Poverty
The new Secretary of the Department of Housing and Urban Development, Julian Castro, was interviewed in an article for Politico Pro on the potential for using affordable housing as a platform for economic mobility. Castro specifically suggested the Family Self-Sufficiency program as a “robust” effort to help low-income Americans who rely on public housing to become economically mobile. While the article is behind a paywall and thus no link can be offered here, you can find some of our recent work on the FSS program in the form of a policy paper here.
A new book from University of Chicago Press shows the real-world impact asset limits can have on families trying to get ahead. In an article for TIME, the author of the book, Andrea Louise Campbell, explained one of the main problems with asset limits: When her “sister-in-law was horribly injured, she and her family had to spend down their money and assets to get the medical care they needed.” The book is titled Trapped in America's Safety Net: One Family's Struggle.
In an article for the Brookings Institution, Elizabeth Kneebone and Natalie Holmes analyzed new Census data to evaluate the relative progress made against poverty in urban and suburban regions. They find that while cities have made some small progress towards reducing poverty, suburban poverty remains “stuck” compared to previous years. Farther out in exurban regions, rural poverty, especially for children, remains a tough issue. Marian Wright Edelman reflected on the findings of a new report from the Children’s Defense Fund-Ohio titled “Health Disparities Are Leaving Ohio’s Rural Children Behind.”
Beyond health disparities caused by poverty, Susan Tebben of the Athens Messenger reported for WOUB public media in Athens, Ohio on further effects of high rates of poverty in small-towns. Poverty has infected the fair processing of the justice system in Athens, a place where the need for public defenders is rising at the same time as funding for the program is decreasing. Poverty is also getting in the way of peoples’ right to fair justice in Scott County, Mississippi, where those who cannot afford bail are sometimes held without indictment or counsel indefinitely. Two such cases provide the basis for an ACLU lawsuit underway.
Inequality
A widely circulated blog post this week by Demos’ Matt Bruenig drew out some staggering facts in the new SCF data about race, education, and wealth. Among the most important is that “white high school dropouts have more wealth than black and Hispanic college graduates.” This fact dispels the myth that education alone can solve the wealth gap and shows that race is a better predictor of wealth than is education. One academic seeking to address this inequity is Eduardo Bonilla-Silva of Duke University, who was profiled this week by Jerry Large of the Seattle Times. Bonilla-Silva argues that the problem of race is not explicit racism, but is rather a “nearly invisible brand of systematic racism.” In other words, the problem is “people collectively being complicit in systems that privilege one group while damaging others. Racism is more than prejudice[;] it’s a social system, and a very adaptable one.”
One of the ways the current economic system perpetuates inequality is through regressive tax subsidies that benefit only those who already have wealth. Gene Steuerle and his colleagues at the Urban Institute published an issue brief this week on “Who Benefits from Asset-Building Tax Subsidies?” The answer? The wealthy. Meanwhile, “the American middle class hasn’t gotten a raise in 15 years,” according to Ben Casselman at FiveThirtyEight. Another factor promoting inequality? Increasingly the economic gains of an economic expansion are captured by the top 10% of income earners. Vox passes along a shocking chart from MIT economist Pavlina Tchernava.
Financial Services
In Slate this week, Zachary Karabell went out on a limb and suggested that the return of subprime lending to the auto-lending market may not be such a bad thing. “The fact that subprime loans became the germ of a global financial crisis does not mean that these instruments are inherently poisoned”, he argued. Instead, “subprime loans represented an expansion of credit to buyers who couldn’t qualify for traditional loans,” and for that reason their return should be welcomed as an expansion of credit available to low-income borrowers. But staking out this position was bound to earn him some rebuttals. Matt Yglesias is one commentator who pushed back: “The question Karabell doesn't answer is what, exactly is the social interest in getting more people to own cars?” Looser lending is beneficial, he says, “when it finances productive investments” like new stores and factories, but not consumer goods like cars. Another reason subprime lending for cars may be a harmful practice is that it allows lenders to set particularly abusive terms for the loans such as installing “starter interrupt devices” in vehicles, potentially rendering them inoperable at inopportune times if the borrower is even a day late on the payments. Michael Corkery and Jessica Silver-Greenberg reported on the practice for The New York Times’s DealBook.
Walmart announced that it would join with Green Dot Bank to make checking accounts available to customers. The accounts would technically exist within a cell phone app run by GoBank, but customers could interface with the accounts at Walmart stores. Danielle Douglas has the full story for The Washington Post.
Quick Hits
Jonathan Cohn interviewed Betsey Stevenson, a member of the president's Council of Economic Advisers, about maternity leave, child care, and other ways to help working moms.
Andrew Khouri for the Los Angeles Times reported on the growing trend of older homeowners carrying mortgage debt into retirement.
