The Ladder

A Blog from New America's Asset Building Program

Asset Building News Week, January 28-February 1

Published:  February 1, 2013
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The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include jobs and unemployment, homelessness, education, and payday lending.

Jobs and Unemployment

Racial segregation in the workplace remains pervasive and complex to address. New York Times’ Economix blog writes that, “Five years into the 21st century, the data reveal a surprisingly high level of job segregation in which African-American men, white women and especially African-American women only rarely worked in the same occupation in the same workplace as white men. In order to create a completely integrated private-sector workplace, more than half of all private sector workers would need to change jobs.” Sarah Shannon, a sociologist at the University of Minnesota, evaluates the success of publicly-funded job creation programs, which target people returning home from prison or those with substance abuse histories. She sees these programs as especially critical in times of high unemployment, such as now (see the Bureau of Labor Statistics Friday jobs report for more on that front).

The National Consumer Law Center has released an important new report evaluating the usage of prepaid cards for unemployment benefits. While many states have eliminated fees associated with the use of these cards, NCLC finds room for improvement. Five states (California, Indiana, Kansas, Maryland and Nevada) are actually violating federal law by requiring that workers who receive benefits do so on the state vendor's prepaid card. Meanwhile, Arkansas is weighing the merits of drug testing its unemployment benefits recipients, in response to complaints about jobless people using drugs. Elizabeth Lower-Basch of CLASP isn’t convinced that this type of legislation is legitimate: "It's all part of the same pattern of stigmatizing people and blaming them for facing hard times, rather than recognizing that we're still in a slow recovery and that many people are struggling through no fault of their own."

Payday Lending

A MinnPost article, produced with support from the Northwest Area Foundation (who have guest blogged for us before), finds rising demand for payday loans in Minnesota. North Carolina advocates successfully stopped a bank that was seeking to market a payday lending product to consumers. As Jeff Shaw of the Raleigh-based North Carolina Justice Center put it, “Especially in the wake of the bad lending that led to the financial crisis, banks should understand that the last thing we need is destructive loans that drag cash-strapped families down even further.” USA Today reports that while refund anticipation loans are largely unavailable from banks, other high-cost products still exist for people anxious to get their tax refunds. American Banker looks at the world of technology start-ups, many of which are getting involved with the short-term lending scene. As Jeanine Skowronski explains, “While these companies' business models vary, their ultimate goal appears to be the same: use some form of big data to drive down the cost of a loan so underserved customers can get credit without paying an exorbitant price.” It remains to be seen what privacy and data mining concerns emerge from these products.

Education

New America’s Education Policy program released a new report this week that presents a range of policy proposals to reform the financial aid for higher education system. Read our take on the report here. The Education program’s director Kevin Carey also has a piece in the New York Times about the issue of unpaid internships, in which he explores a number of the problems they pose, not just for students but for employers and institutions of higher education.

Homelessness

Nevada’s public radio station convened a show to discuss solutions to ending homelessness. This week many advocates for homeless people spent late nights participating in an annual count to identify how many local residents are without shelter. In Ohio, Kate Giammarise writes about the annual count for the Toledo Blade. Deb Conklin, executive director of the Toledo Lucas County Homelessness Board, tells her that the count is a snapshot of “who is experiencing homelessness, where are they experiencing homelessness, and why are they experiencing homelessness.”

Debt

The Nation has a long but fascinating piece on the history of debt in America, spanning all the way from the debtor’s prisons of colonial America to the Founding Father’s views of the immorality of debt to the present state of household debt. Steve Fraser argues that “Debt remains, as it long has been, the Dr. Jekyll and Mr. Hyde of capitalism. For a small minority, it’s a blessing; for others a curse.  For some the moral burden of carrying debt is a heavy one, and no one lets them forget it.  For privileged others, debt bears no moral baggage at all, presents itself as an opportunity to prosper, and if things go wrong can be dumped without a qualm.” His analysis of the role debt plays in our society and collective imagination is even more interesting in light of recent reports about the dealings of credit bureau company, Equifax, which has compiled detailed employment records on millions of Americans and is profiting from the sale of this information. As NBC explains, “The Work Number data is incredibly valuable to debt collectors -- and it may come as a surprise to many workers that their employers, directly or unwittingly, help debt collectors…Equifax markets The Work Number specifically to student loan issuers.” Also check out Demos’ blog coverage of the issue.

On the mortgage lending front, Three Atlanta-area counties have initiated a 145-page lawsuit against British bank HSBC that “alleges the bank targeted minority communities with expensive, sub-prime loans that often went into default.” In light of the national mortgage settlements, Senator Elizabeth Warren and Representative Elijah Cummings have asked federal regulators “to turn over documents outlining how borrowers were harmed by foreclosure missteps of 2009 and 2010, as well as demographic details on the borrowers, who will get compensation from more than $9 billion in settlements with servicers including JPMorgan Chase & Co. and Goldman Sachs Group Inc.” Since the housing bubble, there’s been renewed interest in how to make homeownership safe, particularly for lower-income borrowers. The LA Times reports on a product that some housing advocates are working to promote called the “Dignity Mortgage.” The article explains, “The proposal starts with the classic subprime trade-off: a higher rate for a higher-risk clientele. Borrowers would pay 1.25 percentage points above the going interest rate, maybe 4.75% if more creditworthy borrowers were paying 3.5%. But the deal would get better if borrowers made timely payments for five years. At that point, the extra money they had paid in interest would be used to reduce the mortgage balance, and their rate would be cut to whatever borrowers with sterling credit and 20% down payments were charged at the time the loan was made.”

Quick Hits

The Boston Globe reports on a new study of the racial wealth gap conducted by Rourke O’Brien, a former research fellow with the Asset Building Program. Among other findings, the study shows that black families earning more than $100,000 per year are about twice as likely to give money to friends and family members compared with white families earning the same income. These transfers explain a sizeable chunk of the gap in wealth holdings by race.

Atlantic Cities has a longer piece that explores the history of Youngstown, Ohio and what future development will look like there. The impacts of discriminatory mortgage lending, disparate access to other forms of credit, and residential segregation are pronounced.

Back in December, we mentioned Nick Kristof’s controversial Times piece about the SSI program. This week, the New York Times’ Public Editor acknowledges that “Since the column appeared, many advocates for the poor and disabled have criticized it harshly, questioning its statistics, sourcing and conclusions.” She concludes: “having read all the material – points and counterpoints, objections and defenses — I believe that some of the column’s assertions were based on too little direct evidence or used statistical information that is, at the very least, open to interpretation.”

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