Finance and Assets

Maintaining the American Dream Means Reconnecting Work and Wealth

November 9, 2017  • Lata Reddy

Lata Reddy is the senior vice president of diversity, inclusion & impact at Prudential Financial.

A central tenet of the American Dream is that if you work hard, you will be financially secure – you can raise a family, buy a home, start a business, and retire with dignity. But in our changing world, hard work over a lifetime doesn’t always lead to financial security and prosperity. We need to address the financial concerns of a world that is living longer, younger and faster by providing innovative solutions to financial protection, retirement and asset management challenges.

Twenty-first Century innovation and structural shifts are transforming work far faster than our current safety nets and policies can keep pace. These changes have transferred economic risk from broad structures onto the fragile balance sheets of American households causing financial instability for many. This instability erodes the foundation for success and the ability for people to reach their goals and achieve their dreams.

Working people are struggling and need to find solid ground before they, or their families, can take the needed steps that lead to upward mobility. A crucial first step to financial stability is a quality job. We can generally assume that a good job, at a minimum, is safe, pays enough to live on, has regular and predictable hours, and offers essential benefits. Financial stability also involves having sufficient assets and protections in place – particularly savings and insurance – that can smooth the impact of income volatility or expense fluctuations. Such fluctuations occur when working people face health emergencies, when they are between jobs (or “gigs” in this new economy), when they rely on jobs that pay irregular wages or when they retire.

Working people can save only when they have enough income to support the basic needs for themselves and their families. They are also better equipped to save when their jobs provide the financial products that facilitate saving, such as retirement plans and insurance that allow them to weather emergencies. A person’s ability to earn an adequate income and build wealth is essential to achieving household economic security.

Given this intrinsic connection between work and wealth, we must consider them together, looking at how both labor and financial markets influence the opportunities people have to achieve long term financial security. Simply said, we must reconnect work and wealth.

Companies like Prudential have an imperative and an opportunity to play a vital role in bridging that gap. The imperative comes from the fact that equity is the superior growth model. Given changing demographics, companies can only grow through inclusive policies, practices and products. The opportunity comes from the power of capital markets. When harnessed for good, they can create sustainable positive impact at scale.

The partnership we have developed with the Aspen Institute is in service of advancing this critical dialogue on how employers, policymakers, advocates and communities can create solutions to address the growing fragility of the American worker. The partnership builds on a long-standing relationship and was born out of the shared belief that we must bring together leaders from across sectors to learn from each other and collaborate to find ways to create opportunities for all Americans to earn a decent living and build wealth.

We aim to make “reconnecting work and wealth” a key tenet of the national economic agenda, broadening the national conversation that is today focused on only parts of the problem.

In doing so, in partnership with others, we hope to highlight these issues while also identifying solutions to help build wealth for financially vulnerable people so that they move toward financial resilience, stability, mobility, and prosperity.

The views and opinions of the author are her own and do not necessarily reflect the view of The Aspen Institute Economic Opportunities Program or Financial Security Program or its funders.