Americans don't need cliché financial advice
"Elizabeth Warren is the senior senator from Massachusetts and a Democratic presidential candidate. The opinions expressed in this commentary are her own. "
Chase Bank fired off a tweet last week staging a hypothetical conversation between one of its customers and her bank account. The customer asks why her account balance is low, and the bank tells her not to go out for food or coffee when she can make it at home instead, or to spend money on a cab when she can just walk. The customer pretends not to listen. "I guess we'll never know," she says, brushing off her low balance and the bank's "advice" on how to manage her money. When I read that tweet, it hit me like a punch in the gut - but not for the reason Chase intended.
Here's the thing - I grew up on the ragged edge of the middle class in a family with a tight budget and no room for error. My parents worked hard and did the best they could, but when I was 12 years old, my Daddy had a heart attack. Everyone thought he was going to die. He came back home, but he couldn't work. There was no net to catch my family. We lost our station wagon and would have lost our house if my mother hadn't saved our family by going out and getting her very first job outside the home - a minimum
wage job answering phones at Sears.
It wasn't until later in life that I realized how lucky my family was. After I became a law professor, I started studying what drives families into bankruptcy. I poured through records in courthouse after courthouse, and found that most of the families who ended up in front of a bankruptcy judge were just like mine. They worked hard and did everything right, scraping by until an unexpected medical bill or a divorce pushed them over the edge.
In the years since I started immersing myself in this topic, things have only gotten worse for working families. For 50 years, the price of housing, education and child care has skyrocketed while wages for most workers have barely budged. The economy has grown and workers' productivity has increased, but their share of corporate profits has fallen. The gap between incomes and costs is so gaping that 40% of Americans can't come up with $400 in an emergency. Hard-working families have become adept at stretching their paychecks to the breaking point, skimping on necessities just to make ends meet.
That's not an accident. Over that same period, the wealthy and well-connected have rigged the rules in Washington so that it invests in massive tax giveaways for those at the top and tells working families to pound sand. And as Wall Street billionaires spend their government handouts, their lobbyists and other special interest groups work hard to convince politicians that programs that help families and grow the economy are wasteful.
Take JPMorgan Chase - the same bank that thought it was cute to tweet out advice to struggling customers. During the financial crisis, the bank got a $25 billion bailout. On top of that, Donald Trump's 2017 tax giveaway added $3.7 billion to their profits in 2018. Today, JPM's profits are at record highs.
Chase's tweet wasn't just mean and misguided. It perpetuates the myth that millions of Americans are in dire financial straits because of their own poor choices, or because they spend money irresponsibly. That's a story designed to let the ultra-wealthy off the hook and pretend they bear no blame for the crisis facing workers and families.
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So here are the facts: Americans are working more than they ever have. A much larger share of the population is in the labor force than 50 years ago. And families are not spending money on things they don't really need. The costs of child care, housing, higher education and health care have all far outpaced inflation.
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