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.
Stronger families and neighborhoods start with equal access to modern financial services that keep money in people's pockets and wealth in communities. We know better than to expect the banks to return; they won't be back until the money comes back. But we don't have to wait. We can push the door to full financial inclusion open by using payment technology that provides many mainstream financial tools without the need for a bank account. Prepaid cards--available at many local stores--and payroll cards that employers can offer in lieu of paper checks provide significant time and money savings for our families, and help us develop long-term prosperity in our neighborhoods.
Using a payment card means never having to wait in line to cash a check or pay a bill ever again. It means never worrying about losing cash or having it stolen. It also means that wages are available immediately to spend where you want, when you want. And they come with easy-to-use accounting tools so people can manage their money over the Internet or via mobile phone.
Moving from cash to electronic payments will empower our communities and help us green financial deserts. But ready access must be accompanied by education on how to use technology to our advantage. I've dedicated my career to fighting for the rights of working families, but in today's economy it's not enough to help families get a living wage; we need to help them get access to and use that money more effectively. For instance, my organization, the A. Philip Randolph Institute, partnered with Master Your Card, a community empowerment program, to develop a toolkit with electronic payment education materials designed to help financially underserved young adults and seniors join the modern economy. Efforts like this must be continued to make sure that nobody takes advantage of people who already have too little to lose.
Poverty isn't just a lack of money--it's also the lack of equal access to the tools that are essential for managing and growing wealth. The lack of mainstream financial services in our low-income communities has dried up the chances of upward mobility for families and shut out healthy business growth that helps neighborhoods thrive.
It's criminal that 9 million African-American families are paying more for the privilege of having less and it's crushing our community's ability to prosper. If we can help low-income families keep their money in their pockets--not lining the coffers of predatory payday lenders and check cashers--they will get ahead. It's time to green our financial deserts with the money we already have. We can all build our wealth, grow our local businesses and attract the investment our neighborhoods need to sustain families and take them higher.
Clayola Brown is president of the A. Philip Randolph Institute and a member of the Master Your Card African American Advisory Board.