WILLY LOMAN never figured out how to strike it rich. Instead, the tragic character in Arthur Miller’s play ‘‘Death of a Salesman’’ succumbed to despair.
Governments could rewrite the script. Not with a get-rich-quick scheme, but by helping low-income people build wealth patiently, one step at a time.
One useful tool is the individual development account. The accounts offer people a deal: Save a small amount of money each month, and the savings will be matched on a dollar for dollar basis, or even higher. So someone who saves a total of $1,000 could get a match of $1,000 or more. No one will immediately become Donald Trump. But the money can typically be used for a down payment on a house, education, or to invest in a small business. And programs can require people to take financial literacy courses.
It can be life-changing to help people acquire wealth such as savings and property, because, unlike salaries, these assets can be used for credit leverage and passed on to future generations.
Massachusetts just started funding these accounts, investing $500,000 in March and another $600,000 this month.
The funding goes to local organizations such as MIDAS, a Brighton-based coalition of nonprofit organizations. MIDAS is using its $200,000 to fund five projects, including a pilot savings program for entry-level employees of CVS, the drugstore chain.
Workers who save up to $500 to finance their educations will get another $500 each from CVS and the state, for a total of $1,500. The nonprofit organization Jewish Vocational Service will educate workers about personal finance and help them pursue college. The three-year program will start with 50 workers who could start taking courses in the first year. There are plans to add another 50 workers, and JVS president Jerry Rubin sees the potential for more.
Growth, however, will take more money. Massachusetts has many other financial commitments, but it could start doing research through the state’s new Asset Development Commission. While it was created last year to make policy recommendations, the commission has yet to be staffed. Governor Patrick and the Legislature should appoint members as soon as possible.
New efforts to build wealth in low-income communities are dearly needed. The Corporation for Enterprise Development, a Washington nonprofit that promotes economic opportunity, estimates that there are some 57,000 individual development accounts nationwide — with room to add more. A bill in Congress would create 900,000 development accounts. Getting rich quick is hard. But state and federal governments could help many more people build wealth responsibly.
