Call it what you will – Financial Capability, Financial Empowerment, Financial Literacy…In the field of workforce development, it has long been viewed as an “add on” or a “nice to have,” tangential to the real work we do. As workforce development professionals, should we do the work of connecting community banks and training institution partners—those with the tools for financial capability—to the many job seeking customers we serve? When one of the challenges of our field is that we are torn in so many directions, sometimes the amount of effort just getting a customer a job with a career pathway makes it hard to balance the immediate need and goal of employment with the challenging work of moving programs towards true human centered design. Is it enough for us to say that we specialize in and are experts in workforce development, or do we also need to specialize in all the other tools that address the myriad tertiary challenges our customers face beyond just getting a job?
Over the course of our 20+ years in the workforce development field, Grant Associates has had a front row seat to the many industry trends that have come and gone. Financial capability is one trend that we as a company are fully invested in (pardon the pun). As our thinking has evolved in this area, we fully believe that financial capability training is absolutely part of our role as workforce development professionals. Chances are all of us in this field have seen more than one job seeker pass through our programs who gets one low paying job after another, without ever being equipped with the tools to help him or her make real progress toward self-sufficiency. Financial capability skills are not something we’re innately born with or that necessarily come intuitively, and for many in the communities we serve, there’s simply no opportunities to learn these skills elsewhere.
At Grant Associates, we’ve begun incorporating financial capability tools for all our job seeking customers as well as our entire staff. We are testing assumptions that a person’s faculty in personal financial literacy will carry over into their ability to keep a job, and the drive to get a better job or move into a career pathway and toward greater self-sufficiency. These are not just “Terms of Art” for us, they are real aspirations backed by the program models and tools to make successful careers in our customers’ lives.
Research has shown that chronic stress, like that experienced by those living in poverty, has a negative impact on the development and functioning of the prefrontal cortex, the part of the brain that directly impacts executive functioning. Executive function is what enables our working memory, cognitive flexibility, and our ability to control our behavior and look to the future to set and achieve goals. It should come as no surprise then, when the Federal Reserve reported earlier this year that 66% of those making $40,000 or less could not cover an unexpected $400 expense. When you’re just trying to keep your head above water, building a savings account seems rather irrelevant. But by introducing some basic financial capability concepts and helping customers gain those skills while also helping them find a job, we begin to build a foundation that enables customers to start to plan for their future and that of their families.
Since we began benchmarking our work just under a year ago in one of our largest New York programs, we’ve seen improved Financial Capability Scale scores, increased rates of full-time employment, and improved retention rates—an increase of nearly 20% in our six-month retention rates, and a thrilling three-month period when we saw an incredible 100% retention rate for those placed in full-time jobs. In addition to the standard services available to address barriers, attain training and attending workshops, these job seekers also had access to Change Machine, a tool provided by our partners at The Financial Clinic whose mission and model is “to build working poor people’s financial security through an ecosystem of strategies that includes direct service, capacity building, and systems-level solutions and social innovations to create lasting change.” Initial data shows over $103,000 has gone back in customers’ pockets over the last year. The Financial Clinic’s long-term data shows that for every two financial security milestones achieved, customers see a 29% increase in earned income and 33% more hours worked.
Our early results are from just a small subset of the customers we work with annually. It’s exciting to think of the impact such training could have on communities large and small across the country. It’s clear to those of us at Grant Associates that there is something here worth building upon, and I encourage my colleagues from around the country to share any lessons learned when incorporating Financial Capability into their services. We are all in!
Marlena Sessions is a workforce development professional who has dedicated her career to creating self-sufficiency via careers for all people. She is the Vice-President for Public and Private Partnerships for Grant Associates, a national workforce development company that has operated nearly 80 different workforce programs in communities of all sizes.