As the gap between the haves and the have-nots grows, social workers are increasing efforts in the struggle for economic justice. (Thinkstock/Getty Images.)
Social worker Reeta Wolfsohn received a message from a client she had worked with well over a decade ago.
Back then, “she was a college graduate, an expert in working with the deaf,” Wolfsohn said. “The only work she could get was shadowing a high school student. She had no money, no money even for food, and she was finally at the point of putting together all of her debt.”
The young woman had student debt and credit card debt and had not figured out the total amount she owed. She couldn’t even look at it, said Wolfsohn, founder of the Center for Financial Social Work and the Financial Therapy Network. The woman had been in her 20s then, and has just turned 40.
“She called to tell me she was out of debt,” Wolfsohn said. “She had bought a home and a second home for rental. She actually made me cry.”
“I’ve been doing this almost 20 years, and when I started, nobody was talking about it,” she said. “I knew from the beginning that social workers and the profession had such a huge role to play in financial well-being. We are agents of change. That’s what we do.”
Amid reports that show a widening gap between the nation’s top earners and those who earn much less, social workers have stepped up efforts in the struggle for economic justice in the U.S.
Reducing income inequality and building financial capability for all are both on the list of the American Academy of Social Work and Social Welfare’s “12 Grand Challenges for Social Work” initiative. Economic justice and equity are also included among NASW’s five social justice priorities for the upcoming year.
The need for economic justice can be seen in stark statistics that show the increasing separation between the wealthy and everyone else.
The Growing Gap
A 2012 report by the Economic Policy Institute says a state-by-state examination revealed that income inequality has grown in most parts of the country since the late 1970s.
“Over the past three business cycles prior to 2007, the incomes of the country’s highest-income households climbed substantially, the reports states, “while middle- and lower-income households saw only modest increases.”
Another report, this one released by the Congressional Budget Office in August, looks at how the nation’s wealth is distributed. The report, called “Trends in Family Wealth,” says in 2013 families in the top 10 percent of the wealth distribution held 76 percent of all family wealth families in the 51st to 90th percentiles held 23 percent; and those in the bottom half of the distribution held 1 percent.
Average wealth was about $4 million for families in the top 10 percent of the wealth distribution; $316,000 for families in the 51st to 90th percentiles; and $36,000 for families in the 26th to 50th percentiles. On average, families at or below the 25th percentile were $13,000 in debt, the reports states.
The inequality is even more extreme among racial and ethnic groups, according to a 2014 Pew Research Center report titled “Wealth inequality has widened along racial, ethnic lines since end of Great Recession.”
The center’s analysis of Federal Reserve data revealed a “stark divide in the experiences of white, black and Hispanic households during the economic recovery,” the report says. “From 2010 to 2013, the median wealth of non-Hispanic white households increased from $138,600 to $141,900, or by 2.4 percent. Meanwhile, the median wealth of non-Hispanic black households fell 33.7 percent, from $16,600 in 2010 to $11,000 in 2013. Among Hispanics, median wealth decreased by 14.3 percent, from $16,000 to $13,700. For all families—white, black and Hispanic— median wealth is still less than its pre-recession level.”
A Corporation for Enterprise Development article published Aug. 8 calls for major federal policy shifts to address growing racial wealth divide, plainly stating why in its headline: “Without change, African-American and Latino families won’t match current average white wealth for centuries.”
Such bleak statistics leave the U.S. falling behind other well-off countries, the Stanford Center on Poverty and Inequality stated this year in a special issue of its “Pathways” magazine that focuses on poverty, inequality and social policy.
The center says the U.S. has “the lowest overall ranking among our 10 well-off countries, a result that arises in part because it brings up the rear of the pack in three of the six domains covered here (safety net, income inequality, wealth inequality). Even when the comparison set is expanded to include the less well-off countries, the U.S. still ranks a dismal 18th (out of 21 countries), with only Spain, Estonia, and Greece scoring worse.”
Charles E. Lewis Jr., president of the board of directors at the Congressional Research Institute for Social Work & Policy, said addressing income inequality is extremely important, because it impacts the lives of the vast majority of Americans—the middle class and poor people particularly.
“We have a situation where most of the economic gains over the last three decades have gone to the top income earners,” he said, adding that the wages and upward mobility of the middle class and the poor have stagnated or become worse.
That means less disposable income for those groups, and when they are not spending on services and goods, “that’s not good for the economy,” Lewis said. “That’s why I believe inequality is a big deal. It’s a matter of social justice, and it’s also a matter of economic sense.”
Rufus Sylvester Lynch, who is chairman and an executive committee member at The Strong Families Commission in Philadelphia, said the country “is increasingly becoming an unequal society.” He said we tend to think of it as being other people, people in Appalachia or urban city areas, but it’s everywhere.
“It’s important, because the American Dream is so far-fetched for most Americans that it is painful to think about,” said Lynch, who also is an NASW national board member. “We’re taught if we work hard and get a good education, we can go anywhere. I don’t think that’s true any more. There’s a large disconnect between the haves and have-nots, and it’s changing our whole way of life. That explains the anger in this country, and I understand that.”
On its web page, the American Academy of Social Work and Social Welfare states, “The Grand Challenges for Social Work represent a dynamic social agenda focused on improving individual and family well-being, strengthening the social fabric, and helping create a more just society.”
Its co-leads on the challenge to reduce income inequality are Laura Lein, Jennifer Romich and Trina R. Shanks. Co-leads on the building financial capability for all challenge are Jin Huang, Julie Birkenmaier and Margaret S. Sherraden.
Lein, the Katherine Reebel Collegiate Professor of Social Work and professor of anthropology at the University of Michigan, said there are many reasons why it is important to address inequalities in income and wealth.
“One is, there are systemic and structural inequalities in society: gender, race and a host of other issues,” she said. “Growing inequality has made the impact more visible, and people can see how harmful it can be.”
Who has and who doesn’t have is an incredibly important question, said Romich, associate professor at the University of Washington School of Social Work, faculty affiliate at the University of Washington’s Center for Studies in Demography and Ecology, and director of the West Coast Poverty Center.
“In some ways, it’s one of the most fundamental questions on how we live together as people—how we divide resources we have on this Earth,” she said. “Economic inequality aligns social exclusion, health impacts and generational impacts. Families who aren’t receiving much wealth have less opportunities.”
Shanks is an associate professor at the University of Michigan School of Social Work and faculty associate at the Survey Research Center at the school’s Institute for Social Research. It’s hard, she said, for families to think and dream about the future if they’re barely getting by—and their financial situation makes it harder for their children to succeed.
Statistics on the test scores and abilities of grade-school children show that wealth and income impact children and their future success, she said.
“A child from a wealthy family is more likely to graduate from college, even if their abilities are lower,” Shanks said. “By the eighth grade, the highest-performing, low-income student is less likely to go to college than the lowest-performing student from a high-income family. Children are being left behind.”
Huang, an associate professor of social work at St. Louis University, said addressing the issue of financial capability is important because those skills, knowledge and behaviors can be learned.
“In a social work context, in the grand challenges context, it’s more individual behaviors,” he said. “If helped, they can combine that with the opportunity to use financial services.”
“Our financial life is so complex. All of us need resources, and all of us need skills to conduct our finances for our long-term well-being.”
Because social work traditionally focuses on vulnerable families, Birkenmaier, a professor of social work at St. Louis University, believes the issue of finances has been “underemphasized in social work education for a number of years.”
“So social workers go out into the field very prepared to work with a number of issues that are important, but not financial issues,” she said. “That, they’ve been learning on the job.”
They need a broader view, a macro context to work with struggling low-income families, Birkenmaier said.
“Having an understanding of the labor market and an understanding of the economy and how those impact a family really helps to shape their interaction so they can help those families,” she said.
There is a confluence of societal changes that make it harder for a low-income family to build assets and financial capability, said Sherraden, founder’s professor of social work at the University of Missouri at St. Louis and research professor at Washington University in St. Louis.
“It’s no longer possible to manage a household with cash,” she said, adding that if a person’s credit score is not good, it could affect things like getting a job or renting an apartment.
“That’s the financialization of people’s lives,” she said. “That’s one piece. Another is a lack of opportunity to build assets among families with fewer assets.”
While many Americans can build equity through home ownership and increase retirement accounts, others are unable to do that, Sherraden said.
“There really are very few ways for low-income families to grow assets, and growing assets is really important,” she said. “Also, there’s a lot of stress, because there’s no backup. And families often times are under financial stress when they come in for other services.”
Wolfsohn said a 2015 Gallop report shows that two of every three people worldwide are financially illiterate, as are 40 percent of Americans.
“That’s a really big problem,” she said. “The responsibility for your financial future is on the consumer. The problem of people being so illiterate when it comes to money are so huge. And people have no idea it will affect them for their entire lives.”
Lack of Legislation
Lewis said as the wealth divide has grown, legislative solutions have not been on the table, but they are needed “to address what happened during the Reagan tax cuts and the Bush tax cuts, which transferred a lot of money to wealthy households.”
Middle-class households had an income increase in 2015 for the first time since 1999. It happened because inflation was so low, but few economists will “go on the record” to reverse those tax cuts, he said.
“Until that happens and capital gains are taxed at the same rate labor is, inequality is going to grow,” Lewis said.
He believes there is a tipping point on that: The U.S. used to see economic growth of 3.5 percent or 4 percent.
“We’re stuck at 2 percent GDP growth,” Lewis said. “That’s leaving everybody behind except the very wealthy. And that’s unsustainable. I’m not an economist, so if I can figure this out, you’d think somebody else would, too.”
Birkenmaier said data show the inequality problem is worsening.
“I think it has profound implications for this country,” she said. “There are warnings from political scientists that when you have large inequalities in society, you have a less stable society, and that impacts democracy.”
“I think we all need to be involved in policy issues in the suffering that inequality produces. I hope people do realize they have the power to affect what’s going on. Votes do matter. Voices do matter.”
“I think there’s a lot that social workers can do—particularly with helping people understand why voting is so important,” he said. “If you want to change policy, you can present new policies, but you have to have people in office that are willing to make changes. That’s why it’s important for people to vote—not only in national elections, but in state and local elections—to make sure the policies work for them.”
Turning it Around
There are things social workers can do now to help clients address income inequality and build their financial capability.
“First of all, we have to be willing to talk about it,” Wolfsohn said. “We talk more about sex than we talk about money. We need to be more open and more honest about the financial component in people’s lives.”
Also, social work students need to learn about it, she said.
“We teach students about poverty,” Wolfsohn said. “We teach about hunger. We teach all the pieces. We need to teach (financial literacy) to social workers while they’re in school. Social workers don’t make a lot of money, so it can help them, and they can help their clients.”
Wolfsohn’s Center for Financial Social Work has a financial social work course at the University of Kentucky that includes individual and family finance problems, terminology, ratios and decision-making skills “to understand their influence on clients’ underlying financial problems in social work practice,” the university’s website states.
The FSW course, which can be taken online, is approved by NASW for 20 continuing-education contact hours. There are FSW graduates “in every state in the country and in numerous other countries,” Wolfsohn said.
Sherraden is working on a book that will help train students how to help with finances, how to run programs and push policies that help families.
Work on the grand challenges, some of which involve policy issues, can take longer to address when legislation is involved, but Lein said the group working to reduce extreme income inequality finalized a policy brief with recommendations in September. They are:
- Strengthen labor standards and reform employment policies
- Expand active employment creation through public programs and support for business start-up and capitalization
- Expand the earned income tax credit
- Expand child care access to enable stable employment in the context of healthy child development
- Create new, lifelong policies for inclusive and progressive wealth building
Romich said specific policy proposals include tax treatments, like boosting Earned Income Credit amounts, greater equitable access to early childhood care, and increasing the minimum wage.
“Increasing the minimum wage would not do a lot, but combining it with child care would be helpful,” she said.
The goals of building financial capability for all, as stated on the AASWSW website, are to “significantly reduce economic hardship and the debilitating effects of poverty by adopting social policies that bolster lifelong income generation and safe retirement accounts, expand workforce training and re-training, and provide financial literacy and access to quality affordable financial services.”
One idea, instituting child development accounts, has already been tested and has taken root in a few states and localities, Sherraden said.
Built on the 529 college savings account structure, and funded by businesses and organizations, it is “probably our strongest proposal,” she said.
Child Development Accounts started as “a big social experiment conducted in Oklahoma that shows it’s feasible and possible to include all individuals in the financial services system,” said Huang, who was a project research member.
SEED for Oklahoma Kids (SEED OK) came out of The Center for Social Development at the George Warren Brown School of Social Work at Washington University in St. Louis, running as a pilot program in Oklahoma from 2007 to 2011.
With support from the Ford Foundation, children in participating families received an automatically opened Oklahoma College Savings Plan (OK 529) account with an initial deposit of $1,000 each to get a head start on savings for college or other schooling. The accounts were owned by the state and funds will be sent directly to colleges and vocational schools.
The center’s research summary report in 2014 notes Maine, Nevada and Connecticut had launched similar programs, and one of the findings was “disadvantaged treatment children scored better than disadvantaged control children on a measure of social-emotional development.”
The Urban Institute, in a March 2015 “Review of Children’s Savings Accounts,” states San Francisco and the states of Michigan, Rhode Island, Mississippi and Kansas have crafted programs or started pilot programs.
Huang said such programs also can create non-financial benefits.
“Less financial stress can result in children being less likely to have behavioral issues by age 4 and mothers having fewer depression symptoms,” he said. “It actually can generate a lot of positive behaviors for parents.”
And it really can help the children, Shanks said.
“If people have greater economic security, more savings, money in the bank, they can move forward,” Shanks said. “Particularly, that would make life better for children. It would make a huge difference for the next generation.”
Wolfsohn said the final exam for her financial social work students is her favorite part.
“They have to write an essay on money—anything to do with money,” she said. “I’ve had students write all kinds of things. Mostly they talk about how much they wish they had known about this long ago and how much it had changed their clients’ lives.”
That’s one of the benefits of this work, Wolfsohn said.
“You get to see the change in your clients’ lives,” she said. “Once they have this, it’s there and it won’t go away.”