[Joint House and Senate Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 113-415
INCREASING ECONOMIC OPPORTUNITY
FOR AFRICAN AMERICANS: LOCAL INITIATIVES THAT ARE MAKING A DIFFERENCE
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HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JULY 29, 2014
__________
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JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
HOUSE OF REPRESENTATIVES SENATE
Kevin Brady, Texas, Chairman Amy Klobuchar, Minnesota, Vice
John Campbell, California Chair
Sean P. Duffy, Wisconsin Robert P. Casey, Jr., Pennsylvania
Justin Amash, Michigan Bernard Sanders, Vermont
Erik Paulsen, Minnesota Christopher Murphy, Connecticut
Richard L. Hanna, New York Martin Heinrich, New Mexico
Carolyn B. Maloney, New York Mark L. Pryor, Arkansas
Loretta Sanchez, California Dan Coats, Indiana
Elijah E. Cummings, Maryland Mike Lee, Utah
John Delaney, Maryland Roger F. Wicker, Mississippi
Pat Toomey, Pennsylvania
Robert P. O'Quinn, Executive Director
Niles Godes, Democratic Staff Director
C O N T E N T S
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Opening Statements of Members
Hon. Amy Klobuchar, Vice Chair, a U.S. Senator from Minnesota.... 1
Hon. Richard L. Hanna, a U.S. Representative from New York....... 2
Witnesses
Ms. Angela Glover Blackwell, Founder and CEO, PolicyLink,
Oakland, CA.................................................... 6
Dr. Eva Moskowitz, Founder and Chief Executive Officer, Success
Academy Charter Schools, New York, NY.......................... 7
Mr. William Bynum, CEO of HOPE (Hope Enterprise Corporation/Hope
Credit Union), Jackson, MI..................................... 9
Dr. Aparna Mathur, Resident Scholar, American Enterprise
Institute, Washington, DC...................................... 10
Submissions for the Record
Prepared statement of Hon. Richard L. Hanna...................... 30
Prepared statement of Ms. Angela Glover Blackwell................ 32
Prepared statement of Dr. Eva Moskowitz.......................... 44
Prepared statement of Mr. William Bynum.......................... 50
Prepared statement of Dr. Aparna Mathur.......................... 57
INCREASING ECONOMIC OPPORTUNITY
FOR AFRICAN AMERICANS: LOCAL
INITIATIVES THAT ARE MAKING A DIFFERENCE
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TUESDAY, JULY 29, 2014
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The committee met, pursuant to call, at 2:31 p.m. in Room
G-50 of the Dirksen Senate Office Building, the Honorable Amy
Klobuchar, Vice Chair, presiding.
Representatives present: Paulsen, Hanna, Carolyn B.
Maloney, Cummings, and Delaney.
Senators present: Klobuchar, Casey, and Murphy.
Staff present: Al Feizenberg, Connie Foster, Niles Godes,
Colleen Healy, Christina King, and Robert O'Quinn.
OPENING STATEMENT OF HON. AMY KLOBUCHAR, VICE CHAIR, A U.S.
SENATOR FROM MINNESOTA
Vice Chair Klobuchar. Okay, we are going to call the
hearing to order. We are very glad we have a good number of
people here in attendance, and thank you so much for coming,
and thank you for this important conversation about increasing
economic opportunity in the African American community.
I would like to thank Congressman Cummings, who has worked
with us to put this hearing together. Also, the people from my
hometown of Minneapolis who met with me. We had a really good
discussion about this issue, and talked about how not only do
we want to shed some light, continue to shed light on this
issue, but also talked about what has been working across the
country and some positive developments, as well.
I think we all know we have seen some positive developments
in our economy, and that is a good thing. We have seen
stability. I know in our State we are down to 4.6 percent
unemployment. But we still have a lot of issues with long-term
unemployed and people who, even though they have jobs, are not
making enough money to really pay the bills and make ends meet.
Paul Wellstone, who we miss every day in Minnesota, always
said: We all do better when we all do better. And that is
really what this hearing is all about.
There is much work to be done. We know that the
unemployment rate for African Americans has dropped
significantly in the past six months, but it still remains well
above the overall unemployment rate of 6.1 percent.
In 2013, African Americans were 12 percent of the labor
force but 24 percent of those unemployed for more than 6
months.
We are going to talk about some policy recommendations. I
know we will hear about them from our witnesses, and those are
improving workforce training. We did just pass a bill on that
out of the Congress, but it is something we care a lot about.
Education. Helping families build wealth. Revitalizing
neighborhoods. And helping start their own businesses.
Harlem Children's Zone is obviously a good example when it
comes to education. A birth-through-college pipeline of
programs reaching more than 12,000 young people annually, and
has become the gold standard for comprehensive education
programs built on outcomes- based models.
We also are going to look at increasing the number of
African Americans with STEM skills. We know that is important.
I know there is a young man I just met out there--there he is
in his blue shirt and orange tie--and asked him what his
favorite subject is, and his first answer was, ``Math.'' Very
good. That was good.
And where's your grandma? You showed me where your grandma
was.
(Nigel indicates where his Grandmother is sitting.)
Vice Chair Klobuchar. Okay, good. You should be very proud
of him. That was a good answer.
I am going to actually, instead of going through
everything, because I know that I want to give Representative
Cummings time to speak as well and introduce our witnesses, so
I am going to first turn it over to Representative Hanna who is
our chair today on the House side, and then we are going to
come back to Mr. Cummings and hear from him, a few comments
from him as well as introducing our witnesses.
Mr. Hanna.
OPENING STATEMENT OF HON. RICHARD L. HANNA, A U.S.
REPRESENTATIVE FROM NEW YORK
Representative Hanna. Thank you, Vice Chair Klobuchar,
Members, distinguished witnesses, grandparents, parents, and
scholars. Thank you for being here.
Let me begin by noting: Through the title of this hearing,
Vice Chair Klobuchar and her Democratic colleagues acknowledge
that Washington does not have a one-size-fits-all solution to
every problem that Americans face.
Yesterday marked the 100th anniversary of the beginning of
World War I when Austria-Hungary declared war on Serbia. The
Great War disrupted the supply of immigrant labor to the
American industries. In what became known as the Great
Migration, hundreds of thousands of African Americans moved
north to fill these positions.
July 2nd marked the 50th anniversary of the passage of the
Civil Rights Act of 1964 which outlawed discrimination in
public accommodations and employment based on race, color,
religion, sex, or national origin. Through this Act, both
Democrats and Republicans sought to close the opportunity gap
generated by racial prejudice and segregation.
Over the last half-century, there has been substantial
progress in narrowing the opportunity gap for African
Americans. Fifty years ago, less than 25 percent of African
American adults had a high school diploma; today, more than 85
percent do.
And there has still been a five-fold increase in the
percentage of college graduates. Inflation-adjusted median
family income of African Americans has nearly doubled. The
percentage of African Americans living in poverty today has
fallen by more than a third, and the percentage of children
living in poverty has fallen by nearly half--but much, much
more needs to be and can be done.
Nevertheless, the opportunity gap for African Americans
remains substantial. Much of what remains of the opportunity
gap is caused by a lack of education and job skills needed to
prosper in today's economy.
The surest route to prosperity for every American is a good
education. For poor African American children raised by single
mothers in rough inner city neighborhoods, a good education, as
Thomas Sowell argues, is their greatest chance at a better
life.
America has many great public schools with excellent
teachers that provide them with outstanding education.
Unfortunately, America also has failing public schools with
struggling teachers, many of which are in inner cities serving
poor children.
Economically prosperous families can avoid sending their
children to failing public schools by either moving to a
different neighborhood with good public schools or enrolling
them in private schools. Prosperous families always have school
choice.
Until recently, more families in inner cities had no
choice. Their children were forced to enroll in the assigned
public schools even if they failed to provide a good education.
Over the past decade, however, the public school monopoly for
the poor has begun to change.
Some governors and legislators working with parents have
developed new and innovative approaches to provide all parents,
regardless of their income or wealth, with choice for where
their children are educated.
The choice movement has taken a number of different forms:
charter schools, vouchers to attend private schools, and
privately funded scholarships to attend private schools.
One of our witnesses today is Eva Moskowitz, the founder
and Chief Executive Officer of Success Academy, a charter
school system in my own State of New York. She has overseen the
expansion from one school in 2006 to 22 schools serving 6,800
students--I understand soon to be 32 schools, serving many more
students.
Her students are largely from the poor minority families.
One of the interesting statistics is that these students score
in the top 1 percent in math, and the top 7 percent in English
Language Arts in state testing.
Americans are a generous people, willing to help the poor
through government-funded assistance programs and providing
charities. But Americans are also a practical people.
We want our safety nets to be temporary, helping able-
bodied working-age people to move from poverty into the middle
class, and beyond. We do not want our safety net to trap the
poor in a multi-generational cycle of dependency.
Another witness today is Dr. Aparna Mathur who has
identified what local initiatives in social welfare programs
can actually lift women, especially African American women, out
of poverty and making economic growth even more inclusive for
the poor.
She has argued for streamlining existing programs in order
to improve transparency about the implicit tax penalties
associated with each program. Ms. Mathur, Dr. Mathur, will
offer Members important lessons on how to restructure our
existing anti-poverty programs, improving the lives of current
beneficiaries while providing a better value for the taxpayer.
I look forward to their testimony. Thank you all, again.
[The prepared statement of Representative Hanna appears in
the Submissions for the Record on page 30.]
Vice Chair Klobuchar. Thank you, Representative Hanna. We
have also been joined by Representative Paulsen of my home
State of Minnesota. We are over represented on this Committee.
And I will turn this over to Mr. Cummings.
Representative Cummings. Thank you very much, Vice Chair
Klobuchar. And thank you for holding today's hearing to enable
us to examine how we can increase economic opportunities in the
African American community.
While the overall unemployment situation is improving, we
must ensure that all Americans have the opportunity to live the
American Dream. We must remember that minorities, particularly
African Americans, have a long hard road to walk just to get
back to where they were before the Great Recession.
In a recent report entitled ``Beyond Broke,'' for example,
the Center for Global Policy Solutions and its partners have
revealed just how wide the gap between the net wealth of White
households and Minority households is. And they have detailed
how extensive the financial struggles of the Minority community
really are.
Among other findings, this report explains that home equity
accounts account for 58 percent of the wealth of Whites; but it
accounts for more than 90 percent of the personal net worth of
African Americans. And African Americans are more than twice as
likely as Whites to hold no financial assets whatsoever, and to
have no, or negative net balance.
When African Americans are able to find work, they are more
likely to find themselves in minimum wage jobs in industries
where their salaries barely allow them to make ends meet.
There is much that we in Congress can do to help. We can
raise the minimum wage, which at the moment is not high enough
to lift a single parent working full-time above the poverty
line.
We can immediately extend unemployment benefits, which are
a crucial lifeline for the millions of Americans who have lost
their jobs and rely on this modest benefit to cover the cost of
housing, food, health care, and child care.
And we can work with federal housing regulators to expand
programs designed to help homeowners struggling with their
mortgage payments, and preserve the home equity that is so
critical for the African American community.
We can also shine a light on local programs that are
achieving measurable economic results for Minority communities,
including African Americans, and I thank you, Vice Chair
Klobuchar, for holding this hearing to shine that light.
We must approach this with urgency, the task of lifting all
Americans, including communities of color, out or poverty into
economic opportunity. And any initiative that has succeeded in
this effort demands our attention. And I say to you, we do not
have the right to remain silent.
On the panel today to discuss these issues is Ms. Angela
Glover Blackwell, the CEO and Founder of PolicyLink, a national
research institute advancing economic and social equity. Ms.
Blackwell previously served as a Senior Vice President at the
Rockefeller Foundation. She also served as Vice Chair of the
Board of Directors of the Children's Defense Fund; was a
commissioner on the Robert Wood Johnson Foundation Commission
to build a healthier America; and served on the President's
Advisory Commission on Educational Excellence for African
Americans. Earlier this year, Ms. Blackwell was named a
National Honoree by the Center for Urban Families and the Fred
and Rita Richmond Distinguished Fellow in Public Life by
Brandeis University.
Also with us today is Dr. Eva Moskowitz, the CEO and
Founder of Success Academy Charter Schools, a network of
charter schools throughout New York City. From 1995 to 2002,
Dr. Moskowitz served as a New York City Councilmember for the
Upper East Side of Manhattan, and chaired the Council's
Committee on Education from 2002 to 2005.
Mr. William Bynum is the founding CEO and President of Hope
Enterprise Corporation and Hope Credit Union, a private,
nonprofit community development financial institution that
provides banking services and access to capital to 400,000 low-
income residents of Arkansas, Louisiana, Mississippi, and
Tennessee. Finally, he has advised Presidents Clinton, Bush,
and Obama on community development, small businesses, and
financial services matters, serving for 10 years as a
Presidential appointee and Chairman of the Department's
Community Development Advisory Board.
Finally, Dr. Aparna Mathur is a Resident Scholar at the
American Enterprise Institute. She previously served as Adjunct
Professor at Georgetown University, a consultant for the World
Bank, and an instructor at the University of Maryland.
So I look forward to our testimony, and I thank you, Madam
Vice Chair, for including children. I have often said the
children are the living messages we send to the future we will
never see. The question is, how will we send them?
Thank you.
Vice Chair Klobuchar. Thank you very much. And I know that
Representative Cummings has another hearing, meeting that he
will be going to shortly, and I am going to have to vote. But I
will come back. Never fear. So I may have to turn over the
gavel to Mr. Hanna, or whoever else is here. I want to also
mention Senator Casey is with us from the Great State of
Pennsylvania.
So let's start with you, Ms. Glover Blackwell. Thank you so
much for being here.
STATEMENT OF MS. ANGELA GLOVER BLACKWELL, FOUNDER AND CHIEF
EXECUTIVE OFFICER, POLICYLINK, OAKLAND, CA
Ms. Glover Blackwell. It is my honor to appear before this
Committee to talk about increasing economic opportunity for
African Americans.
The United States is on the cusp of a very important
transformation that is being fueled by the rapidly shifting
demographics, which show that by 2043 we will be a Nation which
is majority people of color: Black, Latino, Native American,
Asian. But already the majority of those under five are of
color, and by the end of this decade the majority of all
children under 18 will be of color.
So we find ourselves in the situation in which investing in
those who too often have been left behind, while it continues
to be a moral imperative, has become a national and economic
imperative.
In making sure that African American and others can fully
contribute to the Nation's growth and prosperity, we really
have to focus as a Nation on work, place, and wealth.
In the context of work, certainly increasing the minimum
wage, expanding unemployment benefits, increasing job training
programs, getting more youth summer jobs, and aligning job
training programs with real jobs are important, but Oakland
actually has a wonderful example, the Oakland Army Base, that
has been shuttered for 20 years and is now being turned into a
logistics hub for the region.
And they are using this $800 million public/private
investment, which will cover a land base larger more than 200
football fields, to be able to lift up the population that is
too often left behind.
First, they are making sure that they limit the temporary
jobs, so that these are long-term jobs. Next, they are
eliminating the box. They are banning the box on application
forms that too often people who have been formerly incarcerated
have had to check and which has put them out of the running for
a job. They do not have to indicate that unless they are well
into the process.
They are making sure that 25 percent of all the apprentice
hours go to the vulnerable populations of Veterans, people
formerly incarcerated, and those who have had difficulty
getting work. And they are making sure that the jobs pay living
wages and have benefits, a very exciting example.
In Baltimore, a bioscience hub, they are making sure that
the jobs that are going to be available in bioscience get to
those who need them the most, by having mentoring programs for
high school students. They get mentored, and then they get
moved into jobs, a seamless process. Very exciting.
But we know that in this Nation, where you live has so much
to do with opportunity, particularly for African Americans, who
live in communities where the schools are often failing them,
suffering from disinvestment, in places where there are no jobs
and little access to jobs. They are wonderful examples of being
able to turn around this notion that place has become a proxy
for opportunity.
The Promise Neighborhood Program is a wonderful example.
Building on the extraordinary success of the Harlem Children's
Zone, where 12,000 children have been surrounded by all the
supports that they need. One hundred percent of those children
start school ready to learn because of early childhood
investments. Ninety-five percent of those children will
graduate from high school and have gone on and been accepted to
college. And the schools are really providing for those
children.
But we also know that there are other local examples that
are important. Pennsylvania has really demonstrated to the
Nation that we can solve the problem of lack of access to fresh
fruits and vegetables, and the Healthy Food Financing
Initiative is building on that, making resources available;
5,000 jobs have been created through this resource in
Pennsylvania, and we are hoping for results beyond that
magnitude across the country.
But we also know, in addition to work and place, that
wealth also matters. And the drivers of wealth are housing,
inheritance, income, but also education. And as we are thinking
about creating wealth, it is so important to understand that
education not only leads to being able to develop wealth
because of employment. By 2020 47 percent of all jobs in this
country will require at least an associates degree. Only 28
percent of African Americans have it.
Not only does education lead to wealth, it can also be the
cause for wealth stripping, when so many students have to go
into debt and stay in debt and have their wealth stripped away
because of the financial crisis that comes from student loans.
Pennsylvania--I'm sorry, Tennessee has a wonderful example:
Tennessee Promise. Governor Haslam actually has a program in
which they guarantee--this program just started in May--that
every single student who graduates from high school can have
two years of free community college. Two years.
That means no loans for the first two years. That means
they're well on their way to the kind of investment that they
will need to do well in the future. We know what works. We need
to lift it up, put policy behind it, and create greater
opportunity for all, including African Americans.
Thank you.
[The prepared statement of Ms. Glover Blackwell appears in
the Submissions for the Record on page 32.]
Vice Chair Klobuchar. Thank you very much.
Dr. Moskowitz, thank you for being here, and thank you for
bringing your students from Success Academy with you.
STATEMENT OF DR. EVA MOSKOWITZ, FOUNDER AND CHIEF EXECUTIVE
OFFICER, SUCCESS ACADEMY CHARTER SCHOOLS, NEW YORK, NY
Dr. Moskowitz. Good afternoon, Senator Klobuchar and
members of the Committee. Thank you for your attention to this
critical topic. I am also honored to be here.
I am Eva Moskowitz, the Founder and CEO of Success
Academies. We started August 20th, 2006, with 155 students.
Today we have 32 schools K through 12. Our first high school we
are opening in a couple of weeks. We have just shy of 10,000
students; 3 out of 4 of our students live below the poverty
line; 94 percent are kids of color; 15 percent of our children
are special needs; and about 10 percent are English-language-
learners.
And yet our students are in the top one percent in math and
in science for the past five years, even with the new addition
of the higher Common Core standards. And our kids are in the
top seven percent in reading and writing. And we have been
asked: Well how are you doing this?
And I would argue that great schooling, world-class
schooling is terribly complex. It is also terribly hard. But
there are some elements that are key, and I would say that in
order to have a great school, or set of schools, you really
have to not only teach reading and writing, but you really need
to go beyond that. We have chess as a fundamental and signature
element. The amount of strategic thinking you teach children
through chess is actually quite profound. Our kids competed in
Dallas this year with 5,000 other children from around the
country, and they took home 1st place, 3rd place, 4th, and 7th
place.
Our kids are on the Math Team. We have 40 percent of our
children who are on the Math Team. That is unheard of in
America. It is usually a few kids. And what we really try and
do is have kids fall in love with mathematics. Our kids compete
internationally on the Math Olympiad and do exceedingly well.
We are also tremendous believers in science education. Our
kids start science in kindergarten 5 days a week. It is not a
second-class subject. We believe in inquiry-based science. Our
kids do about 135 experiments every year starting in
kindergarten. And if you want to try and figure out how we make
this country more globally competitive and how we help our most
vulnerable children, low-income children in neighborhoods like
Harlem and Bed Sty and the South Bronx, it is a robust STEM
education.
We also do coding starting in kindergarten, believe it or
not, with devices called BBOTs, which are little robots that
the kids can program in a single direction. And by the time
they get to middle school, they are doing JAVA SCRIPT. And by
the time they graduate from high school, our kids will be able
to program and earn roughly $90 bucks an hour as programmers.
We want them to go to college and graduate first, but they will
have that access to economic opportunity.
It was mentioned that we have a number of students with us
here today. Our scholars are incredibly passionate about
learning, and our goal in schooling is to help children fall in
love with school.
If you love learning, you can teach yourself anything. Part
of our success has to do with a robust teacher and principal
training program. Unfortunately, schools can either, as was
mentioned, either can be engines of opportunity or they can
actually trap children and they can be poverty traps. And
unfortunately in America, we have far too many failing schools.
We have far too many mediocre schools. And what we need to
do is to make sure that schools are really engines of
opportunity. And when we do that, we will provide a foundation
for economic success. Thank you, very much.
[The prepared statement of Dr. Eva Moskowitz appears in the
Submissions for the Record on page 44.]
Vice Chair Klobuchar. Thank you, very much.
Mr. Bynum is next, and I will be turning the gavel over to
Representative Maloney while we have a vote, and then I will
return.
Mr. Bynum.
STATEMENT OF MR. WILLIAM BYNUM, CHIEF EXECUTIVE OFFICER OF HOPE
(HOPE ENTERPRISE CORPORATION/HOPE CREDIT UNION), JACKSON, MI
Mr. Bynum. Good afternoon. Thank you, Vice Chair Klobuchar,
for the opportunity to speak before this Committee.
It is very encouraging that you are taking the time to
focus on opportunities and challenges related to African
Americans because as the Nation grows more diverse it is
increasingly clear that all of our interests, our common
interests, are tied to the fact that we equip these growing
segments of the population with the capacity to prosper, to
support their families, and to contribute to our Nation's
economy.
Over the past 20 years, HOPE, which is a community
development financial institution, has worked to accomplish
this by undertaking a range of asset development strategies in
Mississippi, Arkansas, Louisiana, and Tennessee.
During this period, we have generated over $2 billion in
financing that has assisted over a half a million people. My
comments will focus on our core elements of work: That is,
providing retail financial services in what are becoming bank
deserts across the country; affordable home ownership; and
support for entrepreneurs.
Our primary financial service vehicle is a credit union
with 29,000 members, federally regulated; 7 out of 10 of our
members are people of Color. Over half of them earn less than
$35,000 a year. And 37 percent were unbanked before they joined
HOPE.
Since the financial crisis in 2008, we have more than
tripled our presence in low-income communities, often in
communities that have recently lost a bank. We have gone from 6
to 23 service locations at a time when 1,800 bank branches have
closed across the country; 93 percent in low-income census
tracts. Of the 1,679 Zip Codes in my service area, 61 percent,
1,031, have zero or one branch; 723 have no bank branches.
Regarding home ownership, we expand access to home
ownership by offering mortgage products that emphasize the
applicant's ability to pay, not how much we can make in fees.
We take the time to understand their situation, what they can
afford, and help them develop a plan to succeed.
In 2013, 82 percent of our mortgages were to Minority
borrowers; 52 percent were low-income; over half were female;
and 86 percent were to first-time home buyers. An annual survey
of mortgage borrowers indicates that 41 percent reported
improved education outcomes for their children since their
families purchased the home.
We also focus on small business lending. We've been doing
this since we started, and nearly half of our commercial loans
last year were to Minority or women-owned businesses. The
average wages at these businesses that we finance was
approximately $28,000, significantly above the $23,000 poverty
threshold for a family or 4, or the $15,000 minimum wage. And
80 percent of the employees at the companies we finance report
that they have health insurance.
I hope this gives you a sense of what is possible when
African Americans and other under-served populations have
access to a financial institution that is committed to
providing affordable and responsible structured services.
Related to this, I would like to make three--a few
recommendations:
First, I really urge you to increase the amount and the
focus of federal resources that benefit persistently
impoverished areas and under-served populations. A quarter of
the Nation's persistently impoverished counties are in my
service area. A disproportionate share of the residents are
people of Color.
Increase the long-term investments in institutions like
community development financial institutions, cooperatively
structured institutions like credit unions that have a track
record in fostering opportunity among African Americans that
will produce the kind of outcomes that I described earlier.
Second, I would support strong federal consumer protection
against products that target the under-banked and other
vulnerable populations, and support increased accountability by
banks.
The mid-South has the highest concentration of payday
lenders in the country. Subprime lending is higher than it is
anywhere else. And combined with the bank closures in low-
income and Minority communities, this is a recipe for disaster.
It is vital that you support strong rules preventing
abusive financial practices and enforce laws that require banks
to invest in communities from which they derive profits.
These steps are essential for ensuring that Americans and
families can participate in the economic system in a viable
manner.
I will close by quoting Dr. King, nearly five decades ago
when he gave his final speech to the Southern Christian
Leadership Conference. He put out a passionate call for
economic justice. In that speech, he emphasized the importance
of well capitalized, locally owned banks in Chicago and
Cleveland as a critical part of the economic success of African
Americans in those communities.
We cannot allow financial services to become an extraction
industry in low-income, rural, and Minority communities only
taking revenue, while leaving large holes in those economies.
Community development, credit unions, community development
financial institutions like HOPE, have shown how a locally
owned, locally accountable financial institution can foster
economic opportunities for historically underserved people and
places.
Thank you.
[The prepared statement of Mr. William Bynum appears in the
Submissions for the Record on page 50.]
STATEMENT OF DR. APARNA MATHUR, RESIDENT SCHOLAR, AMERICAN
ENTERPRISE INSTITUTE, WASHINGTON, DC
Dr. Mathur. Vice Chair Klobuchar, and other members of the
Committee, thank you for inviting me to testify on the very
important issue of economic mobility and opportunity for
African Americans.
Economic mobility refers to the ability of an individual or
a family to improve their economic status, either within a
lifetime or across generations. It is a reflection of economic
opportunities available to parents and their children as they
attempt to move up the income ladder.
Amongst all races, economic mobility is of particular
concern for African Americans. Forty-four percent of African
Americans in the bottom quintile stay there into adulthood,
compared to just 25 percent of comparable Whites. Therefore,
from a policy perspective understanding the correlates of
opportunity and mobility is extremely important.
Segregation, both by race and income, is an important
factor influencing mobility. Many studies find that African
Americans who live in segregated metropolitan areas have lower
educational attainment and lower earnings than their
counterparts who live in more integrated areas.
There are several approaches to alleviate these issues.
Studies advocate using community betterment projects in these
neighborhoods such as improving school building, reducing crime
rates, or investing in neighborhood infrastructure to encourage
integration.
Other policies help individual home buyers or renters gain
access to existing neighborhoods. This approach is typified by
the Community Reinvestment Act of 1977 which was moderately
successful in reducing residential segregation.
Also, empirical economic studies suggest that housing
vouchers which moved African American children out of public
housing and into less distressed homes as part of the Moving To
Opportunity Project helped, as well, in reducing segregation.
In a paper from earlier this year, my AEI colleague Abby
McCloskey and I propose improving the human capital of
disadvantaged city residents by introducing a greater degree of
school choice.
Studies focusing on charter and public schools in districts
comprised mainly of Minority and low-income children suggest
that school choice has significant and positive impacts on
student test scores and attendance rates.
Some examples of the successes, as have already been cited,
are the Harlem Children's Zone Program in Harlem, New York,
which combined charter schools with a web of community services
designed to ensure that the social environment outside of
school is supportive for children from birth to college
graduation.
Another example is the Public School Choice Lottery in
North Carolina which ended the 30-year-old practice of busing
students across a district to achieve racial desegregation.
A few studies suggest that the more years of schooling
African American children attain the more likely they are to
move out of the bottom quintile. However, African Americans
have a high school dropout rate that is double that of Whites.
There is a growing body of research on using financial
incentives to motivate educational goals. The accelerated study
and associate programs granted full tuition waiver for full-
time college at the City University of New York, which was
found to increase graduation rates. Roland Freyer of Howard has
found that financial incentives can be a cost effective
strategy for raising achievement among even the poorest
Minority students in the lowest performing schools if properly
structured.
In our study, my colleagues and I propose a milestone
credit where low-income teenagers receive a cash bonus upon
receiving the high school diploma to realign the incentives to
stay in school. The milestone credit should begin as a pilot
program to test its efficacy in improving graduation rates, the
size of the credit required, and the impact on lifetime
earnings.
The next challenge is labor markets. African American
unemployment rates have been double that of Whites consistently
over the last 50 years. Recent studies suggest that this is the
result of racial mismatch rather than spatial mismatch.
In other words, unemployment is not a result of African
Americans living in areas with fewer jobs; but that even if
they reside in areas that are dense with jobs, these jobs are
more likely to be held by Whites.
One approach would be to allow employers to develop
customized job training and job placement programs based on
their needs. A current experiment along these lines is the
Wisconsin Fast Forward Initiative.
This program allows employers to apply for state grants for
worker training, provided the employers hire the workers after
they are trained. Such programs can be targeted more
specifically at disadvantaged groups such as African Americans.
Certain federal and state government programs such as the
Earned Income Tax Credit have been shown to have a positive
effect on the employment of single mothers and economically
disadvantaged populations.
A possible improvement to the ITC would be to expand the
credit and extend the credit to childless individuals. About 33
percent of African American teenagers, and 25 percent of
African American youth between the ages of 16 and 24, are
unemployed.
Since teenage and youth unemployment leads to lower incomes
and fewer life opportunities, this is an urgent issue that
needs to be addressed. Apprenticeship and training programs for
youth have been shown to be effective at easing transitions of
teenagers and disadvantaged youth to jobs.
Since the 1960s, marriage rates have fallen more sharply
for blacks than for whites. One of the reasons for changes in
family structure is that increases in teen pregnancy rates mean
more single motherhood at very young ages.
Among all racial and ethnic groups, the teen pregnancy rate
is highest for Black teens. Traditional prevention methods have
included more birth control and sex education in schools.
However, nontraditional methods are also worth exploring.
A recent study finds that MTV's ``16 and Pregnant'' show
was responsible for one-third of the reduction in teen
pregnancy rates in an 18-month period.
As the cost of child care increases, many mothers with
young children may also decide to leave the labor force to care
for children, or scale back the hours they work, to balance
household responsibilities.
In our paper, my colleague and I propose streamlining the
current child care subsidies and tax credits which are
needlessly confusing, have low recipient rates, and leave out
many low-income women who need them the most.
The core of our proposal is to substantially increase the
amount of the child care tax credit and make it refundable. The
system of tax credits and means-tested transfers, such as the
EITC, TANF, SNAP, impose high marginal tax rates of up to 30
percent on low-income households which discourages the
workforce participation.
At the very least, combining some of these programs into a
single program could improve take-up rates and allow
policymakers to obtain a clearer understanding of the marginal
tax rates faced by low-income individuals.
To conclude, the most important challenges going forward
are the creation of stable family structure that will invest
sufficiently in the education and upbringing of the children,
as well as providing the right kind of high quality education.
In addition, improving labor market outcomes through the
expansion of the EITC and other programs is important. I have
proposed seven reforms to existing welfare and workfare
programs, as well as incentives for teenagers and youth to
attain higher education.
Thank you. If you can address some of these challenges,
America may remain the land of opportunity for generations to
come. Thank you.
[The prepared statement of Dr. Aparna Mathur appears in the
Submissions for the Record on page 57.]
Representative Maloney [presiding]. Thank you. And I want
to thank all of the witnesses for being here today, and for
their insightful testimony.
In particular, I would like to welcome Dr. Eva Moskowitz
and thank her for travelling here from my home City of New York
to tell us about her organization and experience with working
with low-income children.
Her testimony mentioned an important point: the large
skills gap in our country that is keeping too many Americans
from landing stable, well-paying jobs.
Even younger Americans who just graduated from college,
whose school sets should be up-to-date, are finding it
difficult to land good jobs. And it is one of the highest
unemployment rates for youth that I have seen in my lifetime.
And what is so sad about it is that it just is cumulative. If
you cannot find a job, then it gets harder and harder going
forward.
According to the Economic Policy Institute, over 25 percent
of young college graduates are unemployed or underemployed. And
this issue is a particular concern for Minorities and women,
groups that have been under-represented in the growing science
and the technology fields.
Currently, Minorities make up only one-quarter of the STEM
workforce, and African Americans only comprise 6 percent. I
have introduced legislation, the Minorities and Women In STEM
Booster Act to encourage more Americans from these sets and
these communities to think about a career in science and
technology.
And Chairlady Klobuchar has a bill in to create 100 STEM
high schools across this country.
It is a priority of President Obama to encourage more young
people to go into STEM, particularly Minorities and women, and
there is a huge focus in this Administration on it.
So I would like to hear from our panelists about how we can
encourage greater interest in STEM education and boost Minority
participation. And if you have an experience, direct experience
that you have had successfully in working with Minorities to
get them into STEM.
And I am going to begin with the hometown girl, Dr. Eva
Moskowitz. Good to see you again, Eva.
Dr. Moskowitz. Good to see you, Congresswoman Maloney. Yes,
I think part of the barrier here is that we also have a teacher
shortage in this area, and it is very, very hard to find math
and science teachers, particularly at the high school level.
Representative Maloney. That is true. What do we do about
it? I have been to some of the high schools in my District, and
the teachers are literally from foreign countries in math and
science. So what do we do about it to get the teachers in those
fields?
Dr. Moskowitz. Well longer term, these young men and women
behind me will be able to do that job. So it is sort of short-
term. If we do not train the kids, then we will not have the
teachers later on.
But I think short term what we have had to do is to become
a school of education. We have to teach our teachers the math
and the science in order to be able to teach the kids. It is
hard, and it takes resources, but it is doable.
You know, it is even harder in the field, frankly, of
coding, because people obviously can make much more money in
the private sector. But there are actually ways to train
teachers that are online. Coding is something that, you know,
people who have a knack for it can learn pretty quickly.
There is an organization called TreeHouse that has 72,000
students online, and is really providing training for the job
market. We need to use some of those resources for the field of
education.
Representative Maloney. Dr. Glover, Ms. Glover Blackwell?
Ms. Glover Blackwell. Thank you. It is so important that
school boards adopt policies that make sure that STEM education
is just a standard part of the primary and secondary
curriculum.
These issues just get pushed to the side when it is not
something that every child and every family is thinking about.
In addition to making it a standard part, we really have to
focus on training.
Coding is so important. There's the Black Girls CODE
Program in San Francisco, and also Code 2040, taking young
African Americans and Latinos and making sure that they have
the skills that they need to have an advantage.
And we need to make sure that companies are providing
internships with employment opportunities at the end of the
internships. These kind of programs have been proven to make a
difference.
The mentoring that things like Code 2040 provide is
absolutely essential, because so many young Black men and
women, girls and boys, do not see people who look like them in
these jobs. So programs that connect engineers who are Black
and coders who are Black with these children make a tremendous
difference.
And then we just need to put more money into it so every
school district has the resources they need.
Representative Maloney. I've got to tell you, the most
successful programs I have seen in New York are when industry
comes in and adopts a school----
Ms. Glover Blackwell. Yes.
Representative Maloney [continuing]. And literally trains
the young people for the jobs that they have. IBM has done
that. But also in Harlem, some of the hospitals have come in
for technicians and things that they need.
In other words, where you really focus the education to
what the job will be so that you are fitting the child with the
job.
Doctor--Mr. Bynum, I really wanted to tell you that I
have--I really appreciate and admire your work and HOPE brings
financial services to many communities that have been
underserved.
The FDIC has reported that 21 percent of Black households
are unbanked, double the rate of other populations. Why do you
think so many are unbanked? And what can we do to remove the
barriers?
But I must tell you, I also serve on the Financial Services
Committee. I was a little late because I was at that Committee
meeting. And a lot of what we tried to correct in Dodd-Frank
were really predatory abuse of policies towards the least
fortunate in our society.
They were really aimed at selling products to people that
could not afford it, so that they could get their fee and just
let the chips fall where it may. But even the CARD Act, which I
authored to protect from unfair, abusive practices in the
credit card industry, very much targeted the low-income
community.
So the low-income community is often targeted with these
predatory practices and products, and I would like to hear your
comments on it. And do you think that the fees are just too
high, overdraft fees, ATM fees? Why are so many in the Minority
community, or many communities, unbanked?
Mr. Bynum. Thank you. That is something that we live with
and struggle with every day. We are a regulated depository, but
we have found that there are prudent ways to provide financial
services in low-income communities. As I've said, 40 percent of
our members were unbanked before they joined our credit union.
We have tripled our presence in what we are calling ``bank
deserts.'' Since the Recession, as banks have left in record
numbers, there is unfortunately little accountability when
banks decide to leave these communities.
The Community Reinvestment Act, which is the law of the
land, requires banks to reinvest in those communities from
which they derive profits. It was based on a system when there
were bank branches everywhere. Now most of us have not been
into a bank branch in six months. We do everything
electronically.
And when banks do not have branches, they do not have an
assessment area and are not held accountable to reinvest in
these bank deserts. They are leaving.
Representative Maloney. Oh, I did not realize that that had
really affected the Community Reinvestment Act with the new
technologies.
Mr. Bynum. It has changed the financial industry
dramatically, as bank branches--you know, bricks and mortar and
expensive. People are expensive. And banks are in the business
to maximize profits for their shareholders.
As a credit union, our profits are used to reinvest in our
members: offer them lower rates on their loans; higher rates on
their deposits. And so the business model exists that can
benefit these communities.
And banks, even some credit unions--I get into trouble with
my peers in the financial industry when I hear them have a
knee-jerk reaction to too much regulation. There is smart
regulation. We saw what happened in the absence of regulation--
--
Representative Maloney. Absolutely.
Mr. Bynum [continuing]. During the financial crisis, and
that is why the Consumer Finance Protection Bureau is so
important. It is great to have an agency that is actually
looking out for the interests of consumers and is holding banks
more accountable to offering products that are not deceptive
and abusive; and that hopefully in the near future will put
some brakes on the proliferation of payday lenders.
Because as banks leave these communities, payday lenders
are going into them in record numbers. And those most
vulnerable in our society can least afford to pay 400, 500
percent for small-dollar loans.
We have had so many people come into our doors where we had
to restructure debt traps that they were caught in to get them
back on their feet.
One woman in Memphis needed--she needed--she got accepted
into trooper school, State Trooper School. She needed $1,600 to
buy the uniform. She didn't have the money because she had been
in a payday lending situation, and had gotten so trapped down
in debt. We were able to make the financing available to her.
She's got--she's in the Trooper School. She is on her way to a
better job and being able to support her family.
Representative Maloney. My time has long expired, but I
appreciate so much your testimony and all of the panelists.
Thank you.
Mr. Bynum. Thank you.
Vice Chair Klobuchar [presiding]. Thank you.
Representative Hanna.
Representative Hanna. Thank you.
Dr. Moskowitz, you mentioned in your testimony that schools
need to be incubators of opportunity, not poverty traps. Yet
Dr. Mathur, to that point, you mentioned--correct me if I am
wrong--but if you are born in poverty, you have something like
a 70 percent or so chance of, to be callous, dying in poverty.
And we know that education is that single best way around
that. We have Nigel, and Ananda, and Aida back here, proof that
you can break out of that with enthusiasm. I listened to them
earlier and they are just excited about what they are doing and
where they are at the Success Academy.
So, Dr. Moskowitz, I have a question for you that seems to
me there is no reason to pit anyone against anyone when the
outcome we're all looking for is the same. So my question is a
simple one, I think.
How do you make children love education?
Ms. Moskowitz. It's a simple question. It's the $64,000
question, and I would say that there are many ingredients. But
I think with all the technical fixes, and expertise, we have
forgotten something incredibly important in education, which I
think all parents know.
But actually, schools have to love children. They have to
know when they walk through the gate that the principal loves
them, and that their teachers love them, and every adult in the
building loves them.
Obviously you need more than love to run a great school,
but I don't think that can be underestimated, the emotional
bonds that we have with our students. At our schools, every
principal greets every student every day, and says goodbye to
them every day. And every adult in the building is expected to
know every child's name.
Two of the three students behind me, Aida and Ananda, were
my students when I was the principal of the first school. And
having that relationship not only with the kids but, frankly,
their parents and their grandparents is very powerful in terms
of motivating kids to love school.
I also think when you think about school design--and I do
think we have to think more about school design very, very
deliberately--we often think about school design from the
adult's point of view: what is convenient? What is the least
amount of work?
My best example of this is when schools do not allow recess
when it is cold out. I don't know about you, but I've never met
a child who is cold when it's time to go outside. They
usually--you're fighting with them to put on their winter
jacket, not the other way around.
Vice Chair Klobuchar. Unless you're in Minnesota and it's
10 below zero.
Dr. Moskowitz. Yes.
Vice Chair Klobuchar. I just had to put that on the record.
Dr. Moskowitz. Fair point.
Vice Chair Klobuchar. Or 30 below.
Dr. Moskowitz. But at our schools, winter or not, kids like
to put on their snow pants and, assuming it's safe of course,
go outside and run around.
And so if you imagine all of schooling designed from the
point of view of the kid and what do they like to do, and how
do you make school really, really interesting. We say to our
faculty and to our principals, if there were no laws mandating
school and parents did not need child care--which is very hard
to imagine; I say that as the mother of three--would the kids
come to school?
And I think in many, many cases in America they would not.
They would not choose to come to school. And we have to make
sure that as educators we don't treat children as a captive
audience.
Representative Hanna. How do you engage the--in what
fashion do you engage the parents of these children? There must
be something different about that. Go ahead.
Dr. Moskowitz. Well, we partner with parents. That doesn't
mean that parents run the school, but we do have a very
profound respect for our parents. They are their child's first
teacher and last teacher. And no matter how many hours a day we
have their children, respecting parents, but also demanding
that parents can't see the school as the babysitting operation
where they then check out.
It's got to be a true partnership between the school and
the parents. The school can't do it alone. Parents can't do it
alone. We together, their children join us. We call it a 13-
year marriage. We're in it together, and we've got to see their
kids through thick and thin.
And we have some very concrete demands that we do make of
our parents. And the most important is reading to their child
every night K to 2. And then starting in 3rd grade, our kids
must read 45 minutes a day.
Representative Hanna. My time has expired. Thank you, very
much.
Vice Chair Klobuchar. Thank you, very much. We'll turn to
Senator Casey.
Senator Casey. Thank you, Madam Chair. I want to thank Vice
Chair Klobuchar for having this hearing on a very important set
of topics to focus on. I want to thank our panel for your
testimony and for your work in this area.
I will not get to each of you for a question, but I wanted
to start with Angela Blackwell, not only because you mentioned
Pennsylvania once in your testimony and you referred to a
Pittsburgh program in your written testimony, but I might as
well just start there.
But the real reason was that you did highlight the
Pittsburgh Central Keystone Innovation Zone as a good example,
and I wanted to--an example in terms of job creation and a real
strategy that leads to that. And I just wanted to get your kind
of summary of why you think that program is successful, and
whether or not--I am assuming you would answer, yes, that we
should scale up those programs like that, but whether you think
it is possible and what we can learn from that example.
Ms. Glover Blackwell. Thank you for the question. And I
have been so happy that I can lift up Pennsylvania as examples
in more than one area.
I think that the Keystone Project actually demonstrates
what we can do when we target and when we are deliberate. And
it is so important that as we are talking about the plight of
African Americans, how they have been marginalized in the
economy, over-incarcerated, and pushed aside when it comes to
so much that is essential for being able to reach your full
potential, that as you are looking for strategies, you not
start as if you have a blank slate and all that has not
happened before.
It is so important to acknowledge the struggle, the impact
of that struggle, and to target strategies. And so we are
seeking examples around the country, and Keystone is just one
of those examples, where in the creation of something that is
going to be good for the region, good for the city, we think
that we have to do multiple things at the same time.
The need is too great for us to have a special program to
deal with every one of the things that has to be addressed.
When we are thinking about the things that the economy needs,
things that the region needs, that is how we are going to
achieve equity and full inclusion: by targeting strategies,
making sure that we are removing barriers, measuring outcomes,
engaging partners, and doing this in a public/private way.
And I think that Maryland, Pennsylvania, California, so
many places are learning this and solving our social problems
as we solve our economic problems.
Senator Casey. And even as we look--and we do have in our
State a number of good models--but even as we look at those, I
cannot, nor can anyone in our State, be satisfied with these
numbers when you consider that the African American population
as a percent of the adult population in our State is 10.4
percent, yet the unemployment rate is 12.4.
The same holds true for long-term unemployment: 2.5 for all
races, more than double that, 5.4, for African Americans. So we
like a lot of places have a long way to go. But I was grateful
you mentioned that.
I am also grateful for the Healthy Food Financing
Initiative, which as you know is a national strategy, but it is
being carried out in a lot of states. And we are grateful for
that.
I know I am low on time, but I wanted to get to a question
for Mr. Bynum. I note for the record that a lot of what has
been talked about today in terms of strategies that work, I was
particularly pleased that the JEC staff noted in the memo for
the hearing on page 4 in terms of kind of efforts that can
reduce these numbers that we highlight, expanding early
childhood education--I am reading from the memo here, quote:
``Expanding access to quality, affordable preschool
education can close the gap in school readiness between some
African American children and their peers.'' Unquote.
That is a passion of mine, and I know a lot of people here
in both parties. We have not been able to get agreement on it,
but I think all of us know if kids learn more now they are
going to earn more later. That is not just a nice rhyme, but it
happens to be true, and all the data shows it. So I know that
many people here are focused on that as one of the strategic
focuses.
Mr. Bynum, maybe I will submit it for the record and you
can answer it for the record in a longer form, but in the world
of financing and capital, if you could highlight one strategy
or one effort that Congress could undertake that could actually
pass, what would it be?
And if you want to answer that, you can, but you can add
more in a written statement, if you would like.
Mr. Bynum. I would focus on--again, I appreciate the focus
on strategies that work. And I think, while the Community
Development Financial Institution Fund in the Department of the
Treasury is relatively small, the results have been staggering.
It has been able to leverage capital from private investors
into low-income distressed communities as these banks are
leaving, and the results are targeted investments in
communities that we all need, but low-income communities lack.
So I would say increasing investments in the CDFI Fund, and
focusing those efforts and those resources in a more targeted
way on persistently impoverished and underserved communities.
Senator Casey. Thank you, very much. Thank you, Madam
Chair.
Vice Chair Klobuchar. Thank you very much. Representative
Paulsen.
Representative Paulsen. Thank you, very much.
First of all, I have to say it is a real pleasure to see
Dr. Moskowitz here. You and I have not had a chance to interact
since you and I were both in the Aspen Institute's first Rodel
Fellowship Program.
I will start out by saying I think you are truly a hero to
thousands of New Yorkers of modest means who have been able to
see their children get a better education. And as a mathematics
major myself, it is fun to see Nigel here talk about his
enthusiasm for math down the road.
Let me follow up on what was mentioned earlier, because I
also agree with the comments you made in your testimony about
having engines of opportunity, incubators of opportunity, and
not having poverty traps. That is the foundation of building
success and skills in the future workforce that we will need to
fill.
You talked a little bit about school design, interaction
with parents, and teachers, and principals. Would you say that
having equipped students with not only the skills they need but
the confidence, the hope, and their treatment as adults
motivates them to personally invest in themselves, and then
hold themselves responsible to succeed?
Dr. Moskowitz. Yes. Confidence, you know, breeds--
confidence generated by mastery, and that is a really important
point, because I sometimes think schools pursue self esteem
that is not connected to mastery. But in schools where mastery
is driving the confidence, our kids just know how to tackle
difficult problems.
It is really interesting. On the Math Olympiad, the kids
really have to think. It's a problem, and when they are
practicing for that, you know, it can go on an hour or two. And
they're little. And so they have to be able to puzzle through
it. They cannot solve the answer in 30 seconds.
Similarly, the chess games. The kids get two hours on the
clock. So those games last four hours when they are competing.
And they have to think for four hours. It's very funny. They
are starving when they're done. They are very hungry. And we've
learned the hard way that our snacks are insufficient for that
amount of thinking.
But I think we are a little bit afraid to challenge kids
and allow them to struggle intellectually, and we have to get
over that. We have to allow them to struggle, and also allow
them to experience, frankly, the pleasure of struggling
intellectually, overcoming that, and succeeding.
Representative Paulsen. Unfortunately, I won't have a
chance to ask everyone on the panel a question, but, Dr.
Mathur, you mentioned earlier in your testimony that segregated
areas in cities have lower economic opportunity and school
choice equalling less positive results.
You spoke a little bit about the EITC and welfare reform.
Now recently there was a little bit of attention in the news,
because the House Budget Committee Chairman, Paul Ryan, put
forth this discussion draft on a proposal suggesting the
consolidation of different anti-poverty programs, I think 11
different anti-poverty programs, into one Opportunity Grant. So
then states could participate and I guess incorporate work
incentives into that safety net and reallocate welfare dollars
where they are needed most.
Would you agree that program consolidation would help
impoverished families get those specific needs met from one
overall provider? And if you are familiar with the draft, maybe
you can offer some insight.
I know this has just started that conversation.
Dr. Mathur. Right. I think in our own research we do
suggest that. So we know we are spending about $800 billion on
anti-poverty programs that we have, these whole slew of
programs that the problem is that people don't know about the
eligibility for different programs. Their takeup rates are low
because they just don't know if they will be eligible for
multiple programs at the same time.
So there is a lot we can do to improve transparency. And I
think the first step towards that is consolidating programs
into a few programs that people can understand, that they know
they are eligible for, and which would improve takeup rates,
and particularly target low-income people.
So I think I agree with those proposals. I think there are
a lot of programs that we could combine and make more
effective, given that we have so many that exist today.
The other issue with these programs is also the phase-in
rates, the phase-out rates, the fact that people are going off
the program, you know, low=income people are going off the
programs and facing really high marginal tax rates which
affects their incentive to participate in the labor force.
So again, having transparency, reducing the number of
programs into a few programs, and understanding what the tax
rates are actually faced by these low-income people would
really help.
Representative Paulsen. Thank you, Madam Vice Chair. I
yield back.
Vice Chair Klobuchar. You have a minute left, or 20
seconds. I notice that Ms. Glover Blackwell wanted to answer,
raised your hand up there. We'll give her a little time.
Ms. Glover Blackwell. Thank you. Thank you for the 20
seconds. I did want to say that I worry a lot about the
consolidation of all those programs and pushing them to the
states to make decisions.
Very important. We saw when we had the recent Great
Recession that it is so important for the Federal Government to
be able to increase food stamps and make sure that we are not
hungry. We do not want to just leave that to the states. We
have to have a floor below which we do not let people fall.
I don't think that we yet have gotten to the place as a
Nation where we can abandon the federal responsibility to make
sure that we always maintain a floor. I think that there is
room for innovation and states should be encouraged to do that,
but we cannot abandon the floor. That is a national
responsibility.
Thank you.
Vice Chair Klobuchar. Senator Murphy, welcome.
Senator Murphy. Thank you, very much, Madam Chair. Thank
you for all of you being here. I am sorry that I came a little
late but I got the chance to read a lot of your testimony.
I wanted to maybe talk about two very diverse subjects, one
that I will direct at you, Mr. Bynum, and am happy to have
other people weigh in on this.
Last week, Bank of America announced that they were closing
two branches in the north end of Hartford, which is the
predominantly African American section of the city, leaving
only one bank in the entire north end of the city. There are a
lot of other ATMs, but there would only effectively be one,
maybe, depending on your definition of the neighborhood, two
retail banking locations.
And the excuse was that there wasn't enough traffic, and
that people could just access banking online. The reality is
that online connectivity in that neighborhood is pretty
miserable as well, and there are plenty of alternatives to
traditional banking--check cashing locations at the top of the
list.
So I am hopeful that I am going to be able to prevail upon
Bank of America to reconsider closing at least one of those two
locations. But let me ask you about that question about how you
convince banks to be located in economically distressed
neighborhoods--which, you know, in my state often tend to be
neighborhoods in which you do have a high concentration of
African Americans living.
We have a real problem in Connecticut of people without
banks. You know, there are thousands of people in New Haven and
Hartford who have absolutely no bank that is attached to them
and their money, and thus they spend lots and lots of
additional dollars in alternatives to those banks.
It is not hard to understand when you walk around a
neighborhood and cannot find a bank. So how do we convince
banks to look on this question differently?
Mr. Bynum. I hope you are successful in convincing Bank of
America to revisit that, because I think that we have seen many
banks focus too much on profit maximization in the short term,
rather than looking at the needs of the communities where they
do extract tremendous profits.
The banks have had the most profitable year in history,
$154 billion in profits last year, which is a dramatic
turnaround from where they were in 2008 or 2009.
There is a gentleman that was at the University of Michigan
who wrote a book, ``The Fortune At The Bottom of The Pyramid.''
He I think made a very compelling case that the people in low-
income communities need the same things that everyone else
needs. And there are large numbers of people in these markets.
And if banks took the time to, and focused on serving them as
opposed to moving to more affluent communities which we have
seen in record numbers, I think they would find that there are
ways to prudently structure financing, or as I mentioned in my
testimony, 86 percent of our mortgages were to first-time home
buyers. At a time when banks are focusing on refinancing, and
very few new mortgage originations to first-time home buyers,
but our losses have been at less than half a percent.
And so we know that with the proper structuring, with
proper counseling, things that they make available to more
affluent customers, people can succeed.
We also know that when there is a bank in a community,
access to business financing is more likely to occur. The same
thing with, as banks leave, you have a proliferation of payday
lenders in those communities.
There is a significant tie-in with the education
conversation that is going on, because communities cannot
generate the revenue to support schools if they do not have
business, if the economies are not vibrant. And the economies
cannot be vibrant without strong financial institutions.
The same thing. Kids don't live in schools, they live in
families. They need households and communities. There are data
that show that when kids move into a home, not only do they do
better in school, but they have better recreation outcomes.
Families report that they feel they are in safer neighborhoods
and it stabilizes those communities. Increased tax revenue.
Increased revenue to support schools and other investments to
strengthen these communities.
So there is a strong economic case to make, but I think
public policy has to hold banks accountable to staying in these
communities and reinvesting in them.
Senator Murphy. Doctor--I'm not over my time, right?
Vice Chair Klobuchar. No.
Senator Murphy. Dr. Moskowitz, I assume that a lot of the
conversation here has been centered around education, which is
of course the key to unlock the prospect of economic
opportunity for people throughout the country, African
Americans of course included, but there's a barrier that
happens in our schools for many African American children, and
in particular African American boys. And that is, the school
discipline process.
Many African American boys have their education
interrupted, and often ceased, because of an unjustifiably
disparate way in which we treat African Americans, particularly
African American boys, when they get in trouble in schools. And
we all know about the school-to-prison pipeline by which kids
get suspended, and then expelled, and then are in the juvenile
justice system.
That is the quickest way to keep yourself on the outside of
the economy is to get yourself locked up. And the reality is
that one of the reasons that you have a disparity in the number
of African Americans versus the number of Caucasians in jail as
adults is because you have a disparity starting in the schools
as to how African Americans are treated when they just goof
off. And 95 percent of school discipline is for nonviolent
offenses, for kids that are just late for class, or who are
just being rude to a teacher, and then ultimately they end up
getting pushed out.
So what do you recommend that we do about this continuing
lingering difference between the way in which African
Americans, and Latinos, but it's really a problem more
specifically to how African Americans are treated with respect
to school discipline, so that that doesn't become an increased
burden that hamstrings individuals and families as they try to
progress through the educational system into economic
prosperity.
Dr. Moskowitz. Well often when there is disorder in
schools, children bear the brunt of the consequences. And it is
usually the adults who are not running the lunchroom properly,
or not setting the expectations and teaching kids, you know,
what the expectations are.
You know, we at Success Academies are somewhat old-
fashioned in that regard. We think we need to teach kids to say
``please'' and ``thank you,'' and we need to make sure that
there is real civility and respect. And that is something we
don't expect children to come in automatically with, and
particularly when you have a bunch of five-year-olds together
it can get chaotic and you have to teach children how to
interact in the school environment.
I liken it, you know, you act a certain way in a library.
You don't act the same way when you're at the stadium. And that
has to be taught. But unfortunately, in many of our schools
adults are not taking responsibility for the behaviors that
they are seeing, and they are blaming the children, which is
really unfair.
Senator Murphy. I wholeheartedly agree. Do you track school
discipline by the race of the student? And do you have any
information about whether that disparity, which does exist writ
large, exists in the Success Academy Charter Schools?
Dr. Moskowitz. Well the vast majority of our kids are kids
of color, and there aren't significant differences between
Latino and African American rates.
Senator Murphy. Thank you, Madam Chair.
Vice Chair Klobuchar. Thank you, very much.
I now have a few questions. We issued this report, and I
thank the JEC staff today, ``Economic Opportunity in The
African American Community,'' and we did a state-by-state
analysis and looked at it regionally as well.
I guess I will start with you, Ms. Glover Blackwell. It
actually shows that the Midwest has the higher poverty--highest
poverty and unemployment rate for African Americans, as well as
the lowest median income for African Americans. And so African
Americans over the age of 25 in the Midwest are less likely to
have a post-secondary degree.
Why do you think they are worse than these other regions on
the economic metrics?
Ms. Glover Blackwell. The work that has really been looking
at social mobility in America has pointed out that the Midwest
and the South really are the areas where we are seeing the
worst outcomes across the board, particularly for African
Americans.
In the Midwest we have a situation in which there was
extraordinary dependence on manufacturing. And we have seen a
complete shift from manufacturing to the service and knowledge
economies, and the Midwest has not been fast in terms of making
that adjustment.
So you have an area of the country that has really suffered
devastation because of a reorganizing of the economy. In
addition, African Americans suffered historical discrimination,
and that historical discrimination often had them coming in to
the workforce and making progress at a later point than others.
And so when the recession hit, they were hit hardest. They were
let go. We have not had an educational system that has been
moving people into the new jobs. And so the combination of a
bad economy, the impact of historical racism, and the impact of
an educational system that has not prepared people, has left
the Midwest hurting, and really hurting in the African American
community.
If I could just take a moment to comment on the school
discipline issue, too, because what we are seeing is that so
many young Black men are not able to get into work, even when
it is there, because of a criminal record. And it starts with
the discipline in the school system.
California has really taken this up and started a Select
Committee on Men and Boys of Color, and they have lifted this
issue of school discipline up. They are tracking by race, what
is going on, and they have eliminated schools being able to
suspend children because of ``willful defiance'', which is so
nebulous: anything can come under it. This is forcing people in
the schools to pay more attention. It starts there. It ends up
with unemployment.
And I think the Midwest is suffering more from all of these
things.
Vice Chair Klobuchar. Yes. Because what is interesting, and
you and I talked about our situation in Minnesota where we have
a gap with people of color, yet we have the lowest unemployment
rate in the Twin Cities in the country. And I think part of
this is that the manufacturing that we have now requires
different manufacturing skills than the manufacturing you're
talking about that was traditionally in the Midwest. And that
we similarly have not adjusted in our schools and through the
way we approach workforce training to the new reality.
And we have, you know, two-thirds now of our manufacturers
in our state who still have openings for people. And they are
not all in the Twin Cities, so there are some mobility issues.
But I think part of it is the workforce training issue.
And if you could comment on that, and also what we could be
doing more. I know Secretary Duncan came out to Minnesota and
some of our areas are doing some innovative things with
businesses, and so the kids are actually getting degrees in
high school while they are in high school that will be a one-
year degree, a two-year degree, and they can then go on from
there, or they can work for awhile with those degrees.
Do you want to talk about that?
Ms. Glover Blackwell. Thank you. The truth of the matter is
that now the skills and education required to get the middle-
skills jobs, the advanced manufacturing jobs, are the same kind
of skills one needs to go on to college.
And so schools that are not preparing young people for a
college education are also not preparing them for the
manufacturing jobs that are coming online.
We also know that the job training programs too often are
separated from where the jobs are.
Vice Chair Klobuchar. Um-hmm.
Ms. Glover Blackwell. The best job training programs are
programs that are developed with employers, with the employers
helping to design the curriculum and making arrangements for
young people who come through the programs to be fully trained
to be able to take those jobs.
California is actually taking advantage of the Workforce
Innovation Act to be able to align its training programs with
jobs, so that they are targeting the areas that are most
vulnerable. They are targeting the areas that need work most.
And they are making sure that the employers are working
directly with the training programs so that we are targeting
the jobs, and we are targeting the people, and we can make the
connection.
For all of the things we are talking about, the good news
is: You show me a problem, and I can show you a place in the
United States where communities together are solving the
problems. What we have not done is figure out how to tease out
the policy implications and take all this innovation and good
work to scale.
Vice Chair Klobuchar. Okay. Dr. Mathur, I know you agree on
some of this workforce training. Do you want to comment on that
and how you believe we could take it to scale?
Dr. Mathur. Right. Absolutely. As I mentioned in my
testimony, I think the programs that are going to work right
now are where employers are taking on prospective--and this is
a solution I discussed earlier when we were talking about the
issue of long-term unemployed. In order to get those people
back into the labor market, we need customized job training
programs where the employers have an incentive to train the
people so that they are ready to take on the jobs that are
offered to them.
And in Wisconsin I think they are trying exactly that kind
of initiative where the employers are getting state grants to
train, out of the pool of unemployed, train people to fit the
jobs that the employer eventually offers to them. So I agree
completely with having more training programs that are
customized to get people on the job and back into the labor
market.
Vice Chair Klobuchar. And, Dr. Moskowitz, I know you
commented about your students getting--being able to be trained
in computer programming, which you said can pay like $90,000 a
year. So was part of the thought there that, one, you want them
to go to college, obviously, but they also have this skill they
could use immediately if they wanted to?
Dr. Moskowitz. Yes. We are just practical people and we
want to make sure that they can economically navigate the
twists and turns of life and having that practical skill, as
well as it being intellectually challenging and interesting we
thought would put them in good stead.
Vice Chair Klobuchar. Yes. And I think it is that kind of
thinking, this idea that we work more with where the jobs are,
and I've seen it work so well in places like Rochester,
Minnesota, because the Mayo Clinic is there, and IBM has a
major presence, and it is easier for the community colleges,
and the high schools, to see exactly where there might be some
immediate jobs, and then what those longer jobs are that
require more advanced degrees so they can plan.
It is sometimes harder to do with the inner city because
you do not have the employers right there, and you somehow have
to match the way the education system is working with those
employers. And I think to do it more broadly you have to look
at what those job classes are that are looking for those
immediate jobs that also pay well.
Dr. Moskowitz. And it is just challenging as the economy is
changing so fast, and schools tend to be sort of ossified that
it is hard for them to be agile and respond to the economic
changes.
Vice Chair Klobuchar. And I think that is why in places
like that Rochester, or in Thief River Falls, Minnesota, where
we now have 200 job openings at one employer, they are able.
They can go right to the school district, and right to the
community college and say we're going to have 50 openings in
this area. This is how much it is going to pay. The parents
know how much it is going to pay. And it is just easier to get
the kids and the parents on board, I think, as part of this.
Because people understandably after what Ms. Glover
Blackwell was pointing out, you know, after jobs have gone away
and vanished that people thought they had, people get very
cynical, especially in the manufacturing area, that that is
going to be a job for their child. Yet there are openings, and
there are some well-paying openings.
Mr. Bynum, I will just finish up with you. You have got
clearly something good going, and how do you think people in
other parts of the country can replicate the success you have
had in the lower Mississippi Delta?
Mr. Bynum. I think that it is great that we have been able
to help some people in the Delta, but we have clearly not
helped as many as needs exist.
Since the Recession, we have seen, as these banks have
closed and payday lenders have expanded, there is a need for
accountability to require banks to reinvest in these
communities. But when they don't, Community Development
Financial Institutions have demonstrated that we know how to
deploy capital into these areas.
We have taken a relatively small amount of funding from
Treasury. We slowly gained access to other federal programs.
The SBA and USDA have tools that are very important in I think
prioritizing access to those tools by CDFIs is critically
important.
The CDFI industry has grown over the country. There are
some in most Congressional Districts. We are not nearly at a
scale we need relative to the problem, and so I think investing
significantly more in long-term capital to support the
expansion. And as Angela said, there are models that work. They
need to be taken to scale.
There also needs to be a continued focus on protections so
that payday lenders do not have a free rein to extract capital
from communities that can least afford it.
Vice Chair Klobuchar. Okay. Very good.
Do any of my colleagues have any additional questions?
Representative Hanna. Madam Chair?
Vice Chair Klobuchar. Okay.
Representative Hanna. There is a--Secretary Duncan has a,
it's not universal, people, children 200 percent below the
poverty line who are pre-K. And you spoke, Dr. Mathur, about
the connection between being born in poverty.
And, Dr. Moskowitz, can you give me a quick notion of how
important it is towards breaking that intergenerational poverty
that pre-K is? In other words, going to school with that extra
headstart? Just take a minute.
Dr. Moskowitz. It makes the education much easier if you
have that early childhood foundation. I mean, it obviously can
be done when you get the kids in kindergarten. We are doing it
at Success Academies. But it is absolutely essential for
worldclass schooling to be educating 3- and 4-year-olds. We
just have to be careful that it is done well. Because if it is
warehousing of children, that is not worldclass education. But
what you can do is you can really do all the pre-reading work
that needs to be done in terms of comprehension.
It will be much easier to teach a child to read if they
have heard the same stories over and over again and can act
them out. You can do that in pre-K. Kindergarten is actually
quite academic these days, and we have to kind of rush kids
into reading.
And so if you could do all that work, not to mention the
social and emotional skills that kids need, you could do so
much more in early childhood education if you could have the
pre-K.
Representative Hanna. So the children who are not read to
at home, who do not have access to books, whose parents are not
engaged with them academically, pre-K can help equalize that
opportunity of going to kindergarten?
Dr. Moskowitz. Yes. But I would also say it can support
parents in reading to their children. And don't forget that
that's what great schooling does: it inspires parents to be
engaged in the academic development of their children.
And it is when the children are young that parents are
inclined to. Everyone has a mama bear or a papa bear instinct;
it's just that people aren't quite sure what exactly to do. And
pre-K can be that community center where you involve parents
from when their children are very, very young. And that
investment in parents will carry you over the long haul.
So I think pre-K is seen as just about the kids. It is also
about the adults and getting everyone inspired to be committed
to their children's education over the long haul.
Representative Hanna. Thank you, very much.
Thank you for indulging me.
Vice Chair Klobuchar. That's okay. Anyone else have any
questions?
(No response.)
Vice Chair Klobuchar. All right. Well I want to thank our
witnesses today. These are great initiatives going on across
the country. I think we all know there's a lot of work to be
done, and we look forward to hearing from you again and working
with you in the future.
The record will remain open for five days for any Member
who wishes to put in some comments or additional questions. You
can wait for those, our witnesses.
The hearing is adjourned. And thank you for our three
students in the front row, and my interns that I think are in
the back row, for all listening and staying awake through the
entire hearing. Thank you, very much. The hearing is adjourned.
(Whereupon, at 4:00 p.m., Tuesday, July 29, 2014, the
hearing in the above-entitled matter was adjourned.)
SUBMISSIONS FOR THE RECORD
Prepared Statement of Hon. Richard L. Hanna on Behalf of Hon. Kevin
Brady, Chairman, Joint Economic Committee
Vice Chair Klobuchar, Members, and distinguished witnesses:
Let me begin by noting that, through the title of this hearing,
Vice Chair Klobuchar and her Democratic colleagues acknowledge that
Washington does not have a one-size-fits-all solution to every problem
that Americans face.
Yesterday marked the 100th anniversary of the beginning of World
War I when Austria-Hungary declared war on Serbia. The Great War
disrupted the supply of immigrant labor to American industries. In what
became known as the Great Migration, hundreds of thousands of African
Americans moved north to fill these jobs. There, African Americans
enjoyed a level of economic freedom and prosperity that they had not
previously known.
Also, July 2nd marked the 50th anniversary of the passage of the
Civil Rights Act of 1964, which outlawed discrimination in public
accommodations and employment based on race, color, religion, sex, or
national origin. Through this Act, both Democrats and Republicans
sought to close the opportunity gap, generated by racial prejudice and
segregation, and provide African Americans with an equal opportunity to
pursue the American Dream.
Over the last half-century, there has been substantial progress in
narrowing the opportunity gap for African Americans. Fifty years ago,
less than 25 percent of African American adults had a high school
diploma; today, more than 85 percent do. And there has been a five-fold
increase in the percent of college graduates. Inflation-adjusted median
family income of African Americans has nearly doubled. The percent of
African Americans living in poverty has fallen by more than a third,
and the percent of children living in poverty has fallen by nearly
half.
Nevertheless, the opportunity gap for African Americans has not
been completely closed. Much of what remains of the opportunity gap is
caused by the lack of education and job skills needed to prosper in
today's economy, and the dependency on discordant government programs,
which penalize personal advancement and work.
The surest route to prosperity for every American is a good
education. For poor African American children raised by single mothers
in rough inner city neighborhoods, a good education, as economist
Thomas Sowell argues, is their one chance at a better life.
America has many great public schools with excellent teachers that
provide students with an outstanding education. Unfortunately, America
also has failing public schools with struggling teachers, many of which
are in inner cities serving poor children.
Economically prosperous families can avoid sending their children
to failing public schools by either moving to a different neighborhood
with good public schools or enrolling their children in private
schools. Prosperous families have always had school choice.
Until recently, most poor families in inner cities had no choice--
their children were forced to enroll in the assigned public schools
even if they failed to provide a good education. Over the last decade,
however, the public school monopoly for the poor has begun to crack.
Republican governors and legislators working with parents have
developed new and innovative approaches to provide all parents,
regardless of their income or wealth, with choice for where their
children are educated. The choice movement has taken a number of
different forms----charter schools, vouchers to attend private schools,
and privately funded scholarships to attend private schools.
One of our witnesses today is Dr. Eva Moskowitz, the founder and
Chief Executive Officer of Success Academy, a charter school system in
my own state of New York. She has overseen an expansion from one school
in Harlem in 2006 to 22 schools serving 6,800 children. Her students,
who are largely from poor minority families, score in the top 1 percent
in math and the top 7 percent in English Language Arts in state
testing.
Americans are a generous people, willing to help the poor through
government-funded welfare programs and private charities. But Americans
are also a practical people. We want our safety net to be a
trampoline--helping able-bodied, working-age Americans to move from
poverty into the middle class. We don't want our safety net to be fly
paper--trapping the poor in a multigenerational cycle of dependency.
Another witness, Dr. Aparna Mathur, has identified what local
initiatives in social welfare programs can actually lift women,
especially African Americans, out of poverty, and making economic
growth even more inclusive for the poor. She has argued for
streamlining existing programs in order to improve transparency about
the implicit tax penalties associated with each program. Dr. Mathur
will offer Members important lessons on how to restructure our existing
anti-poverty programs--improving the lives of current beneficiaries,
while providing a better value for taxpayers.
With that I look forward to hearing the testimony of today's
witnesses.
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