Opportunity to Thrive
Economic mobility is defined as the likelihood that a family will move up the income ladder from one generation to the next. Unfortunately, St. Louis ranks 42nd out of the 50 largest metro areas in the country in economic mobility (Chetty, 2014). St. Louis also has significant racial economic gaps, with stark differences between the White population and people of color in unemployment rates, hourly wages, and rates of homeownership (Chetty, 2014).
When people do not have equal opportunity to thrive, the entire region pays a price. The University of Missouri-St. Louis Public Policy Research Center’s Equity Assessment says, “Eliminating racial income gaps would boost the St. Louis economy by $14 billion. If there had been no racial gaps in income in 2012, the St. Louis regional economy would have been $13.56 billion larger” (Public Policy Research Center, 2015).
The signature priorities in the Opportunity to Thrive section address five key areas the Commission believes address economic inequality, and merit urgent attention:expanding Medicaid, employment, financial empowerment, housing, and transportation.
Within this Priority
Ensuring Access to Affordable Health Care
For an adult to be eligible for Medicaid in Missouri today, he or she must have a dependent child and earn no more than approximately 18 percent of the poverty level, or roughly $2,900 for a single mother with two children (Missouri Foundation for Health, 2014). Childless individuals are not eligible for Medicaid under any income circumstances unless they are disabled or pregnant.
In addition to establishing a marketplace for purchasing private health insurance, and offering subsidies to those making between 100 percent and 400 percent of the federal poverty level, the Affordable Care Act also provides states with federal funding to expand their Medicaid programs to cover adults under the age of 65 with incomes up to 138 percent of the federal poverty level. States were allowed to individually decide whether or not to accept these funds and expand eligibility for Medicaid. Missouri is currently one of 19 states that have not yet expanded Medicaid (Families USA, 2015).
While Medicaid expansion could cover hundreds of thousands of Missourians below the federal poverty level ($24,250 for a family of four) these individuals currently do not qualify for Medicaid or for federal subsidies to help them purchase private insurance. This absence of options for childless adults making between 0 and 100 percent of the federal poverty level, and for parents making between 19 and 138 percent of the federal poverty level, is termed the coverage “gap.” In the current system, a family of four earning up to $95,000 a year qualifies for assistance (on the Marketplace). Parents in a similar family earning $32,000 qualify for nothing. In Missouri, nearly 200,000 adults fall into this gap (Joiner, 2013).
For those who fall into the gap, one of the few resources available is low-or no-cost outpatient care and medications provided through such programs as Gateway to Better Health (or “Gateway”) in St. Louis City and County. Each year, Gateway provides primary, specialty, and urgent care coverage to approximately 22,000 uninsured adults in St. Louis City and County, ages 19- 64, through a network of community providers (Regional Health Commission, 2014).
While there are costs for expanding Medicaid eligibility, the potential benefits of taking steps to insure Missouri’s low-income citizens are many:not just greater health and fewer work days lost to illness, but also a decrease in uninsured individuals relying on emergency care as their source of primary care. Ultimately, gaining access to lower cost health care settings provides a savings to taxpayers and reduces cost shifting to third-party business purchasers of care. The Commission recommends that Missouri join the other 31 states that have expanded Medicaid, and take additional steps to ensure that all of its citizens have access to affordable health care (Families USA, 2015).
- Chetty, R. (2014). Improving opportunities for economic mobility in the United States. Retrieved from:https://www.budget.senate. gov/democratic/public/_cache/files/08bd12ef-104d-44c0-a589- 20dcb426b833/chetty-mobility-testimony.pdf
- Families USA. (2015). A 50-state look at Medicaid Expansion. Retrieved from:https://familiesusa.org/product/50-state-look- medicaid-expansion
- Joiner, R. (2013). Medicaid coverage gap will affect more than 5 million Americans, including 193,000 in Missouri. The St. Louis Beacon. Retrieved from:https://www.stlbeacon.org/#!/content/33318/medicaid_coverage_gap_102113_2
- Missouri Foundation for Health. (2014). Missouri Medicaid basics. Retrieved from:https://www.mffh.org/mm/files/MedicaidBasics2014.pdf
- Public Policy Research Center. (2015). An equity assessment of the St. Louis region. University of Missouri-St. Louis Retrieved from:https://pprc.umsl.edu/pprc.umsl.edu/data/stl_equity_assessment_may2015.pdf
- Regional Health Commission. (2014). Gateway to better health program extended through 2015. Retrieved from:https://www.stlrhc. org/work/gateway-better-health-demonstration-project/gateway-better-health-program-extended-2015/
Finding employment still remains a struggle for many in the St. Louis region, specifically low and very-low income residents. Job training and creation is an important part of the solution for increasing economic mobility for all in the region.
Key to regional economic development is a skilled workforce able to meet the needs of employers. But in its 2015 employer survey, St. Louis Community College Center for Workforce Development found that the most frequently cited barrier to expanding employment is shortage of workers with knowledge or skills, surpassing economic conditions and government policies or regulations (St. Louis Community College:Workforce Solutions Group, 2015). To address this shortfall, employers must train new employees themselves, offer higher wages to find the skilled workers they need, or leave positions unfilled.
Skills such as critical thinking, communication, collaboration, and creativity are becoming ever more important to organizations, but they often fall outside of the typical academic curriculum. Communication and collaboration between educators and employers, however, can help narrow employment skills gaps and increase the relevancy of education to career development and attainment, supporting both businesses and students.
One model used by educational institutions and community and faith-based organizations are, individually or in partnership, offer accelerated programs to quickly teach skills and reattach potential employees to the workforce. Programs that focus on mentoring based on authentic relationships rooted in a common commitment have the best opportunity for success (United States Department of Labor, 2014). Aligning such efforts with a regional strategy and common indicators to measure progress can assist in creating stronger regional talent development initiatives.
Internships and apprenticeships are valuable programs to both help students succeed in their careers, and help employers ensure they have a competent, trained workforce. By expanding internship and apprenticeship opportunities for high school and college students, and fostering collaboration between educators and employers in the development of these programs, Missouri can support better learning and economic outcomes that benefit individuals, companies, and communities.
- St. Louis Community College:Workforce Solutions Group (2015). State of St. Louis workforce 2015. Retrieved from https://www.stlcc.edu/Workforce-Solutions/St-Louis-Workforce/Reports/State-of-St-Louis-2015-Workforce-Report.pdf
- University of Missouri-St. Louis:College of Business Administration. Skills gaps:The ill-prepared workforce. https://www.umsl.edu/divisions/business/files/pdfs/skillsgap13_14.pdf
In determining the priority calls to action in the area of financial empowerment, the Commission identified several different, but related issues, including the minimum wage, predatory lending, child and family development accounts, and financial empowerment centers.
A recent study by the National Low Income Housing Coalition recently found that the average hourly wage to afford a basic two-bedroom apartment in St. Louis is $15.69 (Bolton et al., 2015). This value was calculated based on the Department of Housing and Urban Development’s estimated Fair Market Rent (FMR), and the idea that a family or individual should not spend more than 30% of their income on housing costs (Bolton et al., 2015).
The current minimum wage in Missouri is $7.65 per hour. This low hourly wage means Missourians can work a full- time job (usually 2,080 hours per year, earning $15,912) and still earn below the federal poverty level ($15,930 for a family of two) (Office of the Assistant Secretary for Planning and Evaluation, 2015). Low wages such as these make it difficult to care for a family, secure housing, and cover basic living expenses.
Per an August 2015 bill passed by the St. Louis Board of Aldermen and signed by Mayor Francis Slay, the minimum wage in St. Louis is scheduled to rise to $11 per hour by 2018 (Board Bill 83, 2015). Nationally, similar efforts are underway to enact legislation intended to increase the minimum wage to a living wage gradually in three to five years.
While low wages make it difficult to escape poverty, predatory lending often makes poverty worse. Low- income households in Missouri with limited access to credit frequently seek high-cost “payday” loans to handle increased or unexpected emergency expenditures. These lenders, who are often the only lending option in low- income neighborhoods, charge exorbitant interest rates on their loans. University of Missouri research found that in Missouri, the average annual percentage rate (APR) of interest for payday loans is 444.61 percent (University of Missouri, 2012).
That same report found that high-cost, predatory lenders concentrate in low-income communities, and that Missouri’s lax regulatory environment has allowed payday lending to thrive. Further, compared to our eight contiguous states, Missouri has the highest APRs (University of Missouri, 2012).
Capping the maximum APR at 36 percent and changing repayment terms, underwriting standards, and collection practices can protect borrowers from predatory lending.
Child and Family Development Accounts
Asset-building has long-term improvements on community, familial, and individual health; alongside early childhood education, it provides children and their families with a valuable tool for educational and financial development.
The power of assets is not just that they can be deployed productively or tapped to weather unexpected events, but they have behavioral effects that can change the manner in which people think about and plan for the future (OECD, 2003). Some studies suggest positive effects of assets on life satisfaction and self-efficacy, and negative effects of lack of assets on depression and alcohol abuse (Sherraden, 2008; Corporation for Enterprise Development, 2008; Mason et al., 2009). Assets appear to be associated with being self-directed, and future oriented (Sherraden, 2008; Corporation for Enterprise Development, 2008; Mason et al., 2009).
The asset-building method of Child Development Accounts (CDAs), Individual Development Accounts (IDAs), and Family Development Accounts (FDAs) is a promising pathway to inclusive asset building in the United States. By providing youth with automatic, opt-out accounts, youth can participate in early asset communication and long-term development of financial security. With such accounts, parents and young children can save for college. Creating assets for education changes how parents think about and engage with their children’s early development, which in the long term has correlated to improvements in grade retention and better social/ emotional development for children (Sherraden, 2008).
Financial Empowerment Centers
Historically, there are fewer banking facilities in distressed communities (Schwartz, 2011). This reality, combined with distrust of and unfamiliarity with the traditional banking system, lead many in these communities to be unbanked or underbanked. ‘Unbanked’ is an umbrella term used to describe diverse groups of individuals who do not use banks or credit unions for their financial transactions (Beard, 2010). They have neither a checking nor savings account. ‘Underbanked’ consumers have either a checking or savings account, but also rely on alternative financial services (Beard, 2010). The most common groups of unbanked and underbanked persons include low-income individuals and families, those who are less-educated, households headed by women, young adults and immigrants. In Missouri, 27.5% of adults are un-or underbanked (Sherraden, 2008).
Unbanked individuals are less likely to have the financial history and know how to apply for credit for a car or a home (Beard, 2010). More importantly, they are more likely to have to use alternative financial services that are far more costly and that therefore impede financial health. Check cashing services are one example. Unbanked consumers spend approximately 2.5 to 3 percent of a government benefits check and between 4 percent and 5 percent of payroll check just to cash them (Beard, 2010). Additional dollars are spent to purchase money orders to pay routine monthly expenses. When unbanked individuals face unexpected needs, they often turn to payday or installment lenders.
In many areas, the number of alternative financial service providers (check cashers, title lenders and payday lenders) far exceeds the number of bank and credit union branches. Alternative financial service providers can be attractive because of proximity, and convenience—many offer a range of payment services, such as cashing pay checks, selling money orders with stamped envelopes, serving as agents for utility bill payments, and transmitting funds electronically for money transfers, all in one location.
Financial empowerment centers, in contrast, seek to provide a one-stop-shop for the un-or under-banked that provides community development banking, multi- generational financial education, and convenient financial services with reasonable interest rates. The Commission recommends the development and support of these centers. It has been shown that very poor families can save and accumulate assets when well-structured products, programs, and policies are accessible (Grinstein-Weiss et. al., 2014).
- Beard, M. (2010). In-depth:Reaching the unbanked and underbanked. Federal Reserve Bank of St. Louis Retrieved from https://www.stlouisfed.org/Publications/Central-Banker/Winter-2010/Reaching-the-Unbanked-and-Underbanked
- Bolton, M., Bravve, E., Miller, E., Crowley, S., & Errico, E. (2015). Out of Reach 2015. National Low Income Housing Coalition. Retrieved from https://nlihc.org/sites/default/files/oor/OOR_2015_FULL.pdf
- Office of the Assistant Secretary for Planning and Evaluation (ASPE). (2015). 2015 poverty guidelines. U.S. Department of Health & Human Services. Retrieved from https://aspe.hhs.gov/2015-poverty-guidelines
- Organisation for Economic Co-Operation and Development (OECD). (2003). Asset Building and the Escape from Poverty:A New Welfare Policy Debate. Retrieved from https://www.ecosocdoc.be/static/module/bibliographyDocument/document/003/2398.pdf
- Poverty At Issue Research Report. (2012). Show-Me Predatory Lending:Where Does the Money Go? University of Missouri Extension. Retrieved from https://extension.missouri.edu/cfe/wcap/Show-MePredatoryLendingReport.pdf
- Sherraden, M. (2008). IDAs and Asset-Building Policy. Center for Social Development Working Papers:No. 08-12. Retrieved from https://www.usc.edu/dept/chepa/IDApays/publications/IDAs%20and%20asset%20building%20policy.pdf
Where we live matters. It impacts our access to education, safety, quality housing, healthcare, food, and jobs. In the St. Louis area, one way we can see how place matters is by looking at disparities in length of life from one zip code to another. In 63105, Clayton, the life expectancy is 85 years. In 63106, near the Jeff-Vander-Lou neighborhood, average life expectancy is 67—a difference of 18 years (Purnell et al., 2014).
And though St. Louis is widely considered an affordable place to live, many low-income St. Louisans still find it difficult to afford housing, especially in safe, thriving neighborhoods.
The Low Income Housing Tax Credit (LIHTC) Program provides tax credits to developers of affordable rental housing, with the aim of encouraging developers to build affordable housing for low-income residents in neighborhoods where these residents can access jobs, health care, and other vital services (Freedman & McGavock, 2015).
The LIHTC program is administered by state allocating agencies, and each state issues a Qualified Allocation Plan (QAP), which describes the criteria the state will use when awarding its tax credits (Ellen et al., 2015). Each year a process is set for administering those funds. Most recently the body responsible for doing so, the Missouri Housing Development Commission, set several restrictions in its 2015-16 QAP to ensure these funds do not concentrate subsidized housing in low-income neighborhoods, which can lead to neighborhood decline (Missouri Housing Development Commission, 2015).
The Commission supports the Missouri Housing Development Commission’s 2015-2016 QAP, as it provides a sound approach to making new low- income housing maximally beneficial to residents and neighborhoods.
In addition, the Commission calls on all units of government with zoning powers to use inclusionary zoning ordinances. Inclusionary zoning policies “require or encourage developers to set aside a certain percentage of housing units in new or rehabilitated projects for low- and moderate-income residents” (HUD, 2013). Improving the use of LIHTC funds, and enacting inclusionary zoning ordinances are both steps toward addressing some of the housing inequity in the St. Louis region.
- Ellen, I.G., Horn, K., Kuai, Y., Pazuniak, R., & Williams, M.D. (2015). Effect of QAP Incentives on the Location of LIHTC Properties. U.S. Department of Housing and Urban Development (HUD) Office of Policy Development and Research. Retrieved from https://www.huduser.org/portal/publications/mdrt/QAP_Incentives.html
- U.S. Department of Housing and Urban Development (HUD). (2013). Inclusionary Zoning and Mixed-Income Communities. Retrieved from https://www.huduser.org/portal/periodicals/em/spring13/highlight3.html
Public transit is a key to expanding opportunity for all St. Louisans. A safe, reliable, affordable, and efficient public transportation system can increase access to health care, education, and employment. Moreover, public transit affects how long it takes many low-income citizens to get to work, and in research from Harvard, “commuting time has emerged as the single strongest factor in the odds of escaping poverty. The longer an average commute in a given county, the worse the chances of low-income families there moving up the ladder” (Chetty & Hendren, 2015).
Effective public transit, and the mobility it enables, can also provide economic benefits to the region as a whole. Transit reduces household expenses; attracts talent and business; and in leading people to drive less, has the potential to decrease traffic congestion, air pollution, and roadway wear and tear (Osborne, 2015).
However, a shortage of funding is keeping the region from pursuing many of its transporation proposals and moving forward with transit expansion.
The Ferguson Commission echoes the recommendation of Beth Osborne, Senior Policy Adviser for Transportation for America, that stakeholders must work together to determine which project or projects will be prioritized (Cella, 2015). This prioritization will enable the region to focus resources where they will bring the greatest return, and ensure efficient, effective implementation of those projects.
Once priorities have been established, it is essential to develop a state funding plan for public transportation projects. State funded transit development matches are required to compete for necessary federal funding and such a plan will make Missouri eligible for federal matching funds for transportation infrastructure. Federal funds, as part of a broader funding plan, are critical to the long-term success of transportation development.
- Cella, K. (2015). CMT releases findings form Transit Funding Study. Citizens For Modern Transit. Retrieved from https://cmt-stl.org/cmt-releases-findings-from-transit-funding-study/
- Osborne, B. (2015). Funding Transit in St. Louis (Presentation). Transportation for America. Retrieved from https://cmt-stl.org/wp-content/uploads/2015/07/t4americapresentation.pdf
Racial Equity Lens Assessment
As the overarching theme in the report, racial equity is at the heart of many of our calls to action. The calls in this section address intentional investments and practices aimed to build infrastructure and connective tissue for racial equity for work in the St. Louis region.
SIGNATURE CALLS TO ACTION
Expand Medicaid Eligibility
Enhance and Expand Collaboration between Educators and Employers
Encourage Life-long Learning and Funding for Job Training Programs
Raise the Minimum Wage
End Predatory Lending
Provide Universal Child Development Accounts
Implement Individual Development and Family Development Accounts
Identify Financial Empowerment Centers
Improve Use of LIHTC Funds
Enact Inclusionary Zoning Ordinances
Develop a State Supported Funding Plan for Public Transit, Identify Priority Transportation Projects for the St. Louis Region
- American Community Survey. (2006-2010). Median home values by race.
- American Community Survey. (2009-2013). Children below 100 percent poverty by race.
- American Community Survey. (2009-2013). Population below 100 percent poverty level.
- American Community Survey. (2009-2013). Population with no high school diploma by race.
- American Community Survey. (2010-2012). Commuters by Race and Ethnic Demographics.
- American Community Survey. (2010-2012). Uninsured population, by race percent by county.
- Bocian, D., Li, W. & Ernst, K. (2010). Foreclosures by race and ethnicity:The demographics of a crisis. Durham, NC:Center for Responsible Lending. Retrieved from:https://www.responsiblelending.org/mortgage-lending/research-analysis/foreclosures-by-race-executive-summary.pdf
- Bourke, N., Horowitz, A. & Roche, T. (2012). Payday lending in America:Who borrows, where they borrow, and why. Washington, DC:Pew Charitable Trusts. Retrieved from:https://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_assets/2012/PewPaydayLendingReportpdf.pdf
- Bureau of Labor Statistics. (2014). Average unemployment rate by ethnicity, 2013.
- Diversity Data. (2010). Home loan denial rates by race. Retrieved from:https://diversitydata-archive.org/Data/Rankings/Show.aspx?ind=25
- Emmons, W. & Noeth, B. (2015). Race, Ethnicity and Wealth. St. Louis:Center for Household Financial Stability, Federal Reserve Bank of St. Louis. Retrieved from:https://www.stlouisfed.org/~/media/Files/PDFs/HFS/essays/HFS-Essay-1-2015-Race-Ethnicity-and-Wealth.pdf
- Federal Financial Institutions Examination Council. Home mortgage disclosure act. Retrieved from:https://www.ffiec.gov/hmda/
- National Center for Education Statistics. (2015). The Condition of Education 2015. United States Department of Education. Retrieved from:https://nces.ed.gov/pubs2015/2015144.pdf
- St. Louis City. (2014). City of St. Louis analysis of impediments to fair housing choice. Retrieved from:https://www.stlouis-mo.gov/government/departments/community-development/documents/upload/STLCP_AnalysisofImpediments_Draft2.pdf
- St. Louis County. (2014). St. Louis County and cities of Florissant and O’Fallon, MO analysis of impediments to fair housing choice. Retrieved from:https://www.stlouisco.com/Portals/8/docs/document%20library/planning/housing/St%20Louis%20Co%20AI%20 FINAL%2012-2014.pdf
- Sullivan et al. (2015). Survey of income program participation (SIPP), 2008 Panel Wave 10, 2011.
- Sullivan, L., Meschede, T., Dietrich, L., Shapiro, T., Traub, A., Ruetschlin, C. & Draut, T. (2015). The racial wealth gap:Why policy matters. Demos and Institute for Assets & Social Policy, Brandeis University. Survey of Income Program Participation (SIPP), 2008 Panel Wave 10, 2011. Retrieved from:https://iasp.brandeis.edu/pdfs/2015/RWA.pdf
- Survey of Consumer Finances. Retrieved from:www.federalreserve.gov/econresdata/scf/scfindex.htm