With a global pandemic, the fight against police brutality and a presidential election, 2020 has felt like a long year. But now that Election Day is behind us, we are looking to the new year. The COVID-19 crisis has made the socioeconomic and racial inequities in American society unmistakably clear. As we look to the future, we must build a stronger and fairer economy to avert future crises and work towards prosperity for all. 

To that end, we’re excited to share Prosperity Now’s 2021 Federal Policy Priorities and 2021 State Policy Priorities. Here are some of the policies we're championing to increase the financial security of low- and moderate-income (LMI) households, particularly LMI households of color. 

Ensuring Families Have Access to Affordable Housing 

Even before COVID-19, many renters and homeowners, especially people of color and those with lower incomes, struggled to pay their housing costs. The pandemic has only made it harder for these families to afford their rent or mortgages. To lessen this burden, we propose a series of tax credits and matched savings programs that can defray housing costs for renters, aspiring homeowners and those who have already purchased a home. 

In addition, states should provide direct housing assistance to households, which can include rental subsidy programs or tax credits for lower-income renters and property tax relief policies for homeowners. Finally, states should increase their affordable housing stock through upzoning to provide more options for LMI renters. 

Bridging the Racial Wealth Divide 

The wealth gap between White households and households of color means that the latter have fewer resources to invest in their children's future, which can perpetuate racial economic inequities. The American Opportunity Accounts Act would provide every child with an account seeded by the federal government, with annual contributions dependent on a family's household income. These "baby bonds" can help level the playing field for children of color, allowing them to invest in wealth-building opportunities once they reach adulthood.  

Boosting Short- and Long-Term Savings 

Having savings is key to managing financial crises and building long-term wealth, yet many households have little savings to fall back on. To provide families with the means to save, states should increase their minimum wage to at least $15 per hour and index it to inflation. Enacting a state-level Earned Income Tax Credit (EITC) and providing incentives to save through the tax code can also help families set aside money for the future. 

At the federal level, Congress should enact Rainy Day 2.0—an expanded version of the bipartisan Refund to Rainy Day Savings Act—which encourages savings at tax time. In addition, the Saving for the Future Act can help employees build emergency and retirement savings through the workplace. 

Expanding Access to Public Assistance Programs 

Even though savings is critical, families who have saved beyond a certain threshold are often rendered ineligible for public assistance programs, such as the Temporary Assistance for Needy Families Program (TANF), Supplemental Nutrition Assistance Program (SNAP) and Low Income Home Energy Assistance Program (LIHEAP). The ASSET Act would eliminate these asset limits, or savings penalties, for TANF, SNAP and LIHEAP, allowing households to build savings without losing access to these programs.  

In addition, at a time when many workers have lost their jobs because of COVID-19, states should expand their unemployment insurance programs to ensure coverage for job loss now and in the future.  

Guaranteeing Universal Financial Access 

Households that are unbanked or underbanked often have to turn to predatory loans or other costly financial services to meet their needs. To ensure that all people have access to the financial system, we recommend that the federal government implement FedAccounts. These accounts would be administered to every person and accessible by mobile phone, allowing for more equitable access to safe, mainstream financial services. 

Protecting Consumers from Harmful Debt 

As mentioned above, LMI individuals and people of color are especially vulnerable to predatory financial products and services that can leave them with high levels of debt. To protect consumers, states should implement policies to restrict or mitigate the harm of predatory loans, hold debt collectors accountable for unfair or deceptive practices and restrict wage garnishment. In addition, allowing or incentivizing alternative credit data collection can help individuals build credit. Finally, states should consider creating a state-level version of the Consumer Financial Protection Bureau (CFPB) to ensure that vulnerable households are protected from harmful practices. 

For more information on these recommendations, check out Prosperity Now’s 2021 Federal and State Policy Priorities. While 2020 has been a challenging year for all, with your help, we can create change for working families in the new year. Please sign up for our Advocacy Center to take action in 2021. Also, as states prepare for their next legislative sessions, please contact Holden Weisman or Joanna Ain if you are interested in exploring what the state-level proposals could look like in your own state.