Hartford Business Journal

September 10, 2018

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20 Hartford Business Journal • September 10, 2018 • www.HartfordBusiness.com EDITOR'S TAKE ALICE households an important focus T he United Ways of Connecticut recently released their third annual ALICE report, which revealed 40 percent of households in our state have incomes that fall below what is needed to pay for basic necessities. The number is startling in many respects but also not totally surprising. Most people understand that Connecticut is an expensive state. In fact, the United Ways report concluded that a household of four, including one infant and a tod- dler, must earn nearly $78,000 a year to afford basic necessities, including hous- ing, food, child and health care, technology and transportation. That's a large number in a state where the median household income is $73,433. The United Ways should be commended for putting a spotlight on the grow- ing financial challenges of Connecticut families. But a more pressing question in my mind is what does the report hope to achieve? There are many studies that highlight the growing income inequality in this country but few propose realis- tic solutions to the problem. And new government programs and spending can't be the only answers, particularly amid Connecticut's fiscal challenges. Richard Roth, CEO of United Way of Connecticut, and Paula S. Gilberto, presi- dent and CEO of the United Way of Central and Northeastern Connecticut, insist the ALICE report isn't simply a dry academic study. First and foremost, they want to raise awareness of the issue so that lawmakers, nonprofits and business lead- ers keep ALICE households (which stands for asset limited, income constrained, employed) in the their minds when crafting public or workforce policies. It's also no coincidence that the timing of the report dovetails with United Way's annual fundraising campaign that kicked off Aug. 8. The United Way of Central and Northeastern Connecticut's goal this year is to raise $20 million, and it has established an ALICE fund so that contributors' money can go directly to programs that help financially strapped families with things like affordable food and child care. But to be clear, the ALICE report isn't simply about boosting donations. Roth and Gilberto see it as a call to action and they want policymakers and business, civic and nonprofit leaders to help come up with answers. United Ways are nonpartisan but they are active at the state Capitol. They release a state policy agenda each year aimed at helping their client base, but they must tread carefully on issues that bump up against the private sector, which they depend on for financial support. For example, one issue they've taken interest in is how to get low-wage workers more advanced notice on scheduling changes, which could help households with two working parents who share one car or require child care support. A bill earlier this year in the state legislature that required employers to pro- vide employees with at least 24 hours' notice of their work shifts was opposed by the business community and ended up dying in committee. "We have to really think carefully with how we frame issues," Roth said. United Ways also back policies that aim to make child care and housing more af- fordable, and programs that support workforce development and financial literacy. Gilberto and Roth wonder if employers can get more engaged in some of these issues, like providing workers with basic budgeting skills or offering emergency loans during times of financial crisis. This is a conversation employers should be engaged in, not just because it is the right thing to do from a social standpoint, but because there is a competitiveness factor at play. Turnover is a problem for many employers, and companies of all sizes increas- ingly use employee benefits as a recruitment and retention tool. If employers better understand the needs of their workers they could offer more relevant benefits that will engender greater employee loyalty. The one caveat we must all understand, especially policymakers, is that a one- size-fits-all model is rarely effective. We must be careful not to threaten jobs in an attempt to create more financial security for workers. OTHER VOICES College loans are a worthy lifetime investment By Rhona Free A national alarm is sounding about the level of debt faced by recent college graduates, particularly in Connecticut. This was accentuated in a recent story in the Hartford Business Journal, which reported, "Connecticut's college graduates in 2017 had the sixth-highest average student loan debt in the U.S." This is something of a false alarm, how- ever, because — although the numbers at first glance may appear concern- ing — one must consider the life- long advantages that a college ed- ucation brings. The bottom line is: College loans are an investment in the future. Numbers alone seldom tell the whole story. In Connecticut, the number is $35,494 — the average debt for 2016 college/university graduates in Connecticut (at the University of St. Joseph, it is $29,028, still decidedly in the ballpark). And yes, to many — myself included — $35,000 is a lot of money. But, as we in the academic world like to say, let's take a closer look — not just at what the number is, but what it truly means. For starters, unlike car loans and mortgages, college loans don't need to be repaid immediately, but only once the education is completed. The car loan analogy is interesting, because the average price of a new car ($35,530) is commensurate with Con- necticut's average student loan debt. But new cars only last for a few years; the money borrowed to pay for tuition, room, board and books is one of the best investments made over a lifetime. Students are not just getting the short-term use of a shiny new machine, but a degree, an educa- tion, and an experience that studies repeatedly show will pay off in the long term with higher incomes and better qualities of life. And let's compare student loans to what is usually the biggest invest- ment of one's life — a home mort- gage. With rare exception, people take on a substantial monthly mort- gage payment to buy a home. They do so willingly, even gladly, because a mortgage is considered "good debt" and an investment in the future, despite the hundreds of thousands of dollars that must be paid back. An investment in the future is exactly what college loans are, only they are paid off much faster than a 30-year mortgage, and their value continues to grow as the years go by. Evidence abounds that, through- out a career, workers with college degrees are likely to earn more than those without. In 2015, median earnings of full-time workers over age 25 with a bachelor's degree were $61,400, while those with an associ- ate degree earned $46,000 and those with a high school degree earned $36,800. From 2010 to 2014, for workers age 22 through 24, those with a high school diploma earned $21,752, compared to $32,094 for those with a bachelor's degree. Beyond higher earnings, the Col- lege Board recently found those with college degrees have lower rates of poverty and unemploy- ment and are less likely to be obese or receive public assistance. They are also more likely to vote, exer- cise vigorously, volunteer, engage in educational activities with their children, and have health insurance and retirement plans. Finally, there is plenty of support for students dealing with col- lege loans; many institutions now educate prospective students early about college costs. Students can get advice from their college's of- fice of student financial services on minimizing costs, receiving grant aid, and other financial options. There are also online resources that offer debt calculators and guidelines on appropriate borrowing. So, consider all of this — a literal lifetime investment. And now — as we college educators often say — take another look at that $35,000 figure. It doesn't look quite so daunt- ing, does it? Yes, $35,000 is a significant amount of money, and as someone who has paid off a college loan, I empathize with those facing that challenge. But when college loans are viewed for what they truly are — an investment in a brighter future — it should make the issue a little less "alarming." Rhona Free is the president of the University of St. Joseph. Opinion & Commentary Greg Bordonaro Editor Rhona Free

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