Association for Public Policy Analysis & Management

Panel: Causes and Consequences of Widespread Financial Insecurity: The Asset Gap, Income Volatility, the Unbanked, and Payday

(Poverty and Income Policy)

The theme of this panel is financial insecurity, a widespread and growing problem in US. More than half of all Americans now live paycheck to paycheck. Part of the problem stems from economic trends: controlling for inflation, wages have been declining since 1972. Inequality has widened alarmingly over the same period. And income volatility has doubled over the past 30 years. In the wake of the financial crisis many Americans have shifted from salaried jobs to hourly work that provides fewer benefits and less security. Americans are working harder, earning less, and having more difficulty predicting how much money they will earn every week. At the same time that financial insecurity has become more pronounced, the costs of health care, childcare and education have grown significantly. The purpose of the panel is to explore the issue of financial insecurity from a variety of angles and to show that the framing of policy debates surrounding this issue need to be reframed. Specifically, policy debates concerning financial inclusion have been framed in terms that are too black and white and that too often ignore the complexity of peoples’ financial lives. Classifying people as financially included vs. financially excluded or banked vs. unbanked limit how we create and evaluate policy; the papers presented in this panel will illustrate that we need to rethink these categories and broaden the debate. We will, for example, explore the criteria for attaining “financial health,” rather than banking status. Shifting the debate allows for a reexamination of the obstacles to achieving financial security and better tailoring policy to how people are currently making decisions and managing their financial needs. The papers will address issues related to financial insecurity using a range of research methodologies and from diverse perspectives. Together, they present new evidence and provide suggestions for how policy can be better connected to the growing number of people facing financial insecurity. In reaction to the larger forces named above and changing banking policy and practice, many Americans have shifted their focus from getting ahead to attaining or maintaining financial stability. We hope to connect with the “golden age of evidence-based policy” by providing new evidence that can move conversations forward productively.