Fundamentally, economic mobility is about agency, United Way of Lancaster County President and CEO Kevin Ressler said.
It’s about people being able to take their economic destiny into their own hands, he said. They can work hard to increase their income and wealth; or, if they choose, they can downshift to have more time for family or other priorities.
Ressler’s comments came Tuesday morning as he set the stage for United Way’s May “Conversation About OUR Community” on economic mobility. He was joined for the 90-minute Zoom roundtable by representatives from Assets, Community First Fund, Lancaster Works, Tenfold and VITA, the United Way’s Volunteer Income Tax Assistance program.
Jaime Arroyo, CEO of Assets and chair of City Council’s Economic Development Committee, kicked off the discussion with a brief presentation. Defining economic ability as the ability to improve one’s economic status over time, he distinguished between relative and absolute mobility: If a household’s income goes up by 10%, but its neighbor’s goes up by 50%, it’s better off absolutely, but not relatively.
Higher education, home ownership and entrepreneurship are all paths to the American Dream, Arroyo said. But each can be costly, making credit, or lack thereof, a potential barrier.
Assets is a nonprofit devoted to nurturing entrepreneurship in underserved communities. More people are turning to entrepreneurship to get ahead, Arroyo said: Assets can help by offering credit on more favorable terms than a bank and coupling it with consulting services.
Community First Fund, a community development finance institution, or CDFI, similarly has the ability to offer more flexible and customer-friendly credit, said Angel Rosario, director of community lending. A CDFI can look at the totality of a customer’s profile, whereas large banks rely on algorithms.
“I think it’s an injustice to just look at a score,” he said.
VITA provides free tax preparation to taxpayers in Lancaster County who make $60,000 or less. This past tax season, volunteers completed returns for more than 8,800 clients. About 5,400 received refunds, including 23 that were more than $10,000, VITA Director Kim Maldonado said.
Clients sometimes see it as a windfall, but it’s not, she said: “They’re getting their money back.” They’re also saving on tax preparation fees, which even for a standard return can easily total $200, Ressler noted. Volunteers are trained and certified, and despite skepticism and claims to the contrary, they are qualified to find the same deductions and credits that legitimate fee-based preparers do, Maldonado said.
Lancaster Works is the area’s only B Corp. focused on workforce development. It provides career consulting, job search assistance and referrals for training, childcare, social services and other needs.
CEO Tyrone Miller described finding one client a $30-an-hour job just in time to help him avoid eviction. Many living-wage jobs don’t require a college degree, Miller said: He’s a big fan of apprenticeship programs, which allow individuals to earn as they learn, eventually setting them up with a solid marketable skill.
Tenfold focuses on household budgeting and housing stability. Randi Shober, Tenfold’s director of financial empowerment, explained its matched savings program, which encourages clients to build up a nest egg to be used for homeownership, a vehicle, education or to start a business.
Public policy past and present affects economic mobility, Ressler said. After World War II, the GI Bill gave a generation of White veterans a boost into the middle class, underwriting their college educations and home purchases, but more than a million Black veterans were excluded, locking them out of a generation of equity building.
He noted that the federal poverty rate drives much public policy discussion, as well as the allocation of billions in federal and state spending. But that metric was developed in the mid-1960s, when the overall economy and household budgets were vastly different. That’s a major reason United Way developed the ALICE framework (Asset Limited, Income Constrained, Employed), which factors in expenses like childcare and cell phone plans.
Most government anti-poverty programs have income thresholds, and families whose incomes rise above them can end up worse off through loss of benefits, a phenomenon known as the “cliff effect.” United Way of Pennsylvania, in partnership with Tenfold and Community Action Partnership of Lancaster County, recently pilot-tested a benefits calculator designed to evaluate those tradeoffs. United Way is reviewing the results to determine next steps and whether it makes sense to roll out a public version, Ressler said.
Arroyo said there are many areas in which policy could be amended to promote economic mobiity: Credit reporting standards, zoning and land planning, minimum wage, student loan debt.
“The economy should serve people, not the other way around,” he said.