Public policy should encourage financial empowerment, according to Jonathan Mintz, New York City's commissioner for consumer affairs.
That's because investments encouraging consumer financial education amplify the impact of other city investments, such as job programs, he says.
"You want to make sure when you help people get a job that they are going to know what to do with those paychecks,”Mintz says.
Combining workforce development with financial counseling up front can prevent people from falling backward and needing help from government programs in the future. That's a lesson, Mintz adds, that New York City has learned.
"We were spending huge amounts of money on the impact of financial instability, but we weren't spending a lot on financial stability," he says. "That is not very smart."
Mintz says New York City has learned these lessons:
►Regulation works. Placing controls on industries that have a direct impact on people’s financial stability, such as debt collectors and process servers, makes a difference in people’s lives.
New York City found that, in many cases, collection agents were attempting to recover debts that were not owed.
►The structure of programs can make a big difference. For instance, a government assistance program that requires direct deposit can go a long way to leading unbanked individuals toward mainstream financial services.
►Politics is a valuable tool. Financial empowerment is an easy sell to political leaders.
By encouraging financial empowerment, "everybody wins," Mintz says, "as opposed to a lot of the current anti-poverty efforts where nobody is ever happy, there are never enough resources, and there is always too much demand."
Mintz addressed the 2013 Annual Conference of the National Federation of Community Development Credit Unions in Baltimore.