Leading experts weigh in on current policy issues and challenges

Strategies for Tackling Family Financial Insecurity

Jobs with pay based on variable hours, commissions, piecework or tips; the fraying of the social safety net, notwithstanding improvements arising from the under-attack Affordable Care Act; a financial services system that is often too flexible in extending credit and too rigid in exacting payments; and the pressures of the increased cost of housing, whether rented or owned are all combining to make it harder for Americans to effectively manage their finances. What policies might both remove some of the causes of family financial instability and better enable families to cope with the instability they face?

The Urban Institute is talking with...
Alexandra Bastien Alexandra Bastien
Angela Rachidi Angela Rachidi
Anita Cozart Anita Cozart
Caroline Ratcliffe Caroline Ratcliffe
Lisa Servon Lisa Servon
Liz Ben-Ishai Liz Ben-Ishai
Rachel Schneider Rachel Schneider
Damon Silvers Damon Silvers
Ellen Seidman
Moderated by:
Ellen Seidman
Fellow, Housing Finance Policy Center, Urban Institute
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Thank you all for joining us today—and the next several days—for our Policy Debate.  

Simply put, family financial instability is increasing, both in fact and in our understanding of how prevalent it is, its many causes and effects. In this Policy Debate we hope to discuss those intertwined causes and effects and to discuss strategies, especially public policy strategies, to reduce the incidence of family financial instability as well as to help families better cope with the instability they are facing.

Here’s our first question:

Family financial instability has negative effects on both individual families and the communities in which they live. Why do you think the problem is increasing compared to, say, the 1980s? What do you think are the primary drivers of family financial instability and fragility?

Negative income shocks create instability, making it more likely families face evictions, fall behind on their rent and utility bills, turn to public benefits, and are food insecure. This instability ripples through to communities, which rely on residents to support property, sales, and income taxes. This instability, which isn’t only a low-income problem—is driven by both income and expense shocks. Roughly 25 percent of families experience a major negative income shock within a year, but taking income and expense shocks together it's 60 percent.

On the income side, it’s not only major events like a job loss; 43 percent of people whose income varies from month to month report that it’s because of irregular work schedules—an important driver of instability.

On the expense side, health care costs are an important driver. An analysis of credit bureau data shows that families are struggling with medical debt—nearly one in five people with a credit bureau file has medical debt in collections.

financial volatility

Thanks Urban for hosting this conversation...The description of this debate really says it all. 

There are at least three drivers of increasing instability, maybe four depending on how you count…First, people experience meaningful spikes and dips in both earning and spending, not only from year to year, but within the year. Second, at the same time, wages have remained stagnant over the last several decades, while the cost of living – and especially the cost of the major investments that people make in mobility through housing, transportation, education and healthcare – has been rising. That means that people have less cushion between their incomes and spending than ever before, which means it is harder and harder to save to buffer against those ups and downs. Third, the Great Risk Shift that Jacob Hacker described means that individuals are increasingly left to their own devices to manage the risks that they face – instead of being able to rely on employers, government or other institutions to spread those risks across a group.

As a result, many people live financially unstable lives in which they may earn enough money over the course of the year, but they don’t have enough money on hand to pay their bills today. They borrow from family and friends, or they rack up credit card debt, or they just don’t pay all their bills or they pay late. None of the options are costless, and those who most need great ways to manage their financial lives have the least access to them. That’s a fourth driver of financial instability that is easily overlooked.

 

According to the Federal Reserve Board’s 2016 Survey of Household Economics and Decisionmaking, nearly one-third of respondents reported that their income varies from month to month. Among this group, a plurality (43 percent) report that irregular work schedules are the source of this instability. Research also suggests that volatile work scheduling is particularly prevalent in service industry jobs, such as retail, food service, home care, and janitorial work—although workers in other sectors are by no means exempt. Yet, it is these very sectors where job growth has surged since the recession, and where such growth is projected to continue. Moreover, economists have found that the move toward an economy that provides more volatile, part-time work—a significant portion of which is involuntary—cannot be chalked up to cyclical effects, instead reflecting real structural changes. As a result, there is an urgent need for thoughtful policy solutions to improve the quality of jobs and strengthen our safety net.

 

Today, Senator Elizabeth Warren (D-MA) and Representative Rosa DeLauro (D-CT) are introducing the Schedules that Work Act, a federal proposal to created new labor standards protecting worker from the harmful effects of employers’ unfair scheduling practices. I’ll discuss this bill and the growing number of similar state and local proposals that have already passed or are under consideration in a subsequent post addressing policy solutions to income volatility.

 

It's fairly well established that income instability has increased over the past few decades. Research also shows that it’s relatively high. In a research brief from March 2017, Pew Charitable Trusts found that only 47% of survey respondents said they had predictable household bills and income month to month. Unsurprisingly, low- and moderate-income families are most at risk. Professor Jonathon Morduch of NYU found a 39% variation in income month-to-month among low- and moderate-income families who were tracked as part of the US Financial diaries project, 

Although many reasons explain financial instability, periods of unemployment or irregular work is a key factor. The economy of today is very different than years past, and workers have had to adapt. In some ways, the 24/7 and on-demand economy benefits workers who otherwise would be unemployed. But it also creates instability in their earnings. The main question is how well do our public policies address this problem? Regrettably, government programs for low-income families might make things worse.

Consider the earned income tax credit (EITC), the largest cash transfer program for low-income families. Research shows it has a number of positive effects, but since it’s only provided one time per year in a lump sum, it fails to compensate for gaps in income throughout the year. The same is true for the additional child tax credit and the child and dependent care credit, although the latter really only benefits moderate- to high-income families.

If we really care about the negative effects of family financial instability, we must do more than try to mandate that employers provide stable employment. The economy of today is increasingly moving away from that, which might make business more competitive in a global economy but unfortunately has consequences for workers, especially those with limited skills. Our public policies must match the realities of today’s labor market and labor force. And that means reforming tax expenditures on low-income families to make them available throughout the year instead of in a lump sum payment. 

I agree with Angela: in addition to labor policies that ensure employers adopt fair and reasonable scheduling practices, we need to strengthen our safety net. We also need to defend our safety net from policies that would make it harder for working families employed in the low-wage labor market to access the benefits they need to stay afloat. That's why CLASP is deeply concerned about proposals to institute work requirements for public benefits programs. Such requirements could lead to benefit loss; such loss can occur when workers have to meet arbitrary hours thresholds, despite the fact that most low-wage workers have little control over when or how much they work. But to keep people working and sustain families, consistent access to public benefits is critical. 

So, I suppose I'm not surprised that we all agreed there is a problem, and quickly moved to discussing solutions. That's great, and let's get to it ... There are both big and small things that can be done.

As we dive into solutions though, I want to add a few more concepts about the problem that are important. In our work on the US Financial Diaries, Jonathan Morduch and I found that not only do people need ways to smooth their ups and downs -- as Angela suggests above by smoothing out the EITC -- but that they also need and value the spikes. Not all volatility is bad. That is in large part because spending needs are lumpy. Maybe a family needs to buy a washer/dryer, or fix a car, or prepay several months' worth of childcare. Income spikes don't necessarily arrive just in time for these needs, so families have to be able to generate spending spikes in other ways as well. (and because of the rising costs and stagnant incomes mentioned above, saving is not a complete answer, even though it is of course, important)

In fact, more than one of the families that we worked with in the Diaries research over-withheld on their taxes by claiming extra dependents in order to make their tax spike as big and useful as possible. The tax refund moment is one of the few times in the year in which struggling families have a chunk of money that they can use to pay down debt, make an investment or buy things that are larger than they can manage with the small difference between that month's paycheck and basic bills. We need to think of ways to help people smooth their spending, but we also need to think of ways to help them spike when they need to.

The key is to recognize that -- for all of the reasons that everyone has cited above -- near-term financial needs have become far more urgent for many people. Families are no longer free to set a monthly budget and forget it, while devoting their attention to a few financial decisions about big, long-term goals. Instead, they are forced to review earnings and spending weekly, or even daily, and to expend time and energy (and money) on smaller financial decisions. It's not enough to know how much they need to save for retirement. They also need to think about whether to spend their tax refund on paying down credit cards or saving. 

So, we need solutions that help people not only with the big, long-term goals like home ownership and retirement -- but also with nearer-term financial instability. You just have to look at the leakage out of 401(k) accounts to see that the two are inextricably linked anyway. 

I'm glad Rachel mentioned how much recipients like the lump sum aspects of the EITC. It's kind of like a forced savings account. Other research confirms what Rachel found in the Financial Diaries project too -- low-income people value having a financial safety net -- and the lump sum EITC serves that function. But that's really not it's purpose. I agree with Rachel that other policies are probably better suited than the EITC to address this issue. SaveUSA comes to mind, which matches savings that result from tax refunds. But other creative solutions are also needed. 

Three factors explain the lion's share of iincreased income insecurity. 1) We all agree that income volatility is a huge factor that helps explain the increase in family financial instability.  Income volatility has doubled over the past 30 years.  Inconsistent earnings make it much harder for people to budget, plan for the future, and save.  If you're unlucky enough to have an unexpected expense hit when you're income is dipping, you may feel the need to take out expensive credit--a payday loan or an auto title loan, for example.  Doing so will make it harder to get back on track and save.  2) Wages have also declined since the 1970s, while the cost of housing, education, childcare and medical care have all increased.  75% of Americans are living paycheck to paycheck, and more than half could not come up with $500 in the event of an emergency.  3) As Rachel already noted, the public and private safety nets have been torn to shreds, leaving vulnerable families to fend for themselves more than ever.

 

 

 

We now are at a point where there is no longer a debate that 1) wage stagnation is a key fact about our labor market 2) families are becoming more, not less economically insecure as incomes become more volatile, and 3) that public policy and business practices have combined to shift risks from institutional structures designed to bear them to households that cannot bear them.

These trends are large scale and long term, and they are fundamental drivers of our political economy.  They contribute not just to economic trends like persistent lack of aggregate demand and, ironically, falling labor mobility, as insecure workers are afraid to take risks in the labor market in the way they were before 1980.  These trends lie behind the growing alienation of Americans across the political spectrum from democracy itself.

If we are going to do something about rising economic insecurity we must stop treating it as inevitable and stop pretending that little tweaks are going to make any difference.  Rising economic insecurity  is not the result of cosmic forces.  As Hamlet said, the fault is not in the stars, or in globalization or technology-- but ourselves-- in policy decisions that have driven rising insecurity and falling wages since the 1970's.  These decisions include

1) the destruction of workers' bargaining power through the weakening of unions and the erosion of the value of the minimum wage and the rise of precarious work by allowing employers to misclassify millions of employees as "independent contractors."   

2) the substitution of savings accounts for pension funds, and the hollowing out of employer provided health care plans so that they provide less and less genuine insurance.

3) the financialization of key aspects of life such as housing and education so that instead of being sources of financial stability they become drivers of financial instability.

If we are going to reverse this trend policymakers will need to do a bit more then change the timing of EITC payments.  We need robust solutions that address the root causes of insecurity in the context of today's labor market and that learn from the history of efforts to provide households with economic stability. 

To give one example, it is clear we need retirement security systems that are 1) portable 2) not dependent on the financial health of a given employer 3) that provide insurance against capital market risks and longevity risk, 3) benefit from professional, low cost asset allocation and management and 4) are properly funded-- meaning well more than the 6% or so of payroll that is typical of 401-k contributions today.    Social Security of course has most of these characteristics, and other advanced countries like Australia have private plans that look a lot like this.  Both Social Security and the Australian superannuation system are well designed for a highly mobile workforce.   Expanding Social Security or establishing a mandatory 9% private retirement plan contribution would both be big steps.  But only big steps can really address what is wrong with our retirement system specifically, or more generally the long term rise in economic insecurity that is plaguing our economy and our politics.

Thanks to Urban for hosting this debate.  As other debaters have shared, wage stagnation for many households contributes significantly to financial instability and fragility.  Wages for too many workers are too low to allow them to save their resources to endure unexpected expenses related to health crises, periods of unemployment or underemployment, housing, transportation or child care cost spikes.  

 

However, another dimension of the wage issue is that not all households have experienced the financial instability challenge in the same way. Among workers of color, poverty is increasing at a higher rate.  Demographers tell us that in 15 years the majority of American workers will be of color.  We cannot afford to have such a significant portion of our population lagging behind in wages, nor increasing instability for millions of hard working families.

 

Picking up on the safety net point: our antiquated safety net was not designed for the ups and downs of today's workers. Urban research finds that our key food assistance program (Supplemental Nutrition Assistance Program, SNAP), rather than unemployment insurance or cash assistance (Temporary Assistance for Needy Families, TANF), primarily stepped in to help people with low incomes during the Great Recession. As designed, the safety net does not address volatility, and can make it worse—ups and downs can cause families to lose their benefits, and the current system does not respond rapidly to changes in circumstances.

Relying on ones’ own personal safety net—like personal savings—would be great, but creating personal savings is a struggle in the current system (we can get to this later). Updating our safety net to meet the realities of today’s labor market is key, as is increased attention to specific vulnerable groups, such as people with disabilities—who might be better served with some work and disability rather than total disability.

We also need reforms to our unemployment insurance system. The program should cover more low-wage workers and consider the realities that today’s workers face. Good jobs are clearly key to this discussion, and low-income people say they want one good job. But broader reform is needed given today’s realities. When we consider costs, we shouldn’t forget the long-term costs on children of growing up with instability and unpredictability.

Thank you all for your thoughtful and lively responses.  Please keep it up!

I’m hearing agreement on the growing size of the problem, that it has to do with both income and expense volatility, and that it cuts across income and demographic groups although lower income and minority households are hardest hit. I think we’ve also got agreement that wage stagnation and policies that have shifted risks from the government and employers to individuals and families have played a large part in creating insecurity.  But there’s also recognition that globalization, technology and international competition are playing a role.  

And we’ve started discussing the need for both shorter-term and structural changes, recognizing that families need help today—and for close-in needs—as well as the ability to plan for tomorrow and for the next generations.  

Let’s push that discussion along.  Our second question is: Can you take a deeper dive into the policies—particularly at the federal and state level, and practices—of employers, the financial sector, service providers (think colleges and hospitals), that could help reduce family financial instability.  Be clear about whether these are relatively short term changes or will require major structural changes.  And, picking up on the point about eligibility in Caroline’s last post, please don’t forget the role of regulations (e.g., eligibility rules and practices) as well as legislation. 

In my earlier post, I mentioned the introduction of the federal Schedules that Work Act (SWA), which took place yesterday. The bill would guarantee retail, restaurant, and building cleaning workers two weeks of advance notice of their schedules and compensate them for last minute schedule changes, on-call shifts, split shifts, and shift cancelations. It would also give workers across industries the right to request schedule changes without fear of retaliation—a very real and justified fear for many low-wage workers. These policies are primarily about predictability – so while they may not eliminate volatility in income, they could help workers to plan for such volatility. For example, knowing one’s schedule in advance would make it easier to hold a second job or budget based on expected income.

In addition to SWA, fair scheduling legislation is gaining traction at the state and local level. Major cities, including San Francisco, Seattle, and New York City, have passed laws similar to SWA, and many states and localities are considering such policies. One of the policies that is passing at the local level would help to reduce involuntary part-time work, an important driver of income instability. These policies, known as “access to hours” policies, require employers to offer available hours to existing part-time employees before hiring new staff. This seems straightforward, but in fact many workers report that despite the fact that they ask for more hours, their employers continue to hire more staff and refuse to offer them much needed hours.

As with all labor standards, it’s important that these policies are enforced effectively once passed. In a report that CLASP and Young Workers United will release tomorrow, we find that although workers deeply value the promise of San Francisco’s fair scheduling law, the city needs to step up its outreach and enforcement activity to make sure it is a meaningful policy.

To pick up on Anita’s point, fair scheduling policies address serious racial inequities. Data show that workers of color are often most likely to suffer from the effects of volatile schedules. In Seattle, a survey conducted prior to the passage of the city’s Secure Scheduling law last year, showed significant racial disparities along several different measures of scheduling instability.

Scheduling policies are one key piece of the puzzle when it comes to labor market side policies to address volatility. Other labor policies, like access to paid sick days and paid family and medical leave, could help to reduce income volatility that results when workers lose wages and jobs because they lack protections. While we work toward passing these job quality public policies, we should continue to think creatively about how to improve the quality of jobs.

In terms of policy solutions, any new mandates on employers make me nervous that low-wage workers will ultimately be hurt through a reduction in employment. Or they will be hurt by employers increasingly shifting to paying employees "off-the-books" to avoid mandates; mainly because the mandates interfere with their ability to run their business. When I lived in New York City, I often heard from business owners in my neighborhood that City laws were pushing them out. This is not good for the community, or for potential workers who would have worked there. 

But public policy can still have a role. Child care assistance needs to be more amenable to nonstandard work hours and last minute care needs. And the EITC should be provided in monthly or quarterly payments to provide a continuous income stream to families. Steve Holt authored a paper last summer, that among other things, outlined a way for payments to be more regular. Congress needs to address this issue with the EITC, as well as the Child Tax Credit and other tax credits for low-income families.      

 

 

Thanks again to all of you for your lively and thoughtful participation in this debate.

We’re going to end with a question about the role of community in family financial stability. If we think of community as a network of family and friends—sometimes focused around an institution such as a place of worship or a school, or around a common origin or set of experiences—the Financial Diaries work suggests that community can play an important positive role, for example by buffering financial shocks with informal loans or by holding savings and allowing them to be tapped only for long-term goals or true emergencies.  On the other hand, lower-income communities, in particular, have limited resources, and are strained to, or simply cannot, solve longer-term or structural problems.

Community can also have a broader meaning—a neighborhood or town, a group of like-minded individuals coming together to press for policy change, a union.  As Liz points out, we are seeing increasing interest in working at the local level to achieve change of all sorts.

Our third and last question is: What is the role of community in preventing and mitigating family financial instability.  Please make sure you define community as you respond.

Thanks to Urban and all the contributors to this debate for a lively conversation. Yesterday I described the growing movement to pass public policies establishing fair scheduling as a basic labor standard. While I focused on the policies yesterday, it’s the movement that I want to underline in response to Ellen’s final question about community.

As I noted earlier this year in a guest blog post for the Aspen Institute, it is impossible to understand the issue of volatile work schedules without acknowledging the vast power imbalances between workers and employers that exist in today’s workplaces. Worker power – or lack thereof – is at the heart of so many of the labor-side problems that contribute to income instability. For example, low-wage workers have little opportunity to give input into their schedules. When they ask for more hours, they often get nothing in return. And, perhaps most tellingly, many workers are too scared to ask for the scheduling accommodations that could bring more stability to their lives, fearing retaliation by their employers, including job loss or reduced hours, which would only further undermine their economic security. In today’s political climate, this fear of retaliation is heightened for immigrant workers, who are rightly concerned about retribution based on immigration status.

What do these examples have to do with community? Central to overcoming the power imbalance in the workplace that leaves so many workers in precarious situations is worker and community organizing. As we witness legislative wins on scheduling policy in a growing number of jurisdictions, the force behind these wins is the effort of a growing number of workers and community members who are coming together to claim their collective power and challenge the status quo. Whether through traditional labor unions, alternative worker groups, or community organizations, this organizing itself may be as much a part of the solution to unfair scheduling as the laws that are passing as a result of its success.

Finally, we hope you’ll check out the report CLASP released today in partnership with Young Workers United, which examines the implementation of San Francisco’s groundbreaking fair scheduling law. We find a need for greater outreach and enforcement to maximize its effects – an endeavor that will require a combination of government action and continued organizing on the ground.

As Ellen summarized, families face complex issues—increasing costs for housing, health care, child care, and education—all in the face of stagnant wages. There’s clearly no one-size-fits-all solution.

More stable jobs and a stronger, more inclusive unemployment insurance system can help prevent instability. But when instability hits, families need a cushion. That can be access to a loan product that helps people succeed, as well as personal savings.

Greater adoption of employer-based emergency loans can help workers address current needs and improve credit scores. The employee/employer relationship simplifies the underwriting and approval process, which is important, as quick access to funds is often key for borrowers (and can keep borrowers out of predatory products). Loan products that have a mandatory savings component have the added benefit of helping people build savings.

As was raised earlier, some people increase their tax withholdings to save. But this strategy comes with the unattractive consequence that people can’t access their money when an emergency hits, unless it happens right at tax time. Instead, can we get people to put that money in a MyRA (launched by Treasury) and make it easy via employers? The MyRA has been marketed as a retirement account, but it can function as an emergency savings account and people can withdraw their money without penalty when they need it (within 3-5 days). Broader marketing and greater use of this account would help families access savings when income drops or expenses spike. Also, if there’s a move to disperse EITC payments during the year (as others have recommended), we should look at whether the MyRA can play a role.

In this vein, the federal government should incentivize emergency savings for low- and middle-income families, such as via the previously proposed but not enacted Financial Security Credit Act. Currently, federal asset building subsidies are lopsided and primarily benefit high-income taxpayers who need them least. In addition to incentivizing saving for low-income families, the federal government should relax asset limits in safety net programs so as not to discourage saving.

Finally, getting down to communities, Urban research finds that the financial health of cities is linked to the financial health of residents; as little as $250-$750 in savings can help. Cities should address the financial realities and needs of residents; one place to start is with their own employees.

I really appreciate this question.  It makes me think of two examples.  

The first is the Boyle Heights Promise Neighborhood in Los Angeles.  This community has both a definition rooted in place as well as the cultural experience of its residents who are almost entirely Latino.  In a neighborhood where financial instability has preceded gentrification and displacement for many families, a collaborative of schools, parent leaders, students, and community organizations worked with vulnerable renters households to help them get in a positive financial situation where they will be able to purchase a home.  

 

The second is Rainier Valley, located in South Seattle. It is a multi-cultural low income community with a significant immigrant population.  Many in the community lack of access to a vehicle cut them off from a range of opportunities from education to accessing jobs in downtown Seattle.  To travel to the nearest community college via transit they would have to make a 75-minute trip each way via 3 buses, whereas a car trip would have taken 25 minutes.  A coalition came together to advocate for an infill light rail transit stop in their community.  They were successful, and in a few years the community will have an affordable transportation option that connects them to opportunity.

What a great question to end this conversation with, Ellen. As you mentioned, the Diaries showed deep financial interconnections among families. Only 5% of the families we got to know had no financial interaction with anyone else. Everyone else either borrowed, saved or shared resources with a friend or family member over the year. For 40% of the families, these were loans, though often the loans were interest-free or had very flexible repayment expectations.  So, for many people, friends and family are the first line of defense to manage financial ups and downs. In some ways, this is a cause for optimism. Communities are distributing resources around, making the most use of the cash they have on hand by shifting it to whoever needs it the most. Carol Stack had this insight decades ago during her landmark work in All Our Kin, and seeing it in research today is a powerful reminder of the compassion and resourcefulness that people bring into their financial lives.

But, there is an inherent barrier here. Communities can only share around the resources that they have, and lower income, lower wealth communities have less to work with.  So, the key question has to be: how do we bring more resources into lower income, lower wealth communities? 

Larger institutions all have the opportunity to play this bridging role, bringing more resources into struggling communities. Local colleges, hospitals and private companies can hire locally, and source suppliers locally. Financial services providers can make more investments in lower income neighborhoods, making more capital available -- and they can develop new products that support the financial activities that are happening within communities. Employers can engage deeply in the financial health of their employees and communities. Government can adopt policies that make these activities more likely.

Thank you  to Urban and all of the other experts participating in this conversation. The best way that communities can prevent and mitigate financial instability is by holding their elected officials and stakeholders accountable. They must demand that their leaders address the systemic policies and practices that have led to the vast income inequality,  household and neighborhood financial instability,  and the growing racial wealth gap we see today. ( By community, I mean residents of a given neighborhood, city or state, all low-income people, and people of color.)  

In order to do this, first community members must understand the ways in which systems promote and perpetuate financial insecurity and the racial wealth gap.  At PolicyLink, we have identified 5 major systems that play an integral role in household finances, which affect neighborhood stability and the larger economy. These systems are A) our financial system,  B) the education system, C) the justice system,  D) our healthcare system, and E) the tax code.  In the report Breaking the Cycle: From Poverty to Financial Security for All we demonstrate how these 5 systems compound on low and moderate income people in ways that strip wealth and leave them financially vulnerable, while the same systems operate in ways that enhance and protect the wealth of high income people. 

Our financial system charges low income people higher interest on loan products, charges fees for basic bank access, and closes bank branches in low income communities. The effect is that low income communities, especially those of color, have more predatory payday lending and check-cashing institutions in their communities than banks. 

Our education system penalizes people of color, especially boys and young men of color, by funneling them into the prison system - limiting their economic prospects before they reach adulthood. The financialization of higher education puts teenagers in the position of making one of their largest financial decisions of their lifetime - taking on student loans. Students of color take on more loans than their white peers while getting a lesser return on that investment. A white high school drop out has a higher net worth than an African American who has graduated from college.

Medical debt remains the primary cause of bankruptcy across the country. Our current political leadership at the national level aims to exacerbate this problem by repealing the Affordable care act, essentially creating a tax windfall for the wealthy.

Our justice system has a lengthy history of targeting and criminalizing people of color and the poor. One often overlooked way  in which this happens is the practice of charging excessive fines and fees, primarily to those who cannot afford them. This practice leads to incarceration for non-payment, creating cycle of continuous financial burden - a debt trap. 

Finally our tax code, the largest wealth distribution mechanism in our nation, overwhelmingly benefits the rich. Over $660 billion is funneled form the federal government directly to households annually in the form of credits  and deductions. The top 1% of earners receives more from these credits and deductions than the bottom 80 % combined. 

While it may seem a tall order, these are the key areas of policy that communities must address in order to promote financial security for all. 

This is really a great question about community and what the role of community should be in addressing financial insecurity. Years ago, family and community (largely the faith community) were the social safety net for vulnerable families. But as a number of sociologists and others have found, the institutions that form our communities are breaking down and people are increasingly segregating by income. Robert Putnam's "Our Kids" and "Bowling Alone" summarize much what has happened in communities across the country. As communities segregate by income, lower-income families no longer benefit from what more affluent families can offer and vice versa. This includes helping families during tough times.  

This is a critical point because in the absence of a "community" to provide a safety net, people increasingly look to the government. But government is ill-equipped to deal with every problem a family faces, including income shocks. I worked for New York City's Department of Social Services for almost a decade and, however well intentioned, it was difficult for my agency to be responsive to every family need. That is why community, in the form of not-for-profits, churches, neighbors, and family were so important. It might be time that we expect more from each other instead of always looking for a government solution.     

Many thanks to all of you for your posts.  I urge readers to start at the top and read through all the posts; they (including the pieces linked) are wide-ranging and thoughtful.

Family financial instability has grown substantially over the last several decades.  That  instability arises from  both income and expense volatility, and it cuts across income and demographic groups, although lower income and communities of color are hardest hit. Participants agreed that wage stagnation and policies that have shifted risks from the government and employers to individuals and families have played a large part in creating insecurity.  But there’s also recognition that globalization, technology and international competition are playing a role, as are the strains on traditional communities of support.

The problem needs to be tackled at many levels, especially focusing on changes in work, in financial services, and in the policies of governments on multiple fronts.  Some participants called for community and worker organizing (including through unions) to press for improvement in communities and major changes in public policies—including some that have been developing over the past 30 to 40 years.  

In the end, what I think we can take away from this debate is that while we may have taken the initial step in solving any problem—namely recognizing and naming it—the country has much work to do if families and individuals are to be able to smoothly manage their day-to-day finances and have the resources to take pleasure in planning for the future.