(En inglés) Helping Families Prepare for Income Changes Throughout the Year
Building Foundations for Economic Mobility Webinar Series

Anand Sharma: Good afternoon, Head Start family. Thank you for joining us for the latest installment of the Building Foundations for Economic Mobility Webinar series. Today, I will be your host as always or at least sometimes whenever I am your host. And this is Anand Sharma, and I'm with the National Center on Parent, Family, and Community Engagement which is one of the federal early childhood national centers. And these centers are focused on strengthening and partnering with folks like you and your programs to ensure better outcomes for children and families.

Now many of you have joined us for many of these webinars in the past, and you're veteran, you know how this goes, but for folks that are new, the building foundations for economic mobility webinar series has been going on for a couple years now, and it's really an opportunity to hear from your peers and other programs around the country and also tap into some of the expertise that exists around the country to help families as they try to achieve their education, employment, and financial goals. For today's topic, we'll be focusing on Helping Families Prepare for Income Changes Throughout the Year. And as many of you know, a family's financial wellbeing is often connected to how well they're able to plan for the future or absorb financial shocks. And, you know, for many Head Start and Early Head Start families change in income or an unexpected expense can result in severe financial strain that could impact both the child's well-being and set those families further away from achieving their financial goals. In the context of this conversation today when we talk about changing income, sometimes you may have heard the term fluctuating income, or income volatility.

All of those basically mean the same thing for our purposes today. And you can think of it as times throughout the year when someone's income, either it's higher than it normally is or it falls and it's a little lower than their income normally is, and those change that can make it hard for a family to plan. The other part of that equation is also the expenses, and sometimes families have unexpected expenses due to a car breaking down, and unexpected illness, or unexpected loss of work, or hours of their employer. So we're very excited to be able to have two experts here today to guide us through this conversation. And I just want to say a little bit about them and their organization. Lebaron Sims and Parker Cohen are joining us from Prosperity Now. Many of you know their work, they've been around for almost 40 years I believe, and they were formally known as CFED. And CFED, now known as Prosperity Now, have helped make it possible for millions of people, especially people of color and those with limited income to achieve financial security, stability, and ultimately prosperity.

Lebaron Sims is the senior research manager at Prosperity Now, and in that role he provides technical assistance to organizations and programs around data collection and data analysis, and he's the part of the applied research team. And Parker Cohen is also here with us, he's associate director, Savings and Financial Capability, and Parker has deep experience integrating financial capability services into social service programs like Head Start. So we're very excited to have them join us. Before we turn things over to them, just wanted to thank people who are sharing their thoughts and ideas with the lobby activity asking about when you kind of had an unexpected change, you know, either for the better or, you know, as a challenge in your life and how you dealt with that. And I'll just say that, you know, number of people said that it took them by surprise, they had to mourn the changes, you know, or deal with the disappointment but I think we have a resilient group of folks here, people said that, you know, they got over the initial shock and were able to explore some other options to reach their goals and maybe, you know, not exactly what they thought they'd be doing or the path they thought they'd travel, but they didn't necessarily view as the, you know, total set back.

So please, you know, keep sharing your thoughts, and we have a lot more time for questions and hearing your thoughts through that General Chat. So as we get in today's topic about changing incomes and helping families cope with that, I wanted to turn things over to Lebaron. Lebaron is going to talk a little bit about some of the data and help us understand exactly what we mean when we're talking about changing incomes and how that affects families. And then later on we'll hear from Parker who's going to talk about solutions.

So now that we understand what the issue is, what are some of the things that Head Start and Early Head Start and other early childhood programs can do to actually partner with families around dealing with these challenges? And, you know, based on the lobby activity that people share their responses to, I know it sounds like a lot of folks, you know, found some strengths to deal with those unexpected situations in their life, but there are things that Head Start programs can do to provide support and to partner with families so that they don't have to do it alone. And with that, I'm very pleased to turn things over to Lebaron Sims. Lebaron?

Lebaron Sims: Thank you, Anand. And thank you all who are attending this webinar, I appreciate it. And let's go ahead and start and dive right into the data. So just to start, I know Anand introduced my organization, Prosperity Now, but for those of you who are unfamiliar, Prosperity Now's mission is to ensure that everyone in our country have a clear path of financial stability, wealth, and prosperity. Prosperity Now is a national organization, but we do work with local and state level advocates all around the country through our Prosperity Now community and through our technical assistants works of which Parker Cohen, my colleague is one of our leads and our all-stars. We attempt to accomplish this very ambitious objective, again, to ensure that everyone in our country has a clear path of financial stability, wealth, and prosperity by conducting case- making research and by identifying innovative, programmatic, and policy solutions. Now our principal data and policy product is our Prosperity Now Scorecard. The Scorecard is a benchmarking tool that assesses the relative performance of the states and the District of Columbia on 115 outcome and policy measures related to the financial well-being of families and household in the United States.

Now of those 115 outcome and policy measures, 53 are policies and all at the state level, and 62 are outcomes. Outcomes like income poverty rate, home ownership rate, business ownership rate, uninsured rate, lot of several dozen others. Out those outcome measures, 21 are disaggregated by race, 14 are disaggregated by disability status, and 26 are available at local levels, including metro area, city, and county.

Now in the Scorecards ranking, again, we rate the relative performance of the 50 states and the District of Columbia to see which states are doing the most to ensure that their residents are on the track to financial stability and ultimately prosperity. And what we found is that the relative performance of the highly correlated with the degrees of social and economic inequality, both at the state and national levels, or rather the performance of each state is correlated with an inequality of opportunity and very few among the residents of the United States will be affected by systemic approach, of sorts, and of course, more than the population served by the nation's Head Start program. Over one in seven people in the United States live below the poverty line in the US and that's, you know, for reference 15.1 percent of all people of any age in United States.

Likewise, roughly one in eight household live below the poverty line, roughly 13.4 percent. Out of the individuals and households, specifically who live below the poverty line, as we all know here on this webinar, income poverty is not a permanent station, rather poverty status is mutable, you know, it's a threshold but it's not exact. You know, people opt in as a result of fluctuations in income, you know, job loss or a job promotion, any sort of change in job, change in location, change in station in the most basic or general sense can cause a family, a person, a household to either fall into poverty or rise out of poverty.

But, again, there's no guarantee that that position won't switch, that person who rose out of poverty will not fall back into poverty, and vice versa. And one of the main ways that people are able to remain above poverty or remain out of poverty is through their savings, through their net worth, and just more generally through household wealth, in a generational and for an individual household. At the median, again, 50 percent of the population below, 50 percent above, at the median, household net worth in the United States is nearly $77,000. But for household below the poverty line, the median is barely over $2,000. Now only $2,000 worth of household net worth isn't a lot that pays off any type of financial emergency and over 1/3 of all households in poverty have zero or negative net worth, again, that's in one in three. Now without that cushion, without that savings cushion, without that net worth cushion, there aren't really enough savings in these households for them to withstand any sort of financial emergencies, certainly not a major financial emergency.

And 4 in 10 households in the United States and that's all income levels are liquid asset poor, meaning that they don't have enough saved to pay themselves the poverty level income for three months in the event of an emergency. Now that poverty level income is $6,150 for a family of four and even lower for smaller households. Again, that's 36.8 percent of all households in the United States, but when you look at households earning below $20,268 or, you know, households that are in the bottom fifth of the income distribution, that number without a safety net spikes to 71.9 percent. That's nearly there in four, or nearly 3/4 of all households earning below $20,000. For comparison sake, of the households earning above $106,788 or, you know, for I guess simpler terminology, households earning in the top 20 percent of earners, only 7.2 percent of those household lack a similar financial safety net. A main reason for this is access to well-paying and secure employment. One in four jobs in United States is considered low wage or in a low-wage occupation, meaning that the annual wage paid by that job pays an income below the federal poverty rate for a household of three, which is $20,780, according to the 2018 Health and Human Services Poverty Guidelines.

Now again, we know a considerable portion of the population and poverty is employed and is employed at a full-time job, but when that job is not paying a living wage, it's little to no surprise that, again, one in five households have the significant income fluctuations from month to month, you know, so often — A household's ability to save is depended primarily upon that family or that household's ability to earn. And when that family or that household isn't earning enough to get by and isn't earning a steady paycheck or on steady hours, right, when the amount that a household is able to earn is dependent upon the number of hours worked in a given week, and that number can change. And it's, again, no surprise that these households are unable to save and are unable to kind of build that safety net, especially with all of the household balance sheet outflows, you know, all the things, the necessity on that households need to be able to spend their money in order, again, to stay afloat and to keep some sense or semblance of stability and continuity in their day to day life. Now of the states with the highest percentage of the low wage jobs, and you see a fair amount of overlap with the states, if you recall the outcome ranking map that we did before, that I showed before, you see a fair amount of overlap here of the states with the highest percentage of the low-wage job with the state that have the worst ranking in United States, largely in the deep South, and also in, I mean, Mexico.

Now part of the reason for this is, again, this idea of access to opportunity and access to resources. Again, without well-paying work and without, you know, transportation and support to get to well-paying job, it's hard for a family that's already kind of stuck behind the eight ball so to speak to advance, or to move ahead, or to achieve that upward economic mobility that every household and every family and in the United States is working so hard to achieve. Now again, without consistent earnings it's, again, little surprise that so many households that are, that are in that bottom income quintile, again, in that bottom 20 percent of household on the earning scale that suffer from housing instability. Now while nearly 85 percent of the nation's top earning households own their home, which again is one of the main sources of housing stability, fewer than 40 percent or less than half of that rate of the top 20 percent, fewer than the 40 percent of households in the bottom income quintile, that bottom 20 percent, own their homes.

Likewise when you look at renters in each income group, nearly 87 percent of renters in the bottom 20 percent of the income distribution are cost burdened, meaning that they're paying more than 30 percent of their income on rent and on related rental housing costs, and which again, these come up with limited income to save and to spend on other necessities like food, childcare, education both for themselves and for their children, and healthcare costs, which we know can be a major financial burden for a lot of families, and a lot of households. And with that, again, though there's been a fair amount of fluctuation in the healthcare market as of late, there are more people in the bottom income quintile that are with health insurance than there have been at any other point in, you know, since this data's really been collected. With that said, we're starting to see trends that showed that, you know, people in the bottom income quintile are starting to lose that health insurance. And right now, the most recent data in the Prosperity Now Scorecard showed the 17 percent of people in the bottom income quintile, again, the bottom 20 percent, are currently without health insurance.

And this is compared to 3.6 percent of people in the top income quintile, and 10 percent of the general population under 65 years old. And without health insurance, and honestly, even with health insurance, you know, one of the main reasons that people kind of suffer from the burdens of poor health, and the burdens — of the high costs of healthcare is this idea that health insurance is inaccessible, and affordable health insurance is inaccessible. This is particularly true among Hispanic and Latino, and African-American families. One in five Hispanic and Latino adults and one in six African-American adults purposely skip a doctor visit due to it being too expensive in 2015. Now all of this is also connected to a household ability to earn, not just earn but to better themselves through education. Of the population in the 20 percent or the lower 20 percent, only 30 percent of adults aged 25 years and older, and that's — I'm sorry, of that about population 13 percent, I'm sorry, 13 percent of adults aged 25 and older have a four-year college degree and that's compared to 56 percent of people in the top earning income quintile. And when we look at this connected to youth, which is population of young adults aged 16-24, who are neither in work nor in school, and we see that people in the, or young adult in the bottom income quintile are disproportionately out of work and out of school.

Twenty percent or 1/5 of the population of young adults in the bottom income quintile are disconnected, once again, are neither in school nor working. Again, this has major implications on not just their ability to save, but again their ability to meet certain obligations that are really necessary, to again, kind of stay afloat and provide those channels to opportunity, and that is so necessary for upward mobility. So before I turn it over to Parker, I'd like to just kind of talk a little bit more about some of the data that I presented, And some of the ways that you can access and share that data through our Prosperity Now Scorecard tool. And so if you go to Prosperity Now, sorry, yeah, ProsperityNow.org or go straight to the scorecard website at Scorecard .ProsperityNow.org and you access some customizable reports, both policy reports that kind of show you how your state compares on any of the 53 policy measures that we have available in the Scorecard in compared to the other states in the United States, as well as the District of Columbia. And we can also produce outcome data report, that kind of walk through all the data measured that I showed you, as well as others that are again, disaggregated by race, disaggregated by disability, and available at the local level.

So you can see how your city or your county compares to your state, the other cities, county, and metro areas, and states across the country. And once you access the data, you can use this data to help people within your organization and within your community understand the financial security or the fate of financial security of household in your community or in the region. You can see and share those racial disparities and outcomes to really see the real and tangible effects that the racial wealth divide that's having on America's community. You can compare your community to other cities, regions, or states across the country. You can start conversations with your partners, your stakeholders, your clients, your funders about the financial challenges that your communities and your clients are facing, and start talking about potential solutions. And you can help partners working in different styles in across different industries, and different groups, and different communities to see how your work connects with theirs and help each other collaborate. So with that, I'd like to turn it back over To Anand to walk through the poll.

Anand: Great, well, thank you so much Lebaron, it really helpful to see some of the current data that just helps us understand what are some of the challenges and pressure that families or many families, I should say, are facing and for folks who are, you know, regulars of the BFEM, Building Foundations for Economic Mobility webinar series, even though we're talking about changing incomes today, a lot of the data that we've saw speaks to some really important issue, and that really matter for us in the work that we do to partner with them and help them achieve their financial education and employment goals. But before we go any further and hear a little bit more about what you and your Head Start and Early Head Start program might be able to do to partner with families in dealing with some of these pressures, we wanted to have a poll. So we'd invite all of you to just take a few seconds to respond to this question on your screen, and the question is, "Does your program currently offer services to help support families manage fluctuations in income?"

And again, we just mean, does your program offer any services that help support families as they deal with income that may change, as Lebaron noted from, you know, month to month or sometimes even more frequently from week to week? So if you just take a moment to respond and let us know whether your program does offer those services in-house, whether you have a community partner that you refer families to, or whether you connect families to services in another way, or whether this isn't something that your program doing yet.

And it's totally fine to say that you're not sure, and that it's something you'd want to check with your colleagues about. So again, we'll give folks just a few more seconds to respond, it just takes a click, and it'll help us get a sense of where you all are at in terms of the different way that your programs are partnering with families. We'll give folks just a few more seconds, I see some answers still coming in. I just want to remind, folks, that, you know, as we head into the next part of our presentation and talk about some of these possible solutions or strategies, feel free to share your questions and ideas in the General Chat, and we'll have some time at the end and really want to focus on any question that would help you and your colleagues in Head Start programs, think about how you might be able to consider adding some of these strategies into your programming, and to partner with families around their financial goals. All right, just a couple of seconds.

And we'll close the poll, and you all should be able to see the responses there. It looks like a large percentage, almost 60 percent of the folks on this webinar do have a community partner that you're making referrals to. And another large proportion of you, just over 30 percent, it looks like do connect families to services but in some other way. We'd love to hear more now that you've voted in the poll through the General Chat about what exactly you're doing to connect to families. So if you have a community partner, what are some of those partners that you're doing to help family if you were changing incomes, if you're making, you know, referrals or connecting them in some other way, you know, what does that look like?

Feel free to share your thought and if you have questions as we continue, we can pick those too, but we also like comments, too. And I know your colleagues across the country are interested to hear what you're doing and in your program, and with the family that you're partnering with. So thank you so much for everyone that voted in the poll. I'm going to turn things over to Parker Cohen. As I mentioned before, Parker has a long history of working with different social service programs to help integrate those services around financial capabilities, and to help families in a wide variety of different settings. So with that, I'll turn things over to Parker.

Parker Cohen: Great, thank you so much, and it was really cool to see those poll results and seeing how many of you, you know, help your participants and your families improve their financial lives, whether directly by services you're providing or referring folks to outside services. And yeah, love seeing what's coming in on the Chat Box and seeing folks that provide, you know, financial education programs, and other sorts of services. So Lebaron did a really fantastic job of laying out what the data is around income fluctuations and issues that we're facing.

And, you know, one thing that we know from more recent research that's come out last few years, and this is something that you may be pretty in tuned to with your work with Head Start families is that, you know, there used to be a lot of assumptions made about the financial lives of families and that they make, you know, more money over time, so when you're 25, you may get a certain amount of money and then when you're ready to retire, when you're around 65, you make significantly more, and that financial emergencies such as a job loss are infrequent and don't happen that often. And that your paychecks are consistent.

You get paid, you know, twice a month and, you know, over the course of, every month, over the course of the year. And what we know is that for a really large portion of Americans, this is just not the way life is, and families have frequent fluctuations in income and also expenses from month to month, and it can be very difficult to smooth these and stay above water. And at the same time, emergencies are much more frequent than researchers thought, you know, folks may have emergencies that vary from, you know, just running out of gas, you know. Many folks may classify that as an emergency if you don't have enough money to pay for more gas to get to work, to what we think of as more, you know, more traditional as emergencies such as the health crisis or a job loss. So we’re seeing that that folks have much more unstable income streams, and this is of course having big impacts on their financial lives, and how we as social service and financial capability providers reach them.

So, you know, with that in mind and thinking of, you know, Lebaron's fantastic data overview, you know, what are some solutions here? And I will start by saying that, you know, unfortunately, there's no magic bullet, there's nothing for income fluctuations for families that will immediately solve these problems. But there are a lot of tools out there in the tool box that can help individual families. So the first thing I want to start with is talking over some innovations that have happened in recent years with savings programs. So, you know, with this understanding of the difficulty that families have with income and expense fluctuations, there has been much greater focus on emergency savings in what we call short fall savings, just the ability to get by within a month where you have decreased income, or increased savings, or increased expenses, I mean. So we know that a large percentage of families cannot come up with $400 in savings. So there are a lot of services that are starting out that are really trying to tackle this particular problem. And one that's really cool is the nonprofit organization called EARN, they were originally matched savings program provider, they started in the '90s, and they have moved to being more of a financial technology provider.

So they have this product called SaverLife that helps participants save a small amount over time, I think the goal is for participants to save $25 a month, which is significant for so many families and when they save at least $25 a month for six months, each month, the SaverLife will provide a $10 match. So you could just by saving, you know, a family could get $60 over six months which, you know, if you have a short fall in income or spike in expenses, some month, you know, that $60 and, you know, $150 to $400 that you saved, you know, of course makes a big difference. So that's a really cool product that's out there that I recommend folks to explore with their participants if small dollar emergency savings is a need. So we also have a lot of, historically, our field of asset builders with financial capability providers really focused on building big assets around matched savings. And, you know, there is a program called Assets for Independence that many of you are likely familiar with that incentivize families to save to purchase homes or small business expenses or educational expenses. And so families would often save $500 or a $1,000 and get that money matched between a rate of one to one on each one. And AFI unfortunately is no longer, however there still are a lot of local matched savings programs. And a lot of them are, especially, those that are newer and more, less traditional are providing really flexible products. So participants can save for financialization expenses, or save it through matched savings program to pay off court fines, or parking tickets, or other fees that have been levied on them. So there are a lots of ways to get creative about matched and incentivize savings and, you know, working with local partners that provide these programs could open doors for the families that you all work with.

Another thing that I want to mention, I see Peggy Olive in the Chatbox from University of Wisconsin, Center for Financial Security, posting about some of the resources that they have. And they have an extensive amount of resources around financial coaching and other financial capability services, and so I definitely recommend checking those out. And in general, financial coaching is a really cool way to work directly with families to set and attain financial goals. And these goals can be broad, and they could be directly related to fluctuations in income or they could be related to other financial issues that may not directly be about that, but maybe tangentially related and really important to work on, as well. And financial coaching went itself particularly well to being integrated in to social service programs such as Workforce Development, and also there's a brief that we have link to in here that we'll show at the end of the presentation that discusses integrating financial coaching programs within a Head Start context. And with financial coaching, a coach and a participant will have a relationship that's based on mutual accountability, and where the participant defines their own financial goals and the coach helps, coach them toward attaining those goals.

So the coach is not necessarily a financial expert, and they are someone that can provide motivation and help hold someone accountable who's trying to attain some difficult financial goals that could be around saving and managing, you know, expense and income fluctuations. So definitely explore financial coaching programs in your community and also, you know, if you're interested, we will be releasing later this year a design guide for developing financial coaching programs, and that will help you explore if it is something that you are interested in providing yourself or to help you explore how to do it. Okay, so the Earned Income Tax Credit and Volunteer Income Tax System.

As so many of you all know, you know, and we all know from our personal lives that tax time is a really critical moment for helping us all get by. For many families, this is the largest financial windfall throughout -- that families receive throughout the year. So the Earned Income Tax Credit helps low to moderate income families get the maximum tax refund possible. So last year, there were 27 million filers that received the Earned Income Tax Credit, and the refund average was $2400. And unfortunately, when families do not have proper income tax preparation many times, they may miss out on this windfall or they might not file all their taxes altogether. So fortunately though, there is Volunteer Income Tax preparation services across the country where volunteers, community- based organizations will help low-income participant complete their taxes for free and attain this windfall. So we've seen VITA sites integrated quite a bit into social service systems, including Head Start. So there are a lot of VITA programs that will come on site of social service programs and provide their services on certain days of the week or they could do a one time thing during the taxe. And of course, as a reminder, it is tax season, and we only have a few weeks left, so, but there are still opportunities to encourage the families you work with to go to VITA sites that are in your community.

And the Prosperity Now website has a finder where you can find participants participating organization that provide VITA services across the country and we have a network called the Tax Time Opportunity Network that consists VITA providers across the country, and our website can help you find the one that's near you. And of course, and so I think, you know, this is implied but I think it's important to call out that, you know, if families are struggling with income and expense fluctuations, getting $2400, $3,000, $1500 at tax time is huge and can really help families pay for medical expenses, pay for school equipment, pay off debt, and do what they need to really get by. So that's the linkage here. And it's also a great time if families have the flexibility to encourage savings. And so, you know, one concept is out there, it's rainy day savings. So I'm actually based in Cincinnati, Ohio, it's raining all day today, and I saw someone else posting about that in the Chatbox. But, you know, rainy day savings programs at tax time, you know, allow you to put some money away for a certain period. It could be three months, it could be six months, and then the families get that money back, you know, typically with a match or some sort of incentive for them to put it away at a defined date. And then that money is there for them to use with some additional interest or incentive for whatever they need.

And in rainy day or at tax time, you know, rainy day savings are not the only savings product , you can, you know, use that tax time, I think EARNS, SaverLife, it's a good opportunity to introduce that as families are getting money, and they could put away $25 potentially this month, and open a SaverLife account. For opening the account, it's free but you can put in the $25 and start saving after tax time. So there are a lot of opportunities to take advantage of the tax moment. So I do want to quickly go through the 10 financial capability services. I've mentioned several of them so far and, you know, this is not the whole world of financial capability programs, this is how a few years ago we decided to organize with only 10 buckets. So financial education, you know, many of you are familiar with financial education of course providing the essential knowledge to make financial decisions. Financial coaching which I describe before, which is the mutual accountability model between the coach and a participant to set and attain financial goals. Financial counseling differs from financial coaching in that the financial counseling is conducted with an expert in at least one area of financial well-being.

So they will be able to expressly give financial advice when families are facing tricky financial circumstances. And credit counseling is similar in that credit counseling is conducted between a client and a credit counselor who is able to provide advice on managing debt, and particularly credit card debt and other types of debt, as well including student loans. Credit building is when families, they may be recent immigrants, may have no credit, or they may just have poor credit, and there are lots of credit building products from secured credit cards to credit building loans that can really help families build up their credit files and get their credit score to where they need to be 'cause we know that, you know, a lot of employers, apartment landlords, and so many others are asking for credit scores when families are trying to, you know, merely get by or get ahead. Access to safe and affordable financial products.

So connecting families with a bank account or a secured credit card that is trusted and will not be predatory, free tax preparation services and VITA programs, I mentioned before follow this bucket, so helping families get better income tax credits.

Access to state and federal benefits. So if many of you are with community action agencies or other programs, you know, a lot of services and organizations are focused around helping families maximize the benefits to which they're entitled to. You know, there are a lot of instances where families may be facing income fluctuations that are drastic, and they don't know that they have access to benefits that can really help them manage those. So that's a really critical one. Then I talked about incentivize savings programs a bit earlier and asset ownership programs, which are related to incentivize savings programs, as they commonly are savings programs where someone will save to purchase a house, or a car, or educational expenses, and receive a match to do so over time.

[Silence]