All children are “our” children.
Financial shocks affect millions of children’s lives. Over 48 million children live in financially struggling households; 38% of these families don’t have savings habits. Financial Health Network has been dedicated to raising awareness around America’s children, publishing research to support the efforts. And this summer, we invited Bob Putnam, author of Our Kids: The American Dream in Crisis to speak to over 800 EMERGE attendees on the topic.
We’ve never quite seen a response like the one in the room that day.
“Fewer and fewer of us are living in mixed or moderate income neighborhoods,” says Putnam. “There are growing gaps… [Americans] have always thought that everybody ought to get a fair and equal start. That’s what it means to be America and that’s less and less true in America. It’s costly politically because it leads to a lot of distortions in our politics. It’s costly morally because it’s just wrong.”
Bob facilitated a moment of impact for hundreds of people, inspiring financial services professionals to do more for our country’s family and children. Thank you, Bob, and thank you attendees for your courage and passion.
Read the full transcript below.
RS: Thank you so much for joining us today in this conversation. I’m Rachel Schneider, a senior vice president at the Center for Financial Services Innovation, and I also spend a lot of my time on a research project called the US Financial Diaries, and I’m sitting here at the Emerge Forum in New Orleans, and delighted to be joined by Professor Bob Putnam. And we’re gonna have a conversation today really about his work, his recent book called Our Kids.
RS: We know that there are big problems in our country right now, but we wanna understand them, we want to feel part of fixing them. So let’s start there. Let’s start with what’s this problem you’ve identified? Share with us a bit about what you’ve learned.
Bob Putnam: Sure. Well, Rachel, if you start at the 30,000 foot level, a lot of good things have happened in America over the last 30 or 40 years. We have less gender discrimination. We have somewhat less racial discrimination although there’s still a lot of work to be done. We have niftier telephones than we used to.
BP: One big bad thing has happened in America over the course of the last 30 or 40 years and that is, America has become much more divided in economic and social class terms. We’re more divided first of all in the sense of the income distribution has become less equal. Some folks have done really well over the last 30 or 40 years, but a lot of folks from the middle down to the bottom of our society have not had a raise in the last 30 years, and that means we’re more divided economically, but we’re also more segregated socially than we used to be.
So more and more of us are either living in affluent enclaves, well-educated enclaves, or in poor less educated enclaves, and fewer and fewer of us are living in mixed or moderate income neighborhoods.
On average kids over here get $7,000 a year in summer camp and piano lessons and these kids get $700 a year. There are growing gaps just like that in taking part in extracurricular activities, that is opportunities for learning soft skills. Growing gaps in test scores. Test scores are going up for these kids over here and down, or not up at least for these kids over here.
Americans have not thought that everybody ought to end up with the same income. [Americans] have always thought that everybody ought to get a fair and equal start. That’s what it means to be America and that’s less and less true in America. It’s costly politically because it leads to a lot of distortions in our politics. It’s costly morally because it’s just wrong that my grandchildren… I’m proud of my grandchildren, they work hard, but they shouldn’t have a rocket booster behind them when these other kids don’t.
But it’s also costly economically, and this is where there’s some connection between this and finances. The cost to everybody in society including my grandchildren, the cost of not investing in these poor kids, the best economic estimate is that the present value cost of not investing in poor kids to the rest of us is about $5 trillion.
It’s a lot of money!
RS: On this theme about people being connected to each other, I know you know I’ve been working on a research project called the US Financial Diaries, and it’s a partnership between us and NYU, and Jonathan Morduch and I, my partner there, and our team, have collected really detailed financial information about several hundred families. And one thing about it, to me, that was completely surprising and really notable was the extent of financial interconnection that families have with each other.
RS: So, in our various small research sample, so take it for what it will, almost everyone had some moment during the year where they shared resources. They either borrowed, or they lent, or they gave resources away. We were tracking in kind as well as financial resources. And so, within communities, there is still so much, I think, sharing. It’s just that some communities don’t have very many resources to share.
BP: That’s right.
BP: I want to say three things in response to that really rich set of conclusions you’ve been able to draw from the Financial Diaries. The first thing is that financial anxieties are an important part of this overall story that I’m talking about because there is a growing gap too in the intensity of financial anxiety that people, especially parents, are feeling.
Of course, lots of people in America, even fairly affluent people feel financial anxiety, but that is not nearly so much as what’s pervasive in the lives of poor people, and that gap is growing. And I am always a little reluctant to drop names, but not long ago, well, about eight years ago now, I was at the White House talking to President Bush and his wife and to his cabinet, he invited me to talk about this growing gap and he said, “What’s causing this?” and so on… He talked about a lot of different things that might have caused it, family instability and so on.
But at one point when I was not being very articulate, Laura Bush, his wife, interrupted me and interrupted the president and said to him, “George, just think about it. If you’re worried, if you don’t know how long you’re gonna keep your house, and you don’t know how long you’re gonna keep your job, you just have less energy to invest in the kids.” Bingo. In my research group, we call that the Laura Bush hypothesis, and it’s true, and it’s the way in which financial anxiety is transferred to kids.
The most important gap of all is actually the savvy gap. My grandchildren are high on savvy, not because they’re smarter, but just because they’re surrounded by other real people, not just devices, but other real people who can say, “Hey did you see this new app, how about LinkedIn?” Or something. I know LinkedIn is now old times, but these kids are no way near having the same… And it’s the high touch part that they need, it’s not just another app, they need some real person in their lives who cares about them, knows about their problems and can help them use these devices. So I am all in favor of hi-tech, but we’ve got to think about how to make that actually work in the lives of real poor kids.
RS: So I’m really curious to hear. I know you’ve been spending a lot of time with local communities talking about what to do.
RS: What have you heard that made you feel optimistic?
BP: We Americans have fixed this kind of a problem before. This is not the first time in American history that we’ve had this kind of big gap between rich and poor and political polarization and so on. That’s true now and it was true a 100 years ago at the turn of the last century, the so-called gilded age. And then in a pretty short period of time, Americans began to recognize the problem and actually to re-weave the fabric of our communities.
That’s what’s going on, and that’s what we need now, to re-weave this fabric including the fabric that links us across social class lines. And in that period we did some important big things that are so important that we now no longer recognize they were innovations.
The high school was not invented by God, or if it was, this is how God did it. In small towns across the heartland people said… And we had never, never had communities in which every kid in town just by being a kid got four years of free secondary education, never any place in the world. And you had to convince the local banker or the local rich lawyer or farmer who had already paid for their kids to get a private secondary education. Their kids were now all off in Chicago making money.
BP: You had to convince them that they should pay for other people’s kids to have the benefit of the secondary education. Not an easy sell. It worked because people began to think, “Well, maybe these are our kids too,” and it turned out to be the best public policy decision we’ve ever made, because that one thing it went viral quickly across the country, every town needed to have a high school.
BP: And it did two things simultaneously, it raised the overall level of productivity of the American labor force so much that that one invention, that one invention, high school, universal high school, is responsible for most of American economic growth throughout the whole of the 20th century. This is a big deal, so everybody was better off including the bankers because they’d invested their money in other people’s kids and it levelled the playing field.
When I think about the poor kids we’ve talked to and I start thinking about them, if they were my kids, I couldn’t sleep at night.
BP: And so, we can fix this if we want to.
RS: Thank you. I think that’s wonderful and really a good place for us to end I think. We can fix this and we hope that we’ll all be a part of fixing it so thank you very much for this time.
BP: Thanks very much. I appreciate it.
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