Financial Security and Economic Mobility

Monday, February 9, 2015

AEDI's work is organized into the buckets of Children's Savings Accounts, college debt, wealth transfer, and financial inclusion, but all of these efforts are unified under the common umbrella of economic mobility, the animating ideal that spurs all of our research and informs our policy positions.

We believe in Children's Savings Accounts because of their potential to improve educational outcomes for disadvantaged children, giving them a better chance at using higher education to vault themselves up the economic ladder. We are concerned about student debt primarily because of evidence of how it can constrain individuals' mobility. We urge wealth transfers as investments in the economic mobility prospects of low-income Americans. And we encourage policies that support full financial inclusion because these institutions can be powerful catalysts of mobility.

As a result of this lens for our work, we spend a lot of time thinking about mobility--what facilitates it, what constrains it, what defines it--and, also, about the relationship between financial security and economic mobility, concepts often used interchangeably that, to us, have distinct meanings and implications.

Among the organizations whose work on financial security and economic mobility we most appreciate is the Pew Charitable Trusts. Pew recently reorganized its Economic Mobility Project to more fully explore the connections between financial security and upward mobility, and we are grateful for opportunities to talk about these dynamics with them as we grapple with similar questions. Pew is a research and analysis organization, not a policy advocacy group, but they are committed to providing accessible, relevant information, as are we. To facilitate robust engagement with these critical questions about what supports financial security and fosters economic mobility, they have produced high-quality, interactive materials, including one of my favorite online tools ever, the Faces of Economic Mobility, which illustrates a given household's likelihood of moving up in our economy.

I had the opportunity to moderate a Senate Economic Mobility Caucus event on student debt and economic mobility that Pew helped to organize in October 2014, and I was struck by their ability to fill a room with congressional staffers for an event explicitly pitched as focusing on empirical evidence, not political points.

As a Generation Xer myself, I appreciate Pew's recent attention to the financial fortunes of this generation, which has received far less attention than the Millennials. Pew has also examined the status of women in terms of economic mobility, compared generations' prospects for mobility, and analyzed the effects of the Great Recession on economic mobility today. We have often cited their analysis, which we find particularly valuable because they often use longitudinal datasets and weave together population trending with sophisticated statistical analysis. We have also benefited from their willingness to review our work and to exchange reactions to and ideas about policy developments and emerging evidence.

The asset field still has more thinking to do about the interface between income adequacy, financial security, and the foundation for economic mobility. American households will thrive when they have what they need to meet their obligations today and to build toward their dreams of tomorrow. Our policymaking systems should deliver both, and our research should examine both indicators. Otherwise, we run the risk of encouraging saving at the expense of present-day sufficiency or, conversely, failing to attend to how families can be 'securely' trapped in poverty.

We look forward to continuing to work with colleagues at Pew and elsewhere to articulate an asset-empowered vision, uniquely capable of providing both financial security and economic mobility.

 
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New Book Released

Today’s student loan system is in place because of a political compromise, and growing discontent with student debt may signal that this arrangement has run its course. While there are resources and organizations in place to help those struggling with debt, the time has come to consider a new direction for financial aid, William Elliott III and Melinda Lewis argue in “Student Debt: A Reference Handbook.”

Why KU
  • One of 34 U.S. public institutions in the prestigious Association of American Universities
  • Nearly $290 million in financial aid annually
  • 44 nationally ranked graduate programs.
    —U.S. News & World Report
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    —ALA
  • 23rd nationwide for service to veterans —"Best for Vets," Military Times