lifting 20 million people out of social exclusion is one of the EU’s targets) (Garrett, 2017). Compared to Europe, social inclusion/exclusion has featured less prominently in discussion in the U.S. Nonetheless, it has garnered some attention in the U.S., especially with reference to concentrated urban poverty and debates about the “underclass” (Chaskin, 2013). Influenced by this increasingly dominant discourse, social workers have developed social inclusion interventions that aim to promote people’s participation in mainstream social and economic life (Washington & Paylor, 1996). Alongside its growing popularity, the notion of social inclusion has also been subject to constant critiques, which view it as very problematic. Goodin (1996), for example, argues that it is a narrow concept that obscures much larger and more significant phenomena, such as poverty, racism, and neoliberal capitalism.

While it has achieved prominence especially in recent decades, social inclusion can be historically linked to the notion of “social citizenship” (Marshall, 1950). In his classical essay, published in the mid-20th century, Marshall argues that all citizens, by virtue of belonging to a national community, have social rights that include, among others, “the right to share to the full in the social heritage and to the life of a civilised being according to the standards prevailing in the society” (p. 10). Marshall’s conception provided the rationale for the welfare state in Western Europe following the Second World War (Handler, 2004). According to this rationale, the welfare state was designed to guarantee citizens a minimum standard of living which would promote their inclusion as equal members of society. Although the formation of the American welfare state during the 1930s and its development in the following decades was not directly influenced by the Marshallian idea of social citizenship, welfare during the mid-20th century in the U.S. was nonetheless considered a “right.” Yet given the historic exclusion of some groups (e.g. people of color) from the welfare rolls, in reality the right to welfare was never fully materialized in the U.S and elsewhere (Katznelson, 2006).

Starting in the late 1970s, efforts to include families living in poverty in the U.S. and Western Europe have emphasized one institution—the labor market (Brodkin & Larsen, 2013). The redistributive welfare state of the mid-20th century, with its relatively generous benefits and expansive social services, has been seen as ineffective and out of control, breeding “passivity” and “dependency” among the poor and contributing to high unemployment and economic stagnation (Garland, 2016). By the 1980s and 1990s, it had become clear to policymakers on both sides of the political aisle that the welfare state must be restructured so it would pay more attention to bringing the poor back to the labor market. By the end of the 1990s, 14 out of 21 OECD countries had introduced some form of workfare programs (Bradbury, 2004). While Marshall suggested that social inclusion is achieved primarily through the provision of social benefits, the common consensus among policymakers in recent decades has been that this goal can be achieved through workfare programs that increase the participation of poor families in the labor market (Brodkin & Larsen, 2013).

Many studies have assessed workfare programs and revealed that they have a negative impact on families and communities (Abramovitz, 2005; Handler, 2004; Schram, Soss, Fording, & Houser, 2009). Handler (2004) produced a comprehensive review of the literature on workfare programs. Handler is particularly interested in the street-level practices that convert workfare policy into action in the U.S. and Western Europe. Engaging critically with the politics of social inclusion, he draws on a large body of evidence to argue that workfare programs are contradictory. They aim to incorporate low-income clients in the labor market, but they do so in ways that reinforce the exclusion of many clients. Handler (2004) notes that,

inclusion through workfare obligation is contradictory. Positive acts of inclusion necessarily result in exclusion — those who cannot negotiate the barriers. Some barriers are structural … But many barriers are individual –health and mental health, substance abuse … and so forth. Active programs [also] make significant new demands on field-level administration … To manage these conflicting demands, and get through the day, officials stereotype claimants, sort those who are more likely to respond, defer or sanction those who are judged to be difficult. There is inevitably exclusion – those who cannot … comply with the rules. (pp. 8–9)

Handler questions the “success” of existing welfare programs that require clients to sign a contract to engage in workfare and charge workers with the task of enforcing this contract. He warns that such programs run the risk of further stigmatizing large segments of the poor, in particular those who fail to navigate program rules and effectively participate in the labor market. He shows, for example, how former U.S. welfare recipients who now work are worse off financially, while there are also many who are off welfare but do not work. Despite its significance, scholars have not explored Handler’s insight further, nor have they examined whether it applies to the outcomes of other social welfare programs.

Alongside workfare, asset-building has become another important approach to promoting social inclusion, especially over the past two decades. Many policymakers, government officials, and policy analysts in the United States, Canada, and Western Europe consider it today to be a sound strategy for helping low-income families escape poverty and achieve inclusion (Federal Reserve, 2014; Organization for Economic Cooperation and Development, 2003). Conceived in the early 1990s, asset-building is part of a larger financial inclusion movement that aims to increase low-income families’ access to mainstream financial services and institutions (Prabhakar, 2013). Asset-building can also be seen as an effort to promote people’s financial capability, an emerging concept that includes both people’s ability to act (financial literacy) and their opportunity to act (financial inclusion) (Caplan, Sherraden, & Bae, 2018). The primary goal of asset-building is to help low-income families save and accumulate assets for a home, college education, and small business. The rationale is that asset accumulation is a vital mechanism promoting and ensuring social inclusion in capitalist societies. Throughout history, low-income families have been excluded from structures for asset accumulation. In the U.S., for example, federal housing agencies and banks engaged in racial redlining during the 1940s and 1950s, refusing to approve mortgages in black inner-city neighborhoods (Wilson, 2009). Over the decades, low-income families have also been excluded from taking advantage of government policies that subsidize retirement savings and homeownership (Sherraden, 1991). These government-based structures have served as a vehicle for improving the financial fortunes of many nonpoor families. A more inclusive asset-building policy is therefore designed to offer low-income families opportunities to save money and acquire assets that would enable them to achieve long-term financial security (Schreiner & Sherraden, 2007). Proponents of asset-building also claim that in order to fully include the poor in society, the welfare state should be devoted not only to cash assistance programs but also to programs oriented toward saving and asset accumulation, which would place the poor on a path out of poverty (Schreiner & Sherraden, 2007). Homeownership is often the primary goal that families in asset-building programs pursue, along with investment in education and small business development. While asset-building policies have been adopted in some form worldwide, they have evolved differently in different countries. For example, some European countries have adopted asset-building at the national level and with substantial financial support from the government, while its implementation in the U.S (including sources of financial support) has been more limited.

Irrespective of the context in which it is being implemented, some scholars are very critical of asset-building programs. They suggest that these programs are reflective of neoliberal logics, which move the responsibility for the well-being of low-income citizens from the state and the collectivity to the individuals themselves, who are expected to make smart investments that increase their value in the market (Prabhakar, 2013). Given that asset-building programs assume that it is in families’ best interests to save money and own assets, these programs can also be seen as grounded in paternalism (Reamer, 2013).

One of the key interventions that seek to achieve the goal of asset-building is Individual Development Accounts (IDAs), which is a community-based matched savings program for low-income families (Page-Adams & Sherraden, 1997). First implemented in the U.S., a match of 2 USD for each 1 USD families save is the most common match. Participants can save as much money as they like, but the matching funds usually cannot exceed a certain amount over the course of the program (usually up to 2000 USD). The funds are accumulated in a separate savings account that is established for the clients when they join the program. The total savings accrued can be used only for asset-based goals, such as purchasing a home and acquiring post-secondary education or professional training. Participants who would like to withdraw the money for other purposes can do so at any time, but the matching funds will be withheld from the amount they receive. In addition to saving, participants in IDAs are required to attend financial education classes, which cover topics such as the importance of saving, money management skills, and establishing or improving a credit history. In the U.S., where this study was conducted, there were 846 IDA programs and almost 97,000 participants in them between 1999 and 2014 (U.S. Department of Health and Human Services Office of Community Services, 2016). These programs’ largest source of funding comes from the Federal government. While the asset-building field has evolved to include other programs such as tax-time savings, IDAs are still one of the most influential and common asset-building tools in the U.S. today. Inspired by the U.S. experience, nearly 23,500 IDA accounts were active in the U.K. as part of the Savings Gateway pilot, which ran between 2002 and 2007 (Harvey et al., 2007). In 2016, the U.K. government established the Help to Save scheme, which offers IDA-like accounts to 3.5 million low-income workers in the U.K. (Hill, 2016).

The empirical literature on IDAs is vast and mostly involves quantitative evaluations of the program. Many studies have examined the program’s effects on low-income families’ savings behavior. These studies find that families are able to save money (Hogan et al., 2004; Klawitter, Anderson, & Gugerty, 2013; Sanders, 2014; Schreiner & Sherraden, 2007), but their average level of savings is very modest—between 16 USD and 30 USD per month (Hogan et al., 2004; Schreiner & Sherraden, 2007). Other studies have examined factors associated with saving and program completion. Findings show that some factors, such as hours of financial education classes and children in the household, have a positive effect on savings and program completion (Grinstead, Mauldin, Sabia, Koonce, & Palmer, 2011; Grinstein-Weiss, Chowa, & Casalotti, 2010; Loibl, Grinstein-Weiss, Zhan, & Bird, 2010), while other factors, such as a higher savings match and low future orientation, do not produce an effect (Loibl, Jones, Haisley, & Loewenstein, 2016; Manturuk, Dorrance, & Riley, 2012). A third strand of the literature has examined the effect of the IDA program on asset ownership among families. These studies find no statistically significant impact on homeownership (Grinstein-Weiss et al., 2013a; Shobe et al., 2017), level of education (Grinstein-Weiss et al., 2013b), and retirement savings (Grinstein-Weiss et al., 2015). The last group of studies has focused on the effect of the program on families’ psychological well-being, showing mixed results: some studies find that the program produces no psychological benefits (Rohe, Clinton, Grinstein-Weiss, Schreiner, & Sherraden, 2017), while others report that it improves families’ emotional well-being (Sherraden & McBride, 2010). Despite this large body of empirical research, the IDA program has largely escaped critical scrutiny. More specifically, little is known about the potential pitfalls of the IDA program and the tensions and contradictions that it may create as a result of its efforts to promote inclusion.

Contrary to the arguments made by advocates of asset-building strategies, some studies on financial management and homeownership among low-income families (studies that are not related to the IDA program or asset-building) have provided evidence that suggest that saving and homeownership may not always be an effective strategy to promote inclusion (Denton, 2001; Halpern-Meekin, Edin, Tach, & Sykes, 2015; Jargowsky, 2015; Scholz & Seshadri, 2009; Shiller, 2015). Although they do not focus on IDAs, these studies are of relevance to the aims of the IDA program and asset-building strategies in general. Halpern-Meekin et al. (2015), for example, find that low-income families are very rational when it comes to managing family finances: they save when their financial circumstances allow them to (e.g. when they receive a large lump sum during tax season) and make necessary spending decisions in certain difficult circumstances (e.g. when creditors come knocking on their door). These findings indicate that the IDA program, which imparts the importance of saving among low-income families, has the potential to harm their everyday survival. Elsewhere, Shiller (2015) shows that over the past century or so, home prices in the U.S. have increased only by 0.30% annually, adjusted for inflation. He concludes that such a low annual return indicates that homeownership is not an effective way for low-income families to build wealth. Shiller’s study, then, opens the possibility that, in contrast to what proponents of asset-building predict, the exclusion of families who complete the IDA program will persist since homeownership is not necessarily a reliable strategy to build wealth today. Given the lack of empirical research on these kinds of tensions between social inclusion and IDA programs, the current study investigates the following question: Do IDAs have the potential to promote the inclusion of low-income families in mainstream society or do they run the risk of reinscribing families’ marginalization?

Methodology

This study utilizes qualitative design and methods. It focuses on a case study (Flyvbjerg, 2006) of a nonprofit community organization that delivers an IDA program targeted at low-income families in the heart of one of the poorest big cities in the U.S. The organization was founded three decades ago to promote what it calls “social and economic self-sufficiency” among low-income families and it deploys asset-based strategies to fulfill this mission. Today, the organization is well-established and nationally recognized in the field of asset-building. Its IDA program is one of the first savings program for low-income families that was implemented in the U.S. After an intake meeting, caseworkers in the program are expected to monitor clients’ monthly financial statements while they actively participate in the program and, unless clients refrain from making deposits, it is likely that clients will not see or meet with their workers until they are ready to “graduate” from the program. A successful client, according to the agency, is someone who reached her savings goal and acquired her first asset (e.g. purchased a home). The agency and its IDA program are a good example of what Flyvbjerg (2006) calls a “critical” case study, which is a case of strategic importance and with relevant content in relation to the research questions. Flyvbjerg (2006) notes that by selecting a critical case, a researcher can logically deduct that “if this is (not) valid for this case, then it applies to all (no) cases” (p. 230). The IDA program administered by this particular agency can be identified as a critical case because it is practically identical to the IDA program first introduced by Sherraden (1991) and examined by past research.

The researcher had no prior relationship to the organization and gained permission to study the program after contacting the agency head. The empirical evidence for this case study comes from in-depth interviews with clients in the program, as well as from ethnographic observations at the agency. Interviews with clients took place in 2014 and 2015. They were recorded and transcribed verbatim for analysis. The interviews lasted between one hour and two and a half hours. The interviews were comprised of a set of open-ended questions that began with some “warm-up” questions about the client’s life history and family background. The interviews then focused on the client’s understanding of the philosophy behind IDAs and asset-building more generally, her experience in the program, and her experience of living in financial distress. Interviews took place either in clients’ home or in a public setting but not in the agency itself in order to provide anonymous and confidential environment for them. Each of the clients who were interviewed was given a detailed explanation of the study’s aims, procedures, and participation outcome. If the client agreed to participate, she and the researcher both signed a consent form.

The client sample includes 24 participants. Purposive sampling was used to select clients, that is the researcher deliberately chose participants from whom he can learn the most about the study’s research question. More specifically, the researcher pursued the strategies of “typical case sampling” aimed at selecting participants who are somewhat “typical” of the IDA program (Patton, 2014). By using this technique, the sample could be illustrative of the general population of clients participating in the program at this specific agency. At the researcher’s request, one of the caseworkers in the program reviewed the program digital database and identified the characteristics of an “average” client: (1) female, (2) African-American, (3) single, (4) has children, and (5) employed either full-time or part-time. These characteristics became the sample’s inclusion criteria and clients who met them were recruited. In other words, all of the participants in the study were poor African-American single mothers who had a job at the time of the study. Seven of the selected participants had a higher education degree (Bachelor or Master’s). Although post-secondary education is considered an asset in IDA programs, these college-educated participants have nonetheless remained poor and excluded and so the program aimed to increase their inclusion by helping them accumulate additional assets. Clients’ characteristics are presented in Table 1. Clients were recruited at the end of meetings with caseworkers, during the monthly financial education classes, and through flyers that were placed on the bulletin board in the agency. All names were changed to protect confidentiality of clients.

Table 1.

Client sample demographics (n = 24).

Characteristic	N	%
Age
18–29	11	45
30–49	10	42
50 and older	3	13
Gender
Female	24	100
Male	0	0
Race
African-American	24	100
White	0	0
Hispanic	0	0
Marital status
Single (never married)	16	67
Divorced	6	25
Married	1	4
Widowed	1	4
Education
Less than high school education	5	21
High school degree (or equivalent)	8	33
Some college	4	17
Bachelor’s degree	5	20
Master’s degree	2	9

Ethnographic observations at the agency offered an opportunity to witness important interactions between clients and their caseworkers. On dozens of visits to the agency over the course of a year, the researcher attended the monthly orientation sessions held for potential clients, the monthly financial management classes for existing clients, and the intake meetings with new clients. An oral consent procedure (e.g. prior to an orientation session or one-on-one meeting) was used; it involved the communication of general information to the clients about the study’s purpose and its voluntary nature. The researcher also spent some time at the caseworkers’ office and observed their daily routine. The researcher typically scribbled short notes during the on-site observations, and took extensive fieldnotes after returning from the agency. While engaging in observations, the researcher learned that four of the clients that were interviewed were at risk of dropping out of the program. To understand why, follow-up interviews were conducted with these clients. Over the course of the observations, the researcher collected program documents (application forms, training materials, program rules, surveys, and relevant policy memos) to understand how the program operates more broadly.

Using an inductive approach to qualitative analysis, all data (interview transcripts and fieldnotes) were coded and categorized according to the principles of thematic analysis (Braun & Clarke, 2006), with the aid of the software program NVivo. To ensure the quality and credibility of this qualitative study, peer debriefing was used, as emerging findings were discussed with two research colleagues. Triangulation was also used, as the information was collected from two sources: in-depth interviews and observations.

Findings

Findings reflect clients’ experience in the IDA program and they are organized according to two overriding themes: (1) saving as a top priority and (2) homeownership as a tool for social inclusion.

Saving as a top priority

The meaning of saving

Saving is at the heart of the IDA program. According to agency documents, between 1997 (when the program was created) and 2014, the total amount of savings was 948,747 USD and the total match paid to clients was 836,320 USD. This means that clients in the program have accumulated a total amount of 1,785,067 USD. In talking about the IDA program, all of the clients, regardless of their educational or employment background, envisioned themselves as savers and suggested that saving in general is very important. They emphasized that the program teaches them to save consistently and on a regular basis. Laqueta, for example, is in her 20s and works part-time in the health care system. She noted that the program is “actually helping you to learn how to save and get into the pattern of saving” (Participant no. 11). In almost all of the interviews, clients reported that routinely practicing the act of saving has produced positive changes in their feelings; it has made them feel “strong,” “good,” “energized,” “motivated,” “successful,” and “happy.” Many clients explained that learning to save consistently had a positive impact on them because it got them one step closer to achieving their goals in life, mainly to become asset owners. This is well-illustrated by what Danielle, who is in her 30s and works full-time in the human service nonprofit sector, said: “It [saving] made me feel good … I knew I was on track and, doing what I need to do and I was saving my money to hopefully reach my goals … I knew that I was just sticking to the plan” (Participant no. 4). Similarly, Lavonne, who is in her 50s and has one child, explained that

making that deposit makes me feel good cause you got money in the bank and it’s going towards something that's going to better me and my daughter … These funds get me closer to being able to live the American Dream. (Participant no. 7)

Saving. No matter what.

Most clients reported that they found it hard to save and discussed the challenges that they face. Nevertheless, they explained that developing a saving pattern meant that they had to practice the act of saving, under any circumstance and irrespective of the consequences. Shaneta, for example, works full-time in human resources and has three children. Shaneta described how the program taught her to prioritize saving, regardless of her changing financial circumstances:

When stuff gets really bad, you’re like, ‘Oh, my gosh, I wish I had 40 dollars.’ So you need to sacrifice. You’re like, ‘I really don't have money right now, but I’m going to put this 40 dollars aside … ’ I remember [the caseworker] once called me because I didn’t save. I said, ‘You know, I’m just trying to pay all the bills, and I just forgot about the 40 dollars.’ And she was like, ‘Look, if you want to stay in this program, you have to get this done … ’ I learned to save, regardless of what’s happening in my life. (Participant no. 13)

Although she finds it challenging, Shaneta claimed that she saves even when her resources are scarce and she is short on money. Yet it can be argued that saving even under extremely challenging financial circumstances may harm Shaneta’s struggle to meet the everyday necessities of life and thus sustain her vulnerability. Like Shaneta, Madison is another client who argued that she saves, no matter what her circumstances are. She is a single mother who raises five children on her own and works two jobs, seven days a week. At one point in the interview, she explained why saving is so difficult for her and for other low-income families:

You really can’t afford to save. Saving is hard when you can’t afford to and when you don’t have enough money to save, when you don’t have enough money to actually sustain actual living. So, to decide to put money into an account that you’re not going to be able to touch, who wants to do that? (Participant no. 6)

Although she had faced the reality of not having enough money to save, Madison emphasized that saving is very important to her. In fact, she explained that saving is so important to her that “even if a bill doesn’t get paid on time, I still save. For instance, right now my account is overdrawn … I’m just choosing not to pay the bill; I’d rather the money sit there” (Participant no. 6). For Madison, saving is considered “sacred” and as a result she sometimes diverts money from necessities in order to be able to save. Yet the idea that saving is more important than paying bills on time can arguably harm Madison and her children’s well-being, for example, it can potentially lead to their utility services being disconnected or bring creditors breathing down their necks. As Desmond (2016) demonstrates in his important work, not paying bills can also lead to evictions, which then make homeownership or securing the next rental more difficult. This chain reaction, Desmond shows, harms families and constitutes a traumatic experience for them. In short, the emphasis on always saving exposes clients such as Shaneta and Madison to potential risks which may reinscribe their marginalization.

Nina also described herself as someone who is very committed to saving. Nina, who is in her 30s, worked in the past (before joining the program) in decent-paying jobs that allowed her to establish a small emergency savings fund that she hopes will help her if she loses her job one day and until she finds a new one. At the time of the interview, Nina worked part-time in human services at a job which she claimed does not pay well nor offer health insurance. As a result, her income from her current job does not cover all her monthly expenses (she estimated that she is about 100–200 USD short each month). Unlike Madison, who does not break the habit of saving by overdrawing her account, Nina does not miss a deposit because she taps into her emergency savings funds. She explained:

The program gave me the discipline to save … I make saving equivalent to rent so like that’s the first thing I pay and then anything else. It’s just like, I’ll pay this later, I’ll pay that later … But I’ve never been late on any bill, on anything. So I get it all, it will always be paid … If I want something, or if I needed something, or I wanted to do something, then I would use my emergency fund. (Participant no. 19)

By disciplining her to save so she could eventually be included in the ownership society, Nina’s involvement in the IDA program leads her sometimes to use the money she saved for a rainy day in order to be able to both make the monthly deposit in the program and cover her everyday expenses. However, it can be argued that draining her emergency funds so she could successfully complete the program may put Nina at risk if her circumstances suddenly change, for example, if she loses her job or faces unplanned medical costs.

Findings show that the tensions between social inclusion and the IDA program also arose when clients described how they struggle to refrain from tapping into their savings and making any withdrawals, even when times are tough and they are short of money. Brianna, who is in her 30s, has two children and works in the health care system. She describes her biggest challenge:

The hardest thing is knowing the money is there and if you’re in a situation, you really can’t mess with the money because you’re saving for something. Like you might be in a situation where you’re spending money and you like ‘oh well I got money in my savings account, I got like 200 or something dollars in my savings account.’ So I think that’s the hardest part, knowing that you have 200 dollars in the account but you can’t touch that 200 dollars. (Participant no. 9)

Similarly, Tameca, who is in her 50s and has two children, also referred to the challenge of avoiding withdrawing the money from her account, even when she really needs it. She said: “The hardest thing about saving is not going down there, taking that money out and go buy that washer and dryer that I need” (Participant no. 16). Taylor is another client who talked about the difficulty of not withdrawing her savings in the face of adversity: “The money was for a specific purpose … but sometimes you need to have money just to have it, for rainy days, for emergencies … so I had to learn that I have money that I’m not going to touch” (Participant no. 1). For Brianna, Tameca, and Taylor, the biggest challenge of saving is not necessarily the act itself of setting aside money; rather, it is the task of taming themselves to resist withdrawing the money, irrespective of their changing everyday needs. However, based on these findings, one could claim that not tapping into savings, regardless of changing circumstances and needs, risks maintaining and perhaps even deepening these clients’ hardships.

Homeownership as a tool for social inclusion

The meaning of homeownership

Homeownership is the primary way in which clients hope to achieve the goal of the IDA program and become included in society. According to agency documents, between 1997 and 2014, 575 clients completed the program and almost a third of them purchased a home. There have been two foreclosures among these clients as of 2011. Clients in the program usually have up to five years from their first day in the program to purchase their first home. Clients were very excited that the possibility of homeownership became reality for them. They talked about how important it was for them to own a home because it could provide their families stability and pave the way for their inclusion in society. Tia, who is in her 40s, is a single mother of five children who works part-time in retail. She knew that the path to homeownership was not going to be easy, but she was determined to pursue it because it would help her family get ahead: “It’s going to be a struggle. However, this is my foot in the door. At the end of it I’m going to have a house … once I have my house everything will go so much smoother” (Participant no. 8).

Homeownership as a risky venture

Despite the crucial significance that clients attributed to owning a home, this study finds that the emphasis on homeownership is another way in which the program risks reinscribing their exclusion. Most of the participants (19 out of 24) in the study saved for housing. Kanita, for example, is a young woman in her early 30s who works full-time in accounting. When she was first interviewed, Kanita was about to complete the program and she excitedly described her plan to purchase her own home with the help of the program. In a follow-up interview conducted with her, Kanita reported that her caseworker told her that she has less than a year to complete all the steps to purchasing a home; otherwise, she would be dropped from the program and another client would take her place. Yet, Kanita felt that she was not ready to purchase a home in such a short period, mainly because she wanted to continue to work on improving her finances. Despite her concerns, her worker continued to pressure her until Kanita finally decided to drop from the program and withdrew the money she had saved:

They contacted me in January and they’re like, “You have to buy a house by December.” So, I’m like, “I thought I had till next September of next year.’ And she’s like, “Oh no, you have to save and purchase everything and get everything done in two years.” I’m like, “Everything has to be done in two years? Saving, purchasing the house, everything? I can’t do that. . .” It wasn’t about the saving. I can save 2,000 dollars. A house costs way more than to buy and close on, there is also the maintenance part. It’s one thing to pay rent, it’s a whole other thing to pay for rent, plus when your toilet blocks up, plus when your roof caves in, plus when your water heater bill plus your taxes. That’s double of what I’m paying in rent right now. So I’m not gonna make a financial decision that I don’t think is right for me … I’m not going to be ready to purchase a home financially by December. Not happening. (Participant no. 14)

Indeed, there is evidence to support Kanita’s reluctance to buy a house given her current financial condition. Studies, for example, show that maintaining and upkeeping a home in the U.S. can end up costing a lot of money that can sink people with low incomes in debt (Shiller, 2015). While Kanita chose not to rush to purchase a house and place herself at financial risk, Serena was more persuaded by her worker’s efforts. On one of my visits to the agency, I witnessed a phone call between Serena and her caseworker. Serena told the worker that she would like to purchase a home, but she is worried that the money she has saved would allow her to buy a house in “poor condition” and in a “bad” and racially segregated neighborhood. At one point, the worker found out that Serena paid 300 USD to a credit repair company so that they would help her improve her credit score. The worker then told the client: “These companies rip people off. They promise them that they would make their debt disappear, but all they do is take people’s money” (Fieldnote no. 22). The worker then informed the client that the agency offers credit counseling services for free and scheduled her an appointment. “A good credit score is critical for getting preapproved for a mortgage,” the worker told Serena as she ended the call. After she hung up, the worker noted that Serena decided to continue saving and move forward with homeownership. This exchange shows how the client’s hesitation about buying a home in a poor neighborhood was never affirmed by the caseworker, who instead merely offered a more efficient way to improve her ability to qualify for a mortgage. Although it is possible that the caseworker was simply “doing her job” of helping Serena “graduate” from the program, findings show that she nevertheless acted in a paternalistic manner by believing that she better understands what is in Serena’s best interests. In any event, the paradox of inclusion is evident in this exchange because purchasing a home in high-poverty and racially segregated neighborhood is not necessarily a “good” investment that would lift Serena out of poverty. Indeed, there is evidence to suggest that the appreciation value of homes is lower in poor, black neighborhoods than in middle-class, white neighborhoods, and that purchasing a home in poor, black neighborhoods does not increase access to decent schools or public services more generally (Denton, 2001; Shapiro, Meschede, & Osoro, 2013).

Jordina is another client whose path to homeownership risks maintaining her marginalization. Jordina had achieved her “savings goal” and had six months left to use the funds and purchase a home. On one of her visits to the agency, she surprised her caseworker by telling her that she wants to buy a “fixer-upper,” a house that is in need of some serious repair: “These houses cost only 10,000 dollars, which means that I don’t need a mortgage … All I need ‘till I finish renovating it is a bedroom where I can sleep and a bathroom” (Fieldnote no. 14). After discovering that program guidelines do not require a mortgage in order to be eligible for the matching funds, the caseworker approved Jordina’s request to use her accrued savings to purchase a fixer-upper. After the call ended, the caseworker wanted to know more about the “fixer-upper industry” and so she searched the internet for information. She found pictures of dilapidated homes that were sold for 9000 USD, and wondered out loud: “How can anyone buy such a house?” (Fieldnote no. 14). She then read from a newspaper article that told the story of a fixer-upper home that came with thousands of dollars in water bills. Buying a fixer-upper and investing money to renovate it and pay any past due bills may be a risky venture for Jordina, as it may lead to heavy debt and cause a lot of stress for her. Although findings show that buying a “fixer-upper” home is not something that the IDA program explicitly promotes, the conversation between Jordina and her caseworker suggests that the program does introduce, in more covert ways, this possibility to clients. There is evidence that suggests that many low-income families who purchase fixer-upper homes in the U.S. have trouble paying for the costs of renovation and they end up living in the tumbledown homes that they originally bought (Shdaimah, Stahl, & Schram, 2011). Living in run-down and substandard houses is another way in which families’ marginalization can be maintained as a result of their involvement in the IDA program.

Discussion

This article is the first to illustrate how asset-building programs risk creating the “paradox of inclusion,” where low-income families are encouraged to save and become homeowners but in ways that could potentially reinforce their poverty and vulnerability. Findings indicate that most families, irrespective of their background, reported that they comply with the rules of the IDA program: they save consistently and are on the path to homeownership. Findings also suggest that the program provides families a basis for hope and enhances feelings of social inclusion, as they experience the program as opening up financial opportunities that can get their “foot in the door” (as Tia described in the interview). Nevertheless, findings show that inclusion through savings and homeownership runs the risk of sustaining the hardships of some families—those who save, irrespective of their economic circumstances or the hardships they endure, and those who pursue the path of homeownership, even if it has the potential to impose a high risk on them. These findings are fairly consistent with Handler’s analysis of labor market activation programs (Handler, 2004). Focusing mostly on street-level bureaucratic practices and their outcome, Handler reports that workfare programs paradoxically exclude those clients who do not comply with program rules or those who comply but get temporary, low-wage jobs that keep them in poverty. While Handler’s analysis focuses on the street-level implementation of workfare programs, this study draws on clients’ own experience of the IDA program, shedding light on how it shapes their efforts to overcome poverty in ways that may eventually harm them. In doing so, findings also support critical interrogations of social inclusion, which suggest that it is ultimately concerned with getting the poor “just over the line … But as long as they are on the ‘right side’ of the line there is nothing … that would help us to address our larger concerns about social marginality” (Goodin, 1996, p. 359). In short, by shifting attention to asset-building, this study extends Handler’s work and contributes to the debate on the limitations of the discourse and practices of social inclusion.

In addition, the findings of this research are also largely consistent with previous studies, which suggest that changing the quite rational financial behavior of low-income families runs the risk of sustaining their poverty (Halpern-Meekin et al., 2015; Scholz & Seshadri, 2009) and that pushing them into the private housing market has the potential to reinforce their social, economic, and physical isolation from the rest of society (Denton, 2001; Jargowsky, 2015; Shapiro, Meschede, & Osoro, 2013; Shiller, 2015).

The findings of this study also generate new insights that contribute to the literature on asset-building strategies. They confirm earlier critiques of asset-building, which argue that a key feature of these programs is that they treat poverty as an individualized condition of people and shift risk onto them (Prabhakar, 2013). Furthermore, contrary to what some researchers argue (Page-Adams & Sherraden, 1997; Schreiner & Sherraden, 2007), findings suggest that perhaps it is too soon to conclude that the IDA program and asset-building more generally are effective and efficient mechanisms for inclusion. Two reasons why such programs may actually not promote inclusion as people intended. First, they do not aim to modify the structural causes that lead clients to fail as market actors. Building assets through IDAs empowers clients as effective and equal market actors, but it fails to change the “rules of the game” that have led to the concentration of wealth at the top and the unequal distribution of wealth between whites and nonwhites. In other words, the IDA program encourages clients to save and purchase a home, without addressing the structural barriers that prevent them from saving and becoming homeowners in the first place. Second, some asset-building programs such as IDAs are not always sensitive to clients’ distinctive circumstances. Saving on a regular basis and homeownership are often the “one-size-fits-all” solution provided to clients (and this is reinforced by the directives for the agencies implementing asset-building programs, such as IDAs). In the process, the appropriateness of such intervention for a particular client, community, or neighborhood is not being given adequate consideration. As this study suggests, promoting such a one-size-fits-all model exposes some families and communities to possible risks.

Limitations

A number of limitations of this study should be recognized. First, it did not follow clients long enough to determine whether the program actually contributed to and deepened their exclusion. For example, did Madison’s decision to overdraw her account so she could stay committed to saving make things worse for her? Did Jordina eventually buy a “fixer-upper” home? If so, did it improve the conditions of her life? The study cannot answer such questions based on the data. The study, however, does provide a reason to be concerned because it enables us to see that the possibility that asset-building operates in ways that risk reinforcing families’ marginalization looms large.

Another important limitation is related to its methodology. The study focused on one agency and used a purposive sample of clients that included only employed single African-American women with children in the U.S. Therefore, these women may differ from other clients and populations in other organizational and geographical settings. In short, the study is not generalizable to IDA programs across the U.S. and elsewhere. However, designing the study as a “most likely” critical case was meant to increase its generalizability. Another limitation of this study is that IDAs are not the only asset-based programs operating today. Findings therefore cannot represent the asset-building field as a whole.

Implications for policy, practice, and education

In sum, the findings point out that it is perhaps impossible to promote social inclusion through a set of social policies directed only at people who are excluded, while overlooking the ways in which the political–economic system generates and sustains their exclusion. Accordingly, the article suggests two interrelated paths to better combat social exclusion through asset-building. First, at the policy level, policies that aim to support asset accumulation by poor families should be accompanied by structural changes that ensure these efforts do not end up reinforcing families’ subordination. For instance, people living in economically marginalized neighborhoods must have quality jobs and earn decent wages that they can then rely on to meet their basic needs and have enough money left to save. The problem of high-poverty neighborhoods and racial segregation should also be confronted to ensure that homeownership would be a good investment for low-income families of color. To create these changes, social workers need to engage in policy practice. Second, at the practice level, while they are undoubtedly well-intentioned, social workers in IDA programs should be trained to be more attentive to their clients’ particular circumstances and to carry out interventions that take into consideration these circumstances and clients’ perspective in general. For example, social workers should consider and discuss whether clients are financially ready to purchase a home and pay the costs involved in owning and maintaining a home. Workers should also ensure that the logic of saving does not override meeting clients’ everyday needs. In terms of social work education, the findings offer some directions for teaching and training social work students. The Council on Social Work Education draws on the Educational Policy and Accreditation Standards (EPAS) to guide social work programs in the U.S. The findings stress the importance of teaching and training students to master EPAS’s core competencies, among them applying critical thinking to inform their professional judgments, placing their practice in context, advancing social justice, and engaging in policy practice to advance social-economic well-being.

Footnotes

Ethics

This research was approved by the Bryn Mawr College Institutional Review Board R15-011.

Funding

The author disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The author received financial support for the research from the Fahs-Beck Fund for Research and Experimentation.

ORCID iD

Guy Feldman

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