financial racism

[LivingAlmostLarge]

We talk about on the personal responsibility with finances on this board. But we talk from a place of privilege. I say this as someone exceptionally priviledged now. But I have many family members not doing well financially. I was exceptionally lucky and everything has broken my way. But since I can see my own family mired in financial instability and poverty and racism I can say that it's super easy to blame poor people for being poor. We talked a little about student loans but it's the only way for poor people to get ahead. But why isn't there more avenues for them to get to a better life? Why isn't there more help for those really poor? I agree that up and down the income scale people need financial literacy. That in general I can say there are a lot of upper middle class families in debt because they make poor financial choices. That they overextend themselves with CC debt, car loans, student loans, and mcmansion. Often times they also live paycheck to paycheck and don't really save for retirement.

Those are the families that need financial counseling. Even those in the middle class often behave the same. Trust me I stare how people drop $1k on a phone for their 6th grader without a thought. How every new device is not a problem or expenses. But the really poor families? They are likely sharing a cell phone. Sharing data on a single line. They are getting a free hotspot from school right now. How can we help those really in need versus making enough but poor financial choices? I know that it is really hard when you are really poor to make good decisions.

Like we've often said when you are poor you shop at the $1 shop because you have $10 for the week. But it would be so much more efficient to shop at costco and buy groceries in bulk. But you might need a car to go to walmart/costco.

[disneysteve]

I can tell you exactly where this thread will go. Some of us will agree with you and agree that the system is greatly stacked against the poor. Others will chime in and say the poor are poor by choice and all they need to do is make better decisions and life will be beautiful. You see your privilege, as do I, but so many do not. Until we fix that, we will never make progress.

[srblanco7]

I read your post as making two points - primarily, that they system is stacked against the poor (poverty leads to more poverty) and secondarily, that there's a need for financial counseling & literacy at all income levels. I concur with both points and DisneySteve is likely correct as to where this thread will go.

I'll suggest that as we consider our responses to this thread that we ignore the hypothetical cases and examples of those who are not willing to work or are comfortable living off the benefits received from government social safety programs and focus on improving outcomes for those who are legitimately trying to improve or could improve with improved financial literacy.

Since the 1960's the US has implemented numerous social programs that assist those in poverty or those who fall into poverty due to economic cycles as a safety net. While there's evidence of success with these programs as a safety net (shorter-term use), the evidence that it's substantively improved long-term outcomes in permanently lifting people out of poverty or decreasing poverty in the US is, perhaps, circumspect (a reduction on a percentage basis from 19% in 1964 to 14.8% in 2014, but with population growth in the US an increase, in terms of real numbers, from 36.1M to 46.7M).

I'll offer a couple thoughts for consideration -

First, since 1964 CPI adjusted wage growth for those in the bottom two quartiles is non-existent or minimal. Noting that the top quartile has roughly doubled when considering the same time period (a clear indicator of long term trend of the "rich getting richer"). I do believe we need to increase the national minimum wage in this country, which currently sits at $7.25/hr and has not increased since 2009 (noting that many states/cities require higher amounts, resulting in an effective minimum wage of $11.80/hr). Even given this higher "effective minimum wage", it's still less in purchasing power than the 1968 minimum wage of $1.60/hr which equates to $12/hr in purchasing power today.

Second, official poverty for those without a high school degree remains about 15% higher when compared with those who completed high school. In my opinion, a clear indicator of the impact of education - which I believe is as close to a "magic bullet" as can be found on this topic. To this end, I believe that financial literacy should be mandatory course work in high school and that community college should be free of charge for starters.

[disneysteve]

Second, official poverty for those without a high school degree remains about 15% higher when compared with those who completed high school. In my opinion, a clear indicator of the impact of education - which I believe is as close to a "magic bullet" as can be found on this topic. To this end, I believe that financial literacy should be mandatory course work in high school and that community college should be free of charge for starters.

Education is critically important, but not just financial education. This is another way in which the system is stacked against the poor. Public schools are largely funded by property taxes. Great, except we have economic segregation in this country. So people and businesses in middle and upper class neighborhoods pay a lot more in property taxes so their schools have a lot more money to work with. In the poor neighborhoods, not so much.

Even if everything else is equal (which it never is), the kid growing up in the poor neighborhood is at a distinct disadvantage to the kid growing up in the well off neighborhood from the education received alone.

[Fishindude77]

We talked a little about student loans but it's the only way for poor people to get ahead. But why isn't there more avenues for them to get to a better life?

The above part of the original thread kind of jumped out at me.
1. The military has almost always been a place where someone of any income level could go to, learn, grow up, and get educated after high school. Many turn it into a full career.
2. All hands on trades are starving for help, and this route has been used for individuals to better their lot in life, and support families for a long time.

No cost or special education requirements to get into either, but you will probably have to be drug free.
These are just a couple examples, I'm sure there are many more.

[moneybags]

Even if everything else is equal (which it never is), the kid growing up in the poor neighborhood is at a distinct disadvantage to the kid growing up in the well off neighborhood from the education received alone.

Even in schools that are well funded, the minority student is still at a disadvantage. The high school I went to has a student population that is 50% minority, 35% low income. Average ACT scores in 2014 were 28 for white students and 18 for black students. There is something in the system that just isn't working. The school has been trying to work on this for years. I grew up poor, but I was white. I paid for my own college. If I were black, poor, same school, I'm not sure I even get into college.

[disneysteve]

Even in schools that are well funded, the minority student is still at a disadvantage. The high school I went to has a student population that is 50% minority, 35% low income. Average ACT scores in 2014 were 28 for white students and 18 for black students. There is something in the system that just isn't working. The school has been trying to work on this for years. I grew up poor, but I was white. I paid for my own college. If I were black, poor, same school, I'm not sure I even get into college.

They've proven over the years that standardized tests like the SAT discriminate by socioeconomic standing. Rich students do better than middle class who do better than lower income. There are a lot of reasons behind that but it's why the college board started piloting an "adversity index" to try and adjust scores based on that. I don't keep up on such things so I don't know what the status of that is today.

It's also why a lot of colleges have stopped requiring SAT/ACT scores. They are discriminatory and negatively impact admissions decisions, skewing classes toward middle and upper class students.

[cypher1]

They've proven over the years that standardized tests like the SAT discriminate by socioeconomic standing. Rich students do better than middle class who do better than lower income. There are a lot of reasons behind that but it's why the college board started piloting an "adversity index" to try and adjust scores based on that. I don't keep up on such things so I don't know what the status of that is today.

It's also why a lot of colleges have stopped requiring SAT/ACT scores. They are discriminatory and negatively impact admissions decisions, skewing classes toward middle and upper class students.

Same goes for Yale being investigated by the DOJ for discriminating against asians and whites enrollment. I'm sure the suit will get thrown out like Harvard was able to do a year ago.

[myrdale]

You see your privilege, as do I, but so many do not.

Yeap. It's funny, the harder you work, the luckier and more privileged you seem to get.

I did watch an interview of Thomas Sowell a while back where he discussed the financial leaps and bounds made by the black community from the end of slavery up to the 1960's. At which point when the government decided to "help". From that point forward things have been headed down hill. In my opinion the break down of the family structure is most to blame.

In 1960, 2% of white children were born to unwed mothers, while 22% of black children were.

In 2015, the numbers are 30% of white children and 70% of blacks.

All the racism in the world isn't forcing people to have children out of wedlock. Either a culture embraces marriage and the family unit or it does not. If a culture choses not to embrace the family it choses to put itself at an extreme disadvantage.

[disneysteve]

Yeap. It's funny, the harder you work, the luckier and more privileged you seem to get.

Privilege has nothing to do with hard work or luck, unless by luck you mean the luck of being born a white male.

[disneysteve]

Either a culture embraces marriage and the family unit or it does not. If a culture choses not to embrace the family it choses to put itself at an extreme disadvantage.

Off topic, but "marriage" and "family unit" are two different things. You don't need to be married to have a family unit. Marriage in most developed countries has declined significantly largely because of advances in gender equality. Women no longer need a husband to survive. They can have jobs, buy property, make investments, etc. all by themselves, which didn't used to be true.

And this isn't just a US phenomenon. It's true around the world. In fact, the percentage of births to unwed parents is higher in many places like Spain, United Kingdom, Denmark, Sweden, France, and more. I found a chart from 2014 and the US is actually 23rd on the list for % of births out of wedlock. But again, that doesn't necessarily mean they aren't in stable committed families. It just means they didn't get that piece of paper from the courthouse.

[myrdale]

You don't need to be married to have a family unit. Marriage in most developed countries has declined significantly largely because of advances in gender equality....... It just means they didn't get that piece of paper from the courthouse.

It is far more than just a piece of paper. Ignoring all of the religious baggage that goes along with it, marriage is a legal contract, a joint venture between two individuals. They are going to pool incomes, share expenses, yoked together to pull the same cart. When children enter the picture, you have two people to carry that burden. When one spouse looses a job, the family still has a source of income.

And why assume a woman doesn't need a husband to survive? A husband just as well benefits from a wife in the raising of their children. Men can cook, clean, fold cloths, vacuum, raise children, all by themselves. That doesn't mean the children aren't disadvantaged by not having a mother present in the household.

Are some people better off divorced? Drug use, infidelity, violence? Absolutely. But back to the business comparison, poor service, stealing from the company, not showing up to work and the business is going to fail. They are better off not being in business, but the investors suffer, as do the children.

[disneysteve]

marriage is a legal contract, a joint venture between two individuals. They are going to pool incomes, share expenses, yoked together to pull the same cart. When children enter the picture, you have two people to carry that burden. When one spouse looses a job, the family still has a source of income.

None of those points require you to be married. Nothing about getting married insures that all of those things will happen as listed. I know plenty of married couples (including some at this very site) who don't pool incomes, don't share expenses, and don't "pull together". I also know plenty of unmarried couples, some who have been together for decades, who very much do those things. The easiest examples come from same sex couples who, until just a few years ago, weren't even able to get married. I have good friends who have been together for 20 years. They have 3 children. They are as committed as life partners can be. They've only been married for 1 year. Did anything change when they got married? Not at all. It was purely symbolic though it does also provide some legal protections since our country is still so screwed up in this department.

All of that said, I'm certainly not anti-marriage. My wife and I have been married for 28 years. If I had to do it all again, I'd do it the same way. But to say that you must be married to have a stable family unit simply isn't true.

[myrdale]

Privilege has nothing to do with hard work or luck, unless by luck you mean the luck of being born a white male.

Does white privilege exist in China?

If I'd been born a Hutu in Rwanda, would i be privileged?

Women account for 51% of the population. Its a coin toss if you're born male for female. Please define what non-biological benefits were bestowed on me at the moment of conception? If women can have jobs, buy property, and make investments, all by themselves, what is the disadvantage?

Thanks to female privilege, they suffer fewer suicides, less prison convictions, less work related deaths and less war related deaths and injuries.

The only possible privilege which could be legitimately argued is that of living in The United States of America. And that privilege is thanks to the work done by white males 224 years ago for themselves and their posterity. That applies to everyone equally, regardless of gender or race.

[myrdale]

But to say that you must be married to have a stable family unit simply isn't true.

I am too assume you're not saying I said that, because I did not. I did say they are at a disadvantage.