One of the most effective ways that government can fight poverty is to help individuals and families prepare for and manage financial distress -- when a job disappears, or wages are cut, or the bills pile up too high. And right now, with unemployment above 8 percent, and with many families struggling to make ends meet, we are a nation still in the throes of financial distress.
When people find themselves in financial distress, too often they don't know where to turn. This can lead to desperate decisions -- including borrowing through high-interest pay day loans or turning to bogus "debt settlement" shops -- decisions that inevitably make a bad situation worse. It is estimated that the average American household is carrying about $16,000 in credit card debt, with many struggling to pay it down. While many of the people who turn to fringe financial products and services have credit cards, they do not have a bank account. According to recent data, there are 9 million American households that do not have a checking or savings account. The "unbanked" are concentrated in cities. And so it is only natural that cities, like New York, are now taking a leading role in tackling this issue.
Traditionally, financial literacy services have been an ad-hoc mixture of classes and workshops run primarily by nonprofit providers, and some government agencies and financial institutions, with no common standards, no measurable goals and limited accountability for results. More importantly, the information is often general and not targeted to the specific (and often complex) financial challenges that individuals and families face. In New York City, we set out to change that in 2008 by creating Financial Empowerment Centers. We hired, trained and certified a skilled staff to offer free, one-on-one financial counseling to clients. The professional counselors help clients to manage their money, reduce debt, plan their financial futures, improve their credit and find affordable banking services.
Over the past four years, our professional counselors have conducted over 28,000 individual sessions, helping New Yorkers pay down over $7 million in debt -- and increase their savings by over $900,000. We've also helped many clients recover from incidents of identity theft and, perhaps most importantly, open mainstream bank or credit union accounts.
Our Financial Empowerment Centers are directly improving residents' bottom lines. But there is also a multiplier effect that is making other government programs more successful. For instance, we've seen how we can achieve better and quicker results for participants in social service programs when financial counseling is inserted into the mix. And when we speak with staff at our workforce development programs, they say that financial counseling is helping to remove one of the most common barriers to job retention: running out of money for subway or bus fare. Integrating financial counseling into our service delivery helps citizens to better manage their budgets, reducing the likelihood they will miss work and lose earnings.
When we initially launched the Financial Empowerment Centers, we did so as a pilot project with private funding. But because the Centers have been so successful, the city now is publicly funding them. When I speak with mayors around the country, it's clear we are all facing the same challenge: doing more with less to help low-income families get through these tough times and put them on the path to financial stability and independence. The purpose of Financial Empowerment Centers is not to provide temporary relief, but lasting knowledge. Give a man a fish, the old adage goes, feed him for a day; teach a man to fish, feed him for a lifetime.
The Mayors Project at Bloomberg Philanthropies will make Financial Empowerment Centers its next investment. The Mayors Proiect spreads effective programs and strategies between cities and helps mayors work together in new ways around solutions. Other Mayors Project investments include Cities of Service, Innovation Delivery Teams and the Young Men's Initiative.
Through a partnership with Living Cities, Bloomberg Philanthropies will invest $16.2 million over the next three years, through a competitive grant process, to launch Financial Empowerment Centers in five other cities. We expect these investments will yield the same great returns that they have in New York City, professionalizing the field of financial counseling and helping tens of thousands more people gain control of their financial futures. And if successful, the Financial Empowerment Centers in these five cities will make a powerful case for cities around the country -- and the federal government itself -- to begin taking up this important work.
Public-private partnerships have been critical to New York City's ability to pioneer innovative new policies and programs. And just as we look to other cities to learn best practices, we hope that our experience in professional financial counseling and empowerment will show that -- even in a time of tight budgets -- giving people the tools they need to help themselves is not only a compassionate policy, it's a smart investment in our future.
Follow Michael R. Bloomberg on Twitter: www.twitter.com/MikeBloomberg
Randi Weingarten: Financial Knowledge Can Be Economic Destiny
When government does this, then people don't bother to do it themselves. Why should they?
Bloomberg defended his action with the standard conservative claim that jobs are best created and kept through the private sector, rather than government, and that companies would leave the city if the government did not allow them to pay low wages. Read the story at Gothamist.
http://gothamist.com/2012/04/25/billionaire_bloomberg_vetoes_living.php
If anyone wants to argue why amnesty programs don't work they should look to Reagan's amnesty program that turned NYC red.
Yet notice-- the pay compensation for executives has never been at a higher multiple compared to the lowest worker, or average worker's pay, than it is today. So the money travels up without effort yet cannot reach bottom with any force at all.
Received wisdom from the spokemodels of the 1% will not make you wise.
pursue democracy rather than scatocracy (see: scatological).
"This can lead to desperate decisions -- including borrowing through high-interest pay day loans or turning to bogus "debt settlement" shops"
Or even quantitative easing (see: wheelbarrow economics).
"Traditionally, financial literacy services have been"
thwarted by intentionally confusing entrapment techniques (see: small print).
"find affordable banking services"
by setting up a system run for the exclusive benefit of the customers. (see: co-operative banking)
"there is also a multiplier effect"
achieved by fire walling-up the missing partition between casino institutions and the bread and butter ones. (See: segregation as a survival strategy/bulkheads in the Titanic)
"one of the most common barriers to job retention: running out of money for subway or bus fare."
When all of a worker’s wages do not cover the bare necessities of existence, it is no longer a job. (see: indentured slavery)
"we are all facing the same challenge:"
(see: the rise of totalitarian regimes)
"Give a man a fish"
Then demand he pay back a whale. (see: the single minded and obsessive Ahab)
"The Mayors Project"
hopes to provide fodder for the stallions in Wall Street.(hear: crazy horses)
"Public-private partnerships have been"
characterized, as socialism for as long as someone else’s money lasts. But wouldn’t that imply that it was possible for an entrepreneur to create a multinational corporation in isolation?(see: Robinson Crusoe inc)
Sure OWS had some problems, but any large and rather unorganized, highly diverse
group would; and we have on yout, etc. the right wing trying to make them
look worse, passing out pot smoking papers, etc. [ not that
pot should be illegal ].
The NYC elite has also clamped down on any attempts
by survivor families to find all the answers about
that terrible day; we have to ask, just as with Bush/Cheney
opposing any investigation, what are they afraid we
will learn ?
There will be an unfinished crater where once there was a deeply loved, historical neighborhood that did not want "growth".
This is a development project Bloomberg approves of.
I have a better idea than "public-private partnerships": why don't we TAX the 1% at a very high rate, so that government can afford to help ordinary people again?