Director’s Message – May 2017

By Janet Byrd

Happy May! The team at NP is hard at work on several fronts this month, but we’re also trying to take some time for reflection.

April was financial capability month, and in addition to lots of information about strategies for financial education, behavioral economics, and tax time information, there were a few articles that asked a provocative question: is the focus on financial capability a distraction from policy work that addresses the racial wealth gap? Or, put another way, should we just focus on policy instead of assuming that financial education is needed? And, going one step further, doesn’t saying we need financial education imply a bias against families living in poverty or struggling to accumulate any wealth?

As much as I love and prioritize policy work, there’s a compelling set of reasons to also do work to empower consumers and build their financial muscles. And there’s new research out that helps us chart both paths – policy solutions and financial capability solutions.

Building financial skills and habits makes sense. We live in an increasingly complex marketplace and the barriers to keeping financial lives on track are big. Information, skills, tricks, and habits are our best hope for navigating the challenges.

  • Research by the Center for Financial Services Innovation shows that across incomes, it’s being able to plan ahead that most makes a difference in whether people feel financially stable
  • The US Financial Diaries project gives us real evidence of just how hard that is in today’s economy, with income volatility from season to season at a new high
  • Behavioral economics and scarcity theory demonstrate just how hard it is to make the right choices when life is moving quickly and demanding our attention

Changing policy makes sense too, and promises to make the changes we need at a scale that we need. We’re looking forward to Dr. Thomas Shapiro coming to town this month. He just released a book, Toxic Inequality: How America’s Wealth Gap Destroys Mobility, Deepens the Racial Divide, and Threatens Our Future, that shows us a way forward to designing policy that can counteract current and historic racially biased policies.

Join the conversation at City Club’s Friday Forum in downtown Portland on May 12th, Racial Wealth Gap: Hidden Costs / Visible Solutions. Several groups are also planning a book club discussion for later in May – let me know if you want to be part of other conversations on this topic.