The Net Worth of Female‐Headed Households: A Comparison to Other Types of Households

• Author: Martha N. Ozawa,Yongwoo Lee
• Published date: 01 January 2006
• DOI: http://doi.org/10.1111/j.1741-3729.2006.00362.x
• Date: 01 January 2006

The Net Worth of Female-Headed Households:

A Comparison to Other Types of Households

Martha N. OzawaYongwoo Lee*

Abstract: This article presents the results of a study that investigated the level of assets and debts that female-headed

households have in comparison to those of married-couple households and other types of households. The empirical

results revealed that the amounts of net worth of married-couple households and male-headed households were sig-

nificantly larger than that of female-headed households. We discuss policy implications stemming from the findings

of the study and recommend that the United States seriously consider creative policy approaches aimed at empower-

ing low-income households such as employment-related supportive policies, microenterprise programs, and Individ-

ual Development Accounts programs.

Key Words: elasticity, female-headed households, family policy, income, net worth.

With the enactment of the Personal Responsibility

and Work Opportunity Reconciliation Act of 1996

(P.L. 104-193), the federal government signaled that

the responsibility for financial security rests with the

nation’s citizens, instead of the government. Charac-

teristically, Temporary Assistance to Needy Families

(TANF), which came into being as the result of this

act, eliminated the safety net from the nation’s wel-

fare system by instituting a 2-year limit in any

period of receiving cash assistance without engaging

in work or work-related activities and a 5-year limit

on receiving cash assistance during one’s lifetime.

The impact of TANF was immediately felt by

female-headed families because they were the pri-

mary beneficiaries of Aid to Families with Depen-

dent Children, which was revamped by TANF.

Although the federal government withdrew its

responsibility for providing a financial safety net, it

launched a new policy initiative that encouraged fami-

lies to develop their net worth (or wealth) so that they

can deal with the economic hardships that occur as eco-

nomic conditions change. The attempt to develop

Health Savings Accounts, Personal Retirement Ac-

counts, which are carved out of the current social secu-

rity program, and Personal Reemployment Accounts

reflects the shift in public policy toward personal

responsibility to develop one’s own income security

(Hubbard, 2004). Health Savings Accounts are

accounts that eligible persons can put money into to

save for future medical expenses. The plan was signed

into law by President Bush on December 8, 2003

(P.L. 108-173). Personal Reemployment Accounts,

which are being demonstrated in seven states, provides

$3,000 to those who are receiving unemployment

insurance benefits. This plan allows such persons to pur-

chase job training and other services, such as child care

and transportation, to get back to work quickly. The

reemployed persons can retain whatever money left.

The idea of Personal Retirement Accounts, in

particular, is being hotly debated across the country.

The plan, as it stands now, would allow workers to

carve out 4 percentage points from their current

social security contributions of 12.4% to establish

such accounts. The purpose of this program is to

establish funded retirement accounts in the names of

specific participants. Because this program entails the

carving out of a portion of social security contribu-

tions, the participants will face a reduction in their

traditional social security benefits. Pertinent to the

topic of this article is the extent to which this program

*Martha N. Ozawa is a Bettie Bofinger Brown Distinguished Professor of Social Policy in the George Warren Brown School of Social Work, Washington University,

One Brookings Drive, St. Louis, MO 63130-4899 (ozawa@wustl.edu). Yongwoo Lee is a PhD Candidate in the George Warren Brown School of Social Work,

Washington University.

Family Relations, 55 (January 2006), 132–145. Blackwell Publishing.

Copyright 2006 by the National Council on Family Relations.