Lessons from Fireside Chat, Part 1: Understanding financial vulnerability and career advancement

Alex Ruder is the principal community and economic development advisor at the Federal Reserve Bank of Atlanta. He leads many of the Fed’s efforts in workforce development, affordable housing, entrepreneurship and community engagement. He joined NFIN in September, for the first of a series of Fireside Chats about financial vulnerability in North Fulton.

Alex shared a University of Washington Self-Sufficiency Standard to demonstrate what a single mother of 2 young children would need to earn to live in Fulton County. NFIN local survey research estimates these costs run about 18% higher in North Fulton than the county-wide average. For the sake of the example, however, single mom Leia would need to find about $5100 a month. As you can see, as a $9/hr service worker, Leia qualifies for $433/mo. in assistance benefits.

Leia evaluates her options to work toward more income and stability for her family. She sees that jobs are available in the nursing field, and decides to become a Certified Nursing Assistant (CNA), and maybe move up from there to Licensed Practical Nurse (LPN), for the higher wage it offers. Our community needs this service, and Leia needs the income. In the most simplistic sense, the earning curve is pretty clear, and there are some excellent programs available to get the required training.

This view, however, masks the ‘benefits cliff’ and other challenges facing Leia in reaching a living wage. How does this path impact her short-term income? Will she have to drop to part-time work to complete her training?

“Employment alone is not a sufficient picture of a family’s well-being,” says Alex. A clearer picture comes from looking at Leia’s Net Financial Resources as she moves through training to see how various barriers can impact her ability to better her work situation.

Net Financial Resources = (Employment Income + Public Assistance) – (Taxes + Expenses)

For an even more complete understanding, we factor in the training years (beige, light green). The green line shows clearly the Benefits Cliff. This is where Leia is losing access to child care benefits. The Benefits Plateau shows us where rising income is mitigated by loss of benefits for a neutral effect. The Break Even, dotted line illustrates the years Leia doesn’t have sufficient resources to pay basic expenses. If she is in this kind of training program, she will need some additional financial support to get to the wage benefit that the training eventually offers. Between yellow and green line, in her mid 30’s, the difference is so small, there is less financial incentive to move to the LPN level in these transition years. Ultimately, from her late 30’s on, if Leia can get through the transition, she clearly finds more benefit from the LPN track.

What does Leia’s path mean to us as community members and tax payers? When Leia is able to fill an essential service position, move off public assistance, and pay taxes as a CNA or LPN, we all benefit. As an LPN, Leia’s tax contribution is over $130k over her professional lifetime. In total, as she moves from CNA to LPN - adding the red and yellow bars together - Leia is paying over $200k in taxes in her career.

 The foundational basis for much of the Fed’s work around economic development is creating customized tools to help communities measure this more holistic picture and find ways to support workers during this transition to self-sufficiency. Some common strategies include:

·      Benefits Cliffs Calculator tools

·      Student advisement to increase post-secondary attainment

·      Career pathways design/targeted occupation and industry analysis

·      Aligning wrap-around supports

·      Employer engagement

Policy Simulation/Changes

·      Change Asset Limits

·      Income Disregards

·      Alignment of rules/services across programs

·      Tax credits for working families

·      Graduated phase-outs

Alex shared the Career Ladder Identifier and Financial Forecaster (CLIFF) tool the Fed uses to help communities like North Fulton, identify career openings that need to be filled, the composition of families and workers in the area who could potentially move into these positions, and the resources that would be needed to support the transition during training.

The digital tool then helps families trace out their financial potentials and challenges, and identify the resources in the community that can assist in supporting these steps. These services are offered at no cost to the community.

To view the Chat, CLICK HERE