Viewpoint: It’s Time to Green Our Financial Deserts
Friday, May 13, 2016
Since 2010, more than 5,000 bank branches have closed in communities across the United States. Meanwhile, expensive alternative financial service providers like check cashers and payday lenders continued to proliferate at an alarming rate. Not surprisingly, these two trends have disproportionately impacted hard-working people of color, trapping roughly 9 million African-American families in a world where it costs more to have less.
As a trade unionist, I can tell you that good-paying jobs are the first step to ending poverty. The second step is too often overlooked: greening the financial deserts that have spread like a plague through low-income communities. Financial deserts are neighborhoods where people don’t have easy access to mainstream financial tools, which isn’t just about proximity to a bank branch. It’s a lack of bank branches, an overload of alternative financial services, and a dearth of opportunities to spend hard-earned wages at local businesses. They create an environment where the money of low-income people bleeds out through predatory alternative financial institutions and leaves little left over to nourish families and propel upward mobility.
New York, Los Angeles, Chicago, Baltimore, Washington, D.C.—every major city and many rural areas in the United States have something in common. Walk through prosperous neighborhoods and commercial zones and you see a bank on every other corner, often under the buildings and businesses they’ve helped sprout. Keep walking a few streets past your comfort zone and you’ll see the first sign of America’s financial Sahara: a check-cashing store and accompanying payday lender.
What you won’t see are any banks. And that’s bad news because people can’t win the war on poverty when their wallet is getting killed every payday. More than half of African-American families rely on alternative financial services to manage their money, which is like going to a convenience store for groceries and only finding donuts, cigarettes and beer.