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Illustrating the Importance of Strategies that Build Assets

April 28, 2011

Why are the recommendations for building assets in Making Mississippi Competitiveso important for families across Mississippi? The Mississippi Self-Sufficiency Standard offers a valuable lens for understanding why families may experience barriers to building assets as they struggle to make ends meet and the importance of implementing strategies to build assets for those at or below the Standard.

By adding up all the basic expenses that a family has each month, the Self-Sufficiency Standard provides a benchmark for the amount of income families need to cover the basics. For example, in Hinds County, a family with one adult and a preschooler needs $29,349. Across the state in Tippah County, the same family would need $22,945. Families that do not earn wages equivalent to this amount may struggle to cover the basics, and, equally important, may need additional support to save for their future and their children’s futures.

Taking a closer look, the graphic below provides examples of a number of high growth occupations in Mississippi and illustrates whether those opportunities provide wages equivalent for one adult and a preschooler to make ends meet without outside support. The chart illustrates that while high growth opportunities with Self-Sufficiency wages are available across the state, there are also many families that will need substantial support to build savings for higher education, emergencies, vehicles and buying a home.

Overall, one in three Mississippi households find themselves below the Self-Sufficiency Standard. For these families, and many above the Standard, the strategies mentioned in “Making Mississippi Competitive” such as -offering Individual Development Accounts, breaking down the barriers that keep unbanked from developing a relationship with a financial institution, building stronger consumer protections, enhancing financial education, and creating a State Earned Income Tax Credit- all offer pathways for thousands of Mississippi families to build towards greater economic security.

Author Sarah Welker, Policy Analyst
Sources: Mississippi Department of Employment Security Occupational Projections and Wages,
Overlooked and Undercounted: Struggling to Make Ends Meet in Mississippi, Mississippi Self-Sufficiency Standard

 

More State Poverty Data: What’s Next?

April 26, 2011

image credit: 24/7 Wall St.

An article last week from the website 24/7 WallSt reported that Mississippi is one of the 10 worst states when it comes to income inequality—ranking 6th.  They reported that Mississippi “has the greatest percentage of households making below $30,000 a year, 42.53%, and the smallest percentage of households making $200,000 or more, 1.54%”.  They also reported that Mississippi’s poverty rate increased from 2007-2009.

It’s nothing new to hear about poverty in Mississippi, and it’s something that can easily make us feel overwhelmed.  The challenge begins with how to respond.  Some of the recent work from the Mississippi Economic Policy Center (MEPC) includes suggestions for efforts to help working families improve educational attainment, build assets, and move up the economic ladder.

First, the MEPC’s most recent report 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.

Second, “Building Pathways to Credentials and Careers: Strengthening Mississippi’s Workforce by Connecting Adults to Postsecondary Credentials and Family-sustaining Careers” discusses the importance of postsecondary education and how to make it more accessible for Mississippi’s working families.

Third, a recent update on the on the state’s tax system highlights how the system exacerbates the state’s income inequality and MEPC’s revenue options provide recommendations for how to improve the system.

Author Sara Miller, MEPC Senior Policy Analyst

Excerpts from “Making Mississippi Competitive: Solutions For Building Assets In Low-Wealth Communities”

April 22, 2011

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.

The methodology used to create the report can be found in the report appendix. 

 

 

New Report Released Today: “Making Mississippi Competitive: Solutions For Building Assets In Low-Wealth Communities”

April 20, 2011

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

Thank Taxes: A Week of Appreciating Taxes

April 14, 2011

Every day our tax dollars go towards building a smarter, stronger and more connected Mississippi. Taxes create community spaces, build schools and create the transportation systems that bring us all together. Without these things, it would be harder to see the people we love, to participate in community events and to train a more prepared workforce.

Just this week, taxes have supported me and people I know across our state in a wide variety of ways. In the last seven days, I have seen taxes provide:

  • Electricity to light and air-condition elementary school classrooms in Clarksdale;
  • A park at the Reservoir used for weekend cookouts and games;
  • Job training programs for low-skill adults interested in health care and manufacturing;
  • An airport to fly home through after visiting family and friends;
  • Bridges to drive across as I travel to communities and share information on programs that build economic security for families.

Together, our taxes make Mississippi a better, more connected place to live for ourselves, our neighbors and our children.

As a younger member of the workforce, I find myself asking if the choices made now will someday impact the quality of education my children receive as they grow up from 1st graders to 8th graders and then college students. Taxes help strengthen the educational opportunities and resources available to them as they grow up and enter the workforce.

On Tax Day, I am thankful for the public resources we have, but I also reflect on how to ensure we strengthen those resources for our future and our children’s.

Author: Sarah Welker, Policy Analyst

Thank Taxes: Putting Tax Day into Perspective

April 13, 2011

As the tax filing deadline nears, we are given the opportunity to reflect on our shared values and the public structures we’ve built that embody those values.  Those public structures are the foundation of our economy.

Without them  our businesses would not be able to be successful and our families would not be able to thrive.

Things like K-12 education that ensures opportunity for all children, affordable community colleges to prepare our workforce for jobs, police and fire protection that ensure our community well-being, and an elaborate infrastructure system of roads and utilities are often at the top of my mind when thinking about the public structures that assert our shared values.

Our taxes also do many other things that we often take for granted.  Here are just a few of the things I’ve had the opportunity to do today because of taxes all before even getting to work:

  • Breathed clean air
  • Brushed my teeth with clean tap water
  • Went for a run on a public trail
  • Cooked breakfast for my family using safe food from the grocery store
  • Traveled safe roads to take my son to preschool

That list doesn’t even scratch the surface.

Taxes not only ensure economic opportunity through education, infrastructure, and public safety today, the choices we make about taxes now affect our prosperity and well-being in the future.  Our parents’ and grandparents’ taxes built the interstate highway system, top notch schools and universities, health clinics, libraries and parks.  I think tax day is a day to wonder: What are we building?  Are we making sufficient investments to secure prosperity for the next generation?

Author: Sara Miller, Senior Policy Analyst

MEPC Is Now On Facebook

April 5, 2011

We’re pleased to launch MEPC’s official Facebook page and we are excited about this opportunity to engage with those interested in public policy issues effecting our state and communities.


Join a community who share a common interest in the development and implementation of public policy with the ultimate goal of improving access to economic opportunity for all Mississippians.

Click on www.facebook.com/mississippieconomicpolicycenter and press the “Like” button to stay connected to the latest developments from MEPC. See you on Facebook!

Extended Unemployment Impacts Thousands of Mississippi Families

March 14, 2011

Many working Mississippians have been impacted by job loss or reduced work hours throughout the economic downturn. As we enter 2011, Mississippi’s economy continues to slowly recover; however, the portion of Mississippians unemployed for an extended period of time remains higher than before the recession.

In 2010, 6.8% of Mississippi’s labor force was unemployed for 15 weeks or more. In 2008 the portion of long-term unemployed dipped to 2.0% and then rose steadily in 2009 and 2010 as more Mississippians struggled to find employment. Last year, the number of persons unemployed for 15 weeks or more surpassed 89,000.

Mississippians Unemployed More Than 15 Weeks  Rises in Downturn

The current high rates of long-term unemployment challenge training providers to support unemployed adults, so they gain skills that open pathways to jobs with higher wages. Recently, the Mississippi Department of Employment Security was awarded an additional $1.6 million in on-the-job training funds for employers to connect unemployed Mississippians with employment and training at the same time. A portion of these funds support employers who hire and train workers who have been unemployed 19 weeks or longer.

Beyond on-the-job training, it remains important that training at Mississippi’s community colleges and universities remain affordable for all adults that wish to gain skills and transition to higher-wage employment opportunities. Maintaining affordability within postsecondary education remains one of the most important elements of solving the state’s long-term struggles with poverty alleviation and requires a balanced approach to building a state budget that includes raising revenue instead of taking a cuts only approach.

Author: Sarah Welker, Policy Analyst
Source: Bureau of Labor Statistics. Alternative Measures of Labor Underutilization for States.

Are MS High School Graduates Prepared for College and Careers?

March 3, 2011

Key Takeaway: The average composite ACT score for Mississippi’s 2010 high school graduates is 18.8 – below the minimum score of 19 that is recognized as a measure of college readiness.  Community colleges and universities face the challenge of providing effective remedial courses to ensure all students have the skills they need to succeed in college coursework and to advance to quality careers.  The challenge is exacerbated by the current funding environment for the community colleges.

2010 ACT Score Summary

The ACT sets a score of 19 as the minimum composite score that students need to enter and succeed in college-level courses. In 2010, Mississippi’s average composite ACT of 18.8 was the only state average below the minimum for college-readiness. The map below details state averages for ACT composite scores in 2010 for the Southern region.

Louisiana, Arkansas, and Alabama all received ACT composite scores above 20 on average. Tennessee’s average ACT composite was below 20, but above the national minimum for college-readiness.

What do Mississippi’s ACT scores mean for community colleges and universities?

Across Mississippi, community colleges and universities frequently use ACT composite scores and subject-specific scores to determine the course placement for recent high school graduates. Each community college sets a minimum ACT composite or subject score that indicates whether a student is ready for college-level courses. Students with scores below the minimum are placed in remedial courses in math, reading, and/or English designed to prepare students for success in college-level courses.

Many of Mississippi’s high school graduates are in need of remedial coursework when they enter college. The state’s community colleges and universities face a challenge of providing effective remediation for a large number of students, both recent high school graduates and those that return as adults. Ensuring that remedial courses are provided effectively to students is imperative for increasing the number of Mississippi’s students that advance towards a college degree and into quality careers.

To ensure underprepared students receive high quality remediation, colleges will need adequate support and resources to implement improvements. As Mississippi’s leaders face a climate of limited resources, a balanced approach that includes raising revenues instead of a cuts only approach is needed to ensure that Mississippi’s students are well supported on a long-term path towards self sufficiency.

Author: Sarah Welker, Policy Analyst
Source: ACT, “The Condition of Career and College Readiness”, 2010.

Over One Quarter of Community College Students in Mississippi Need to Go Into Debt to Get an Education

February 22, 2011

A previous article on student loan debt encouraged a deeper look at the volume of Mississippi community college students that need the financial support of federal student loans to pay for school. In 2008-2009, 21,113 community college students in Mississippi borrowed federal student loans. The 21,113 students taking out loans represent 28.9% of all community college students in Mississippi.

In the wake of rising enrollment and constrained state support, many colleges have had to raise tuition to cover the cost of instruction and operations. Average tuition at all of the state’s community colleges rose 19.7% from 2008-09 to 2010-11¹. The rise in tuition indicates more students may require larger loans to cover the cost of pursing a postsecondary degree. State and national leaders face the challenge of keeping tuition affordable and providing sufficient financial aid to students most in need.

In 2008-09, students at Mississippi’s community colleges took out $90.2 million in student loans. On average, students borrowed $4,272 per year through student loans for expenses associated with attending classes.  The chart below lists average federal student loan aid by community college.

Average Federal Student Loan Aid Received by Community College, 2008-09

Postsecondary education remains a critical avenue for moving towards economic security in Mississippi. As decisions are made for the FY2011-12 budget year, the data on student loans is a reminder that funding of higher education not only affects community colleges, but also the debt burden students may face as they seek to advance to quality careers and self-sufficiency through higher education. A balanced approach that includes raising revenue is required to allow the state to maintain its vital investments in higher education and to keep a community college education affordable for all Mississippians.

Author: Sarah Welker, Policy Analyst
Source: U.S. Department of Education. National Center for Education Statistics.
IPEDS Data Center.

¹State Board for Community and Junior Colleges. Finance and Administration Division. Average Tuition and Fees for In-state Residents.

Note: MS Delta, Coahoma, and Southwest Mississippi Community Colleges each did not have any federal student loans reported in 2008-09.

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