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Do You Offer Financial Education for the Right Reasons?

Is your first priority to increase business or to improve members' lives?

October 04, 2010
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The ‘new poor’

There’s little doubt in most people’s minds, however, that financial education is necessary. And while the most effective education programs start early and continue throughout a lifetime, it’s impossible to ignore the need for adult education.

After all, kids will model what they learn at home. And most teachers will tell you how difficult it is for kids to unlearn behaviors they have by the first grade.

Still, financial education isn’t getting through to many adults—those consumers who need help and who are often woefully unprepared to manage their money. A big problem in today’s economy is that the groups that need help are growing, not shrinking, as new groups join the ranks of the unprepared.

The New York Times series on “The New Poor” examines the struggle consumers have to recover from today’s Great Recession.

Starting in February and still ongoing, the series chronicles what’s happening among the 17% of the population that’s either unemployed, underemployed, or has given up the job hunt. Many of these people need help.

For example, the gap between whites and minorities is growing larger. It’s hard to ignore how rising unemployment and growing foreclosures in the recession have combined to destroy black wealth and income gains over the past 20 years.

The Institute on Assets and Social Policy at Brandeis University says that for every dollar owned by a white family, a black or Latino family owns just 16 cents.

At the end of 2009, The Economic Policy Institute reported in “The State of Working America” that median wealth for white Americans had dipped 34% to $94,600, compared with a 77% drop in median wealth for black Americans to $2,100.

“As jobs have become harder to get, so has welfare: as of 2006, 44 states cut off anyone with a household income totaling 75% of the poverty level—then limited to $1,383 a month for a family of three ($16,596 annually),” the Times reported.

At the same time, economists worry that the recovery will fail to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed. So where do the new poor turn?

Many jobs simply won’t come back. In some cases, jobs have been outsourced to less expensive workers overseas. In others, new technologies have made skill sets obsolete.

Hit hard have been administrative and clerical workers, which have lost 1.7 million jobs since the recession began. Nearly half the printing machine operators lost their jobs between 2007 and 2009. Travel agent jobs fell 40%.

Other groups that have been adversely affected include women between the ages of 46 and 64 and workers age 55 and older. In fact, more than 2.2 million workers age 55 and older are unemployed, and nearly half of them have been out of work for six months or longer.

The unemployment rate among that group is 7.3%—a record. For many, today’s stark reality is it will take years to absorb the unemployed back into the work force, and many older workers will drop out of the labor force due to their age before their fortunes change.

Forced early retirement imposes an intense financial strain, particularly for people with lower incomes. The poverty rate among this age group is nearly 10%.

Next: Far-reaching impact

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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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