By:
Published: June, 2022
Why Four Policy Pillars? Ensuring economic security draws on four ‘pillars’ of policy: Labor, Benefit, Protection, and Equity. In the context of a changing economy and population, the Academy’s Economic Security Study Panel has developed a menu of options to assure income for people in every stage of life, tailored to the four policy pillars. All aim to fulfill the mission of social insurance to reduce and prevent economic insecurity caused by common life struggles like poverty, sickness, injury, and old age.
What is protection policy?
- Policies that protect against fluctuations in income and expenses by promoting savings, reducing debt, accessing credit, and regulating key financial actors including banks, other lenders, landlords, and state and local governments.
- These policies employ two main mechanisms: promoting individual savings as a shield against “financial shocks” (such as job-loss or an expensive medical emergency) and limiting potential threats to a person’s income.
Challenges to Economic Security and Potential Solutions
- Retirement and emergency savings: Low-to-moderate-income workers often struggle to save enough money for emergencies and retirement. Policies that increase their ability to save help them cope with emergencies, retire with dignity, and improve their, and their children’s, life prospects.
- Debt carrying: Households that are just staying afloat financially can be devastated by single events that result in debt and corresponding interest payments. Policies that regulate high-interest rate lenders, limit long-term financial burdens from the criminal legal system, and ensure access to legal supports reduce cycles of poverty and despair.
Example
- Low-income workers are targeted by entities that seek to profit on those who are less financially savvy or face difficult circumstances. Some of these groups include:
- Predatory lenders, who use misleading loan terms to charge extraordinary interest rates;
- Abusive landlords, who arbitrarily withhold security deposits or unfairly evict tenants; and
- State and local governments, whose fines and fees disproportionately force people and communities of color into debt.
- In Pennsylvania, for example, a typical publicly defended client still owed nearly $900 in fines, restitution, and other costs six years after trial. This debt could cause denial of TANF and SNAP benefits, drivers’ license suspension, or incarceration.
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