Policy Matters

Supporting policies that promote and protect the accumulation of assets

One of the often overlooked strategies for challenging the long-standing grip of poverty in Mississippi includes support for policies that promote and protect the accumulation of assets among the state’s working families.

Assets allow families to avert financial disaster following an emergency, to pursue the stability of homeownership, or to increase future earnings of the next generation through a college education.  On the other hand, the absence of assets or savings can leave families in situations where they need to rely on high-cost alternative financial services.

Absent an inheritance, building assets requires an income, a basic understanding of personal finance and a vehicle to save. Notably, Mississippi has a high prevalence of low-wage work – exacerbating the challenge of saving.  Through the right mix of workforce supports and development, financial education/training and tax policy, Mississippi has the opportunity to increase the amount of money that working families take home and to equip them with the tools to build wealth and their communities by strengthening the tax base.

At the same time, a strategy to promote asset development must also be buttressed by efforts to protect asset accumulation. Depository institutions, such as credit unions and banks, need to have options for low- income working families to save. In the absence of affordable options, families rely on high-cost alternative financial service providers to pay bills and conduct transactions. As families pay more for financial services, less money is available to save or to go towards the purchase of more appreciable assets like a home or sending children to college.

The report includes three main sections. 

First, the report provides an overview of asset levels and banking profiles in Mississippi.

Secondly, it examines the use and pricing of a range of alternative financial services (AFS). These include check cashers, payday lenders, title lenders and rent-to-own stores.

Finally, the report looks at a range of promising practices that both promote and protect asset development around the country. From these practices, several recommendations are presented for building asset development opportunities in Mississippi.

A new report released today by MEPC in partnership with the Foundation for the Mid South finds that Mississippi’s net worth asset level is lower than 44 other states.  The net worth of a typical Mississippi household is only about $50,000, compared to the national average of approximately $88,000.

Across the state of Mississippi, families are working hard, but fail to make ends meet.  Low wage work and the absence of assets exacerbate an exceedingly tough environment for working families.  Assets, in particular, play a huge role in determining which families avert financial disaster during an emergency and which families move forward through homeownership, entrepreneurship or college education.

Yet, Mississippians face a number of obstacles in building assets.  A higher percentage of Mississippians lack a checking or savings account than anywhere else in the country.  In the absence of a relationship with a bank or credit union, families without retail accounts are relying on high cost financial services.  As families find that they are in situations where they must use high cost financial services, less money is available to save and build assets.

“Making Mississippi Competitive: Solutions For Building Assets In Low-Wealth Communities” suggests a variety of ways that bankers, policymakers and families can create an environment to facilitate saving among Mississippi’s working families that ultimately builds wealth.

Read the Full Report