Excerpts from “Making Mississippi Competitive: Solutions For Building Assets In Low-Wealth Communities”

April 22nd, 2011

One of the often overlooked strategies for challenging the long-standing grip of poverty in Mississippi includes support for policies that promote and protect the accumulation of assets among the state’s working families.

Assets allow families to avert financial disaster following an emergency, to pursue the stability of homeownership, or to increase future earnings of the next generation through a college education. On the other hand, the absence of assets or savings can leave families in situations where they need to rely on high-cost alternative financial services.

Absent an inheritance, building assets requires an income, a basic understanding of personal finance and a vehicle to save. Notably, Mississippi has a high prevalence of low-wage work – exacerbating the challenge of saving. Through the right mix of workforce supports and development, financial education/training and tax policy, Mississippi has the opportunity to increase the amount of money that working families take home and to equip them with the tools to build wealth and their communities by strengthening the tax base.

At the same time, a strategy to promote asset development must also be buttressed by efforts to protect asset accumulation. Depository institutions, such as credit unions and banks, need to have options for low- income working families to save. In the absence of affordable options, families rely on high-cost alternative financial service providers to pay bills and conduct transactions. As families pay more for financial services, less money is available to save or to go toward the purchase of more appreciable assets like a home or sending children to college.

The report includes three main sections.

First, the report provides an overview of asset levels and banking profiles in Mississippi.

Secondly, it examines the use and pricing of a range of alternative financial services (AFS). These include check cashers, payday lenders, title lenders and rent-to-own stores.

Finally, the report looks at a range of promising practices that both promote and protect asset development around the country. From these practices, several recommendations are presented for building asset development opportunities in Mississippi.

The methodology used to create the report can be found in the report appendix.