The racial wealth gap has been a hot topic lately on our blog.  The United States remains one of the wealthiest countries in the world, yet escaping poverty and achieving prosperity remains out of reach for millions of Americans.  Too many people of color, striving to make a better life for themselves and their families, face significant barriers to building wealth and less access to opportunities that are widely available for Whites.

This 3-minute video from the Urban Institute sheds more light on the issue with a simple, compelling illustration.  This animation is based on research by Eugene Steuerle, Signe-Mary McKernan, Caroline Ratcliffe, and Sisi Zhang of the Urban Institute.

Click here to read OK Policy’s paper, ‘Closing the Opportunity Gap: Building Equity in Oklahoma.‘

Watch This Too:

• The New Jim Crow
• The Line
• Just the Facts
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Last week, State Representative Jason Nelson (R- Oklahoma City) expressed concern about a presentation given by Kate Richey, a policy analyst for Oklahoma Policy Institute, as part of a lecture series sponsored by the Oklahoma Department of Human Series. The apparent cause of Rep. Nelson’s concern, and that of at least one legislator who urged DHS to cancel the lecture, was that the talk addressed issues of racial disparities in Oklahoma. These issues, while uncomfortable to some, are a valid subject of  public debate and should be an urgent matter of legislative attention.

Oklahoma Policy Institute is committed to evidence-based analysis of state policy issues, and we will continue to promote policies that lead to expanded opportunity for all Oklahomans.  We appreciate DHS’ willingness to use its lecture series to raise awareness and foster debate on important policy issues, and applaud their decision to reject appeals made by members of the legislature to cancel the lecture.

continue reading Opportunity gap is a central, not ‘marginal’, concern for Oklahoma

The Oklahoma Department of Human Service’s Practice and Policy Lecture Series will host our very own policy analyst, Kate Richey, on April 25^th  to discuss Oklahoma’s racial wealth gap in asset building. The free event will take place from noon to 1 pm at the Oklahoma History Center located at 800 Nazih Zuhdi Drive in Oklahoma City. Click here to pre-register for the lecture.

Kate’s lecture, entitled Closing the Opportunity Gap: Building Equity in Oklahoma, is based on her report released by OKPolicy last year. Asset building refers to items necessary for prosperity such as a savings account, home ownership, and an education. Kate will outline how the housing crisis and Great Recession has widened the already present opportunity gap between whites and minorities in Oklahoma. She will argue that unless policy initiatives are implemented that facilitate asset building for low-income Oklahomans, the American dream will not only stay out of reach for thousands, but also hurt the entire state’s future economic prosperity.

A policy analyst for OKPolicy since 2011, Kate Richey possesses an extensive knowledge on a wide range of public policy issues including poverty, race, immigration, healthcare, and asset building.  She received her B.A. in Business from the University of Texas at San Antonio and her M.A. in Political Science from the University of Central Oklahoma. In addition to public policy research and writing, Kate also has taught government and public policy at the college level. Visit our Staff webpage for her complete bio.

 All lectures in the Policy and Practice lecture series are free and open to the public.  For more information contact the Office of Planning, Research and Statistics at 405-521-3552. View the complete lecture series lineup here.

A wide-ranging government modernization bill passed in 2011 required all funds disbursed from the State Treasury be sent electronically. A major effect of this provision is that the Oklahoma Tax Commission will no longer send paper checks for tax refunds. Oklahomans who did not set up a direct deposit for their refunds instead received a pre-paid MasterCard debit card.

The switch was made to save money for state agencies, but critics pointed out that these savings could come at the expense of Oklahomans who would have to pay new fees to access their money. The new costs include a 25 cent fee for using the card to pay bills online, a 75 cent fee to transfer the balance to a savings or checking account online, and a fee of $1.50 per month after 60 days of card inactivity. The cards would also be subject to ATM fees if not used at MoneyPass ATMs, which can be difficult to find outside of Oklahoma City or Tulsa. According to the Oklahoma Tax Commission, 87 percent of the debit cards issued last year accrued fees.

continue reading Expensive to be poor: Are we saving the state money by pushing fees onto low-income Oklahomans?

[Click here for our permanent page tracking safety net legislation]

[Click here for a list of active bills and their status (updated 3/19/13)]

A number of bills targeting safety net assistance to Oklahoma’s poorest families were filed this session.  Some are straightforward measures to limit or deny assistance by modifying eligibility, but many seem likely to foster suspicion about applicants and recipients of specific public benefit programs. Debates over how best to use the state’s limited resources are always welcome, but debates that air popular yet faulty assumptions about low income Oklahomans can do far more harm than good.

TANF (often called welfare) and SNAP (formerly food stamps) are cash benefit programs that primarily serve children, seniors, people with disabilities and low-income single parents.  They offer eligible Oklahomans, caught in turbulent life situations and struggling to afford basic needs, a safety net to catch them if they fall.  Unfortunately, regardless of their intent, many of these bills perpetuate inaccurate and mean-spirited myths and stereotypes about the poor while doing significant damage to critical safety net programs.  (Unemployment benefits, a cornerstone of the state’s safety net, is a hot topic this legislative session but will be covered in a subsequent post due to space limitations.)

HB 1909 forgoes a federal waiver that extends the time limit on benefits to able bodied adults without dependents in areas with high unemployment  Job seekers in some parts of the state still face stubbornly high unemployment rates and the prospects for living wage employment remain bleak, i.e. in communities of color and many counties in Eastern Oklahoma the unemployment rate is twice as high as the state average.

HB 2014 disqualifies anyone convicted of a drug felony from eligibility for SNAP  The implication here is not only that low income people are more likely to use and sell drugs than people who earn more, but also that because of their addiction they don’t ‘deserve’ assistance.  We’ve said it before and we’ll say it again: substance abuse and addiction is a disease.  Can you imagine a bill that barred diabetics or cancer survivors from applying for assistance?  

Working people with addictions or criminal convictions must overcome significant obstacles to secure quality employment.  When they fall back on the safety net in disproportionate numbers, it points to their disease and/or their precarious economic situation, not inherent degeneracy.  Barring them from the social safety net is like barring people who are illiterate from literacy programs.  It’s illogical, it’s costly, and children bear the brunt, as we’ve elaborated in a previous post.

SB 887 Bars food stamp recipients from knowingly permitting anyone else to use their benefit card; imposes prison time and fines  There are legitimate reasons why food stamp recipients might have someone else – a close friend, older child, caregiver – pick up groceries.  Routine household errands are a bigger burden for single working parents and folks with limited mobility.  It’s not uncommon in any family for an aunt or a teenage child to occasionally pitch in and help out with the shopping.  Yet SB 887 bill assigns food stamp recipients with fraudulent motives for doing so, even when an innocent motive is much more likely.

HB 2017 Imposes a savings limit known as an ‘asset test’ on food stamp applicants and recipients HB 2017 makes anyone who accumulates $5,000 in savings ineligible for food stamps.  It doesn’t sound so bad, right?  If you have that much money in the bank, why should taxpayers subsidzie your groceries?  The answer is simple.  Low-wage earners with families will never achieve independence from public assistance if they’re not allowed to save for emergencies, or necessary household items like appliances or cars.  A household’s income should determine eligibility for public assistance, not their savings: 

Asset limits often set a maximum threshold for saving that is far below the amount needed to cope with a medical emergency, car  breakdown or other urgent and unanticipated expense.  Beyond discouraging saving in the first place, asset tests can compel families to deplete existing savings before accessing help. Spending down savings to be eligible for temporary benefits can make financial stability more elusive in the long run, ultimately resulting in increased reliance on public assistance. 

HB 1908 Takes money from TANF to fund a public service campaign promoting marriage  As a standalone bill (perhaps one that galvanized faith groups and raised private funds), a public service campaign promoting marriage would reflect an admirable commitment to family values.  But a bill that does so by taking funds away from an anti-poverty program for single parents and their children is an entirely different can of worms.  No radio spot or billboard promoting marriage can help a single parent pay the bills, land a better job, or fall in love with a good partner and co-parent.  Shrinking an already paltry benefit (just $206 a month on average) to finance an endeavor that many single parents will internalize as patronizing is not the task of any right-sized government.

SB 667 Prohibits public benefit recipients from accessing electronic cards where liquor is sold, gambling machines are installed, or adult entertainment is offered  This bill does nothing to prevent the use of public dollars at nefarious establishments.  It simply prevents electronic debits and/or withdrawals from onsite ATMs.  What the bill would do is codify stereotypes: poor parents aren’t just lazy, they’re degenerate, and they’re spending money they desperately need to take care of their children on booze-soaked benders at casinos and strip clubs.

Perhaps most troubling about the slate of bills above is how quickly they are moving through the legislative process.  With the exception of SB 673, all of them have been approved by one or more committees in their respective chambers.  Two of them (HB 1908 and HB 1909) are being carried by the Speaker of the House, TW Shannon and leadership bills are more likely than not to continue to receive hearings and elicit supporters.  We urge legislators to take their time and carefully consider both the real and symbolic implications of these bills and hope that conscience and a sense of civic duty ultimately guide their choices.

**Click here to receive updates about the status of these bills as they progress**

Some core assets are best described as foundational:  health, education, and transportation are critical to our ability to achieve and maintain financial security throughout our lifetime.  Health, education, and transportation position us to obtain employment, generate enough income to make ends meet, and save for emergencies or long-term goals.  This post is the second in a running series based on our recent report, Closing the Opportunity Gap: Building Equity in Oklahoma, which assesses the racial wealth gap and proposes solutions for closing that gap through asset-building.  Our first post focused on historical roots of the wealth gap in Oklahoma.  Now we’ll consider wealth and assets in terms of their earliest and most foundational effect on Oklahomans’ lives and ability to build wealth.  

Health

Health is a person’s most fundamental asset. Poor health decreases quality of life, inhibits employment, and drains income.  Significant disparities exist in the health status and outcomes of low-income and minority Oklahomans. Inequities largely arise from differences in population health and socioeconomic conditions that are systemic and avoidable.  

There is mounting evidence that health in early childhood provides the physical, cognitive, and social foundation for lifelong health and well-being. Racial and ethnic disparities in prenatal, early childhood, and youth health are evident across several key indicators, summarized in our brief.  African Americans are especially vulnerable to poor health outcomes early in life, with the highest rates of preterm births, low birthweights, and children with special health care needs. They are also least likely to have accessed prenatal care and basic vaccinations.

Education

There is a strong correlation between educational attainment and income.  Countless studies also correlate educational achievement with a host of social goods, like political and civic engagement, lower crime and incarceration rates, and higher intergenerational educational attainment. The racial wealth gap is partially rooted in early gaps in educational attainment, which spill over to create income disparities and eventually wealth disparities.

Transportation

Transportation is a foundational asset because lack of reliable transportation can inhibit access to stable employment. Without a vehicle, finding and keeping a job is more challenging. There is a wealth of empirical evidence suggesting that car ownership boosts employment and earnings.

Cars expand employment opportunities by enabling workers to consider employment far from bus stops and with flexible scheduling (late night, holiday or overtime shifts). Oklahoma’s metropolitan centers lack comprehensive public transportation and navigating rural areas without a car is a significant obstacle to employment.  People living in communities of color in Oklahomans are almost four times more likely to report having no access to a vehicle [see chart].

Without the foundational assets listed above, securing a job that pays a living wage is all but impossible.  An individual must be healthy, qualified, and able to get to work before they can maintain stable employment and earn income to support their families and save for the future.  The next post in this series will explore disparities by race and ethnicity that spill over from foundational assets into generative assets, which represent Oklahomans’ capacity to earn.

David Stevens is President of the Mortgage Bankers Association.  This post is excerpted from remarks delivered at the Consumer Federation of America‘s annual financial services conference in Washington D.C. on November 30th, 2012.

We are in this unique paradox right now.  The ability to buy a home has never been greater from a pure economic standpoint and yet the rush to buy a home is not there.  Why is that? 

First, there has been incredible damage created in this country. Mistakes were made by bad lenders who promulgated products on unknowing consumers, by government regulators who pushed things like seller-funded down payment assistance programs and homeownership without any controls in place, by investors in their search for yield, and by rating agencies who competed to rate bonds and failed to really measure the true value of those bonds.  Real-estate agents saw ways to continue selling homes and make money. Some consumers speculated and thought homeownership was a piggy bank that could be tapped into endlessly.

The bubble was created and wiped out ultimately the wealth of millions of Americans.  There is no question that there is collective blame in this process.  At the same time, wherever we turn, we see headlines about institutions, particularly banks, which are the core focus of the Occupy Movement, the media, and law suits and litigation.  Banks made significant errors in the process over the past number of years; they also have pockets and deep ones and it’s an opportunity to go after these institutions. But I can tell you as a guy who has worked in financial institutions – bank [parent companies] don’t want to see their mortgage subsidiary ever get in the headlines again.

So the message that bank [parent companies] are giving to their mortgage companies is, ‘Don’t make a bad loan.  We never want to see this ever happen again and we’d just as soon get out of the mortgage business all together than have to deal with these headlines going forward.’  The other side of it is, as a result of this damage that has been created, we have this mass array of regulations coming on the industry.  Regulation that was needed, controls that are going to limit the ability of lenders, rating agencies, investors, realtors, to ever go down the path again of taking advantage of consumers.

They are going to protect consumers, but at the same time what we have is confusion. Lenders don’t know what rules are coming.  We have nine regulators in Washington all regulating the housing and finance system and none of them talk to each other.  Jim Perry, who heads the President’s team on housing at the National Economic Council, spoke at a conference recently and asked, “How do you correct what happened but not do so in a way where we are stuck with not enough liquidity?”  Clearly we have not threaded that needle yet.  

We know policy makers recognize this and I think this is the real challenge we collectively face, as those who want to get markets moving again. Credit is simply too tight, and it is tight for reasons that are primarily driven by fear, uncertainty, and the experience of the past decade. But whether it is mortgages or consumer debt, what we are seeing is access to credit is being restrained from all but the most wealthy, and we are seeing that draw lines that have ethnic and cultural boundaries to them, quite frequently age boundaries to them.

Simply put, what we are seeing is the average weighted FICO scores are going up and the barrier to entry has been raised. Is it a good thing? To some degree it is.  Fully documenting every borrowers ability to repay is the right thing to do. The question is at what point do you limit access to home ownership to all but some select demographic subgroups? Older and whiter get better access to credit in today’s market by pure demographic standards than any other variable.  The pendulum has swung too far the other way, overly tight new standards may be preventing credit worthy borrowers from borrowing to buy homes. 

We are also seeing a retreat from lending.  People say to me, “Dave these banks are just barking, they are going to lend don’t worry there is no desire to walk away from the market.” There is a literal exodus of lending institutions who are running away from the housing finance system because they simply don’t need the risk. I talk to banks everyday who tell me we just don’t want to be in the banking business, and quite frankly the largest number of them are smaller community, credit unions who are saying it is not worth the risk to be in the housing finance system there is just too much exposure associated with it. 

The point that I make constantly to people, this may not sound very politically correct, is you can sue them, you can regulate them, but you can’t force them to lend.  At the end of the day, we need to find the environment that brings balance back so that institutions will lend. Financial institutions should want to lend if it is profitable, that’s what they’re in the business to do. If they don’t succeed it is because they don’t see it that way.

As the economy recovers, household formation recovers. The final piece I want to emphasize is the generation to come.  This echo group generation, Generation Y, 80 million Americans born between roughly 1970 and 2000 is the biggest generation in history.  We have a generation market coming our way that is going to need a place to live.  So in the end this is my final side remark.  How do we get to a point where we can work in partnership?  Where we have clear rules of the road that protect everybody?  Consumers get to borrow safely; lenders to lend safely, and investors to invest safely so that we get a functioning housing finance system in this country.

Medical debt is money owed for medical goods or services, like doctor’s visits, lab fees, or hospital stays.  One survey of low-income households in eight states, including Oklahoma, found that 46 percent of low-income households carried medical debt.  National survey research has found that 41 percent of adults of all income levels have either accumulated medical debt, or had difficulty paying medical bills in full.  Medical bills burden too many Oklahoma households with financial insecurity, debt collections that damage credit history, and bankruptcy.  

Financial insecurity

Without health insurance, households at any income level can be financially devastated by a serious illness that requires frequent doctor visits, expensive treatment, or surgical intervention.  But even relatively minor illness can threaten the financial security of low-income households, whether they have insurance or not.  Co-pays and medical bills that aren’t covered by insurance, and lost income or employment from time-off work, can become insurmountable obstacles for those already living paycheck to paycheck.  Those without sufficient income to pay off their medical bills face few good options: spending down their savings, charging the balance to a credit card, taking out a loan or a 2nd mortgage, leaving other bills unpaid, or some combination of all four.

continue reading How medical debt erodes Oklahomans’ financial security

This post was written by OK Policy intern John Davis. John recently graduated from Oklahoma State University with a bachelors in political science and a minor in history. He enjoys researching and writing on a diversity of topics and looks forward to continuing his education.  

Small businesses, particularly very small businesses, are a critical component of Oklahoma’s economy.  Microenterprises represent a distinct subset of small business, those with 5 or fewer employees and start up costs of under $35,000.  They comprise the bulk of businesses nationally and locally - 88 percent of Oklahoma’s 345,630 businesses are microenterprises.  One way Oklahoma policy makers can empower and sustain this economic activity is to strengthen microenterprise development organizations, which provide access to affordable credit, often essential to starting or expanding a business. 

‘Microcredit’ refers to small commercial loans made to individuals seeking to start or expand a microenterprise.  Many microenterprise owners lack access to mainstream financial services, because their capital needs are too small, they have insufficient credit history, or their enterprise has not been in operation for a sufficient amount of time.  This post explains how expanding microcredit options can empower owners and entrepreneurs and boost economic growth in Oklahoma. Microenterprises are a significant part of our overall economy, and an important avenue for low- and moderate-income individuals to move up the economic ladder.  CFED (Corporation for Enterprise Development) President Bob Friedman, highlighted the importance of microenterprise startups:

continue reading Extending the Ladder: How microcredit expands economic opportunity

A recent broadcast of NPR’s MarketPlace Money featured a short commentary by Tom Lehman, a professor at Indiana Wesleyan University, defending payday lending.  Responding to widespread concerns about the high cost of payday loans and their tendency to trap borrowers on a treadmill of debt, nearly half of all states have either prohibited payday loans (15 states) or enacted tight limits on fees and loan usage (8 states), according to a recent report by the Pew Charitable Trusts.

In arguing against restrictions on payday lending, Prof. Lehman states that, “You do not help marginal borrowers by laying out their available options and then eliminating by regulation the one they actually choose.” However, his defense of payday lending is based on several major errors and mischaracterizations.

continue reading Payday Loans: Myths and reality