Great Programs Fail Without Marketing

When you hear the debate about large scale federal programs such as the Affordable Care Act, the focus tends to be on issues related to taxes, states rights, the role of government, etc.  Yet what is becoming increasingly clear to me is that once a piece of legislation is passed and a program funded; once the lawsuits have run their course; and in short once the dust has settled, the most critical question is how people will actually take advantage of the initiative.

The Obamacare rollout is the exception that proves the rule.  Going into it, policymakers knew that unless a large percentage of uninsured young people signed up for the exchanges, the whole program wouldn't work.  To address this, the federal government spent nearly $700 million on "publicity, marketing and advertising..."  And it appears to have worked: as of April 19, 2014 over 8 million Americans had selected a plan on the insurance marketplaces (source: CNN)

Memo: Joy

Photo Credit: Alice Popkorn

Dear faithful (I hope) readers,

I hope you will indulge me in my new favored approach to conveying ideas: the memo.  I know, memos conjure up images of paper-pushers in faceless bureaucracies, but I promise these will be different!  I view these as an opportunity to concisely share my thinking and, I hope, get your feedback. So here goes:

I remember the first time I flew Virgin Atlantic, I couldn’t help but think that the people in charge of the airline a) actually gave a shit about its customers and b) weren’t boring people in suits.  Compared to other airlines, the colors were different, as were the attitudes of the staff, the music, even the rote passenger safety video.  And yet this zaniness in no way made me question my safety, even though flying is, at its core, a life-and-death business: stick a bunch of people in an aluminum (or carbon fibre) tube, fire up some engines, and get them somewhere else on the planet (ideally an airport).

Financial Coaching Client Story

I have had the pleasure of working with an employee of a partner employer, whom I will call Julie so as to protect her identity, for several months. From our initial conversation, I learned that her mother had recently passed away and, largely as a result, she wanted to sell her old house so that she could purchase a new one—something small, affordable and in a good neighborhood  The more we spoke, the more I realized that she was ready to move on to the next stage of her life, and we framed all of our one-on-one sessions around that goal.

In order to help facilitate her transition, we began by constructing a budget analysis that forecasted what her spending would be after moving into the new house. By looking at her income and expenses, we were able to paint an accurate picture of her inflows and outflows.  The outlook was not optimistic, however: her monthly expense exceeded her income by $916.

Payday Loans Are Fatally Flawed

Rhode Island is in its fourth year of trying to reform payday lending in the state, and here at Capital Good Fund (CGF) not only have we been part of the lobbying effort, we’ve also launched our own payday loan alternative product.  Funded by United Way of RI, this loan ranges from $300 - $500, carries an interest rate of 30% + a 4% closing fee, a one-year term and very flexible requirements.

In the 5 months since the product launched we’ve done nearly 70 loans with phenomenal repayment rates.  Still, compared to the payday loan industry, which did $70 million in lending in 2011, that’s peanuts.  And indeed our tiny scale fuels the industry’s argument that only by charging an effective APR of 260% can they afford to deliver these “essential loans.” 

Financial Coaching Corps Profile - Jennifer Vacca

In her job at Fidelity Investments, Jennifer Vacca works to ensure that employees are engaged in their   So when she heard about the opportunity to serve as a Financial Coaching Corps (FCC) volunteer through a partnership between Capital Good Fund (CGF) and the Office of General Treasurer Gina Raimondo, she jumped at the chance.  Not only did she see this as a unique opportunity to engage in community service, but it is also aligned with her day-to-day work at Fidelity.  “I found the concept of the FCC compelling,“ Jennifer points out, “Because I think an initiative that provides financial advice to those that would ordinarily be unable to afford it can really make a difference.”

work—productive, happy and connected to their fellow Associates, the company and the community at large.

Minimum Wage Kills Jobs! Or Maybe It Doesnt: CBO

I'm going to come right out and say it: I'm incensed.  The reason for my ire?  You may have heard that the Congressional Budget Office (CBO) just came out with a report looking at the impact an increase in the minimum wage would have on the economy.  Well, you may have also seen the headlines about this, which tend to read as follows: 'Raising Minimum Wage Reduces Jobs, Poverty, Study Says,' (WSJ) or 'U.S. minimum wage hike would kill jobs but alleviate poverty: CBO' (Reuters)

Now as you might imagine, I take no umbrage at the estimate that nearly 1 million people will move out of poverty: that's actually fairly easy to calculate, since we know how many minimum wage workers there are today, and we can therefore realistically project how many people's annual incomes will increase.  What's more, I believe strongly that it is morally wrong for someone to work full-time and still live below the poverty line.

No, what has pissed me off is the part about losing 500,000 jobs.  And the reason is simple: that number is a complete and utter misrepresentation of the data.  In fact, the CBO seems to have absolutely no idea how many jobs the increase in minimum wage would kill; they don't even seem to know if it would kill any at all!  Here's what they actually say: "...in CBO's assessment, there is about a two-thirds chance that the effect would be in the range between a very slight reduction in employment to a reduction in employment of 1.0 million workers."  What?  They are saying that they are 66% sure that there will either be no impact at all, or an extremely significant one.  And in the other 33% of scenarios? Based on their projections, we could just as well assume that 1 million jobs will be created.  In other words, their findings are simply worthless.

What is especially galling is that I've yet to find a media outlet that has pointed this out.  I mean think about it: everyone is getting hopped up on an estimate that is, at best, a wild guess.  The 500,000 number is about as useful as saying that there's a 60 percent chance of the weather tomorrow being somewhere between a tropical paradise and a category 5 hurricane.  No one would plan their day based on such idiocy, and neither should we base federal poverty on similarly ludicrous data.

And let's be clear: this matters.  Politicians are going to use this report to argue against raising the minimum wage, and advocates are already on the defensive.  Equally importantly, the focus on the loss in jobs is overshadowing the fact that nearly 1 million working families will move out of poverty, and it's critical to note that the CBO report doesn't cast any doubt on that figure. 

So yes, I'm hopping mad, and you should be as well. The lives of million of families, and the fairness of our economy and society, are at stake. We live at a time of unprecedented income inequality, a time when wealth and political power are being concentrated at the top.  We can't afford to lose momentum on a policy issue that can have so much impact, and we certainly can't base that policy on ignorance and manipulation.

Financial Coaching Corps - In The Community

Last Sunday I had the honor of presenting about the Financial Coaching Corps to members of the
congregation of Temple Beth Shalom on the East Side of Providence.  The Corps, a partnership between Capital Good Fund and the office of General Treasurer Gina Raimondo, is all about financially empowering the residents of Rhode Island, and one of the ways we do that is by going out into the community and talking about financial topics in general and the Corps program in particular.

The 13 people in attendance and I talked about how the credit system works (and why it matters); tips and tricks for budgeting and building savings; how to avoid, or get out of, a debt trap; and the dangers of predatory services.  What I enjoy most about these events is that they help people understand our complicated financial system; and Treasurer Raimondo and I share the belief that understanding the system means that families will navigate it in a way that serves their life goals.

In addition, attendees learned about the opportunity to receive a free session of Financial Coaching through the RI Financial Coaching Corps.  This truly unique program connects financial service professionals with Rhode Islanders seeking assistance with creating a budget, building a savings plan, increasing their credit score and managing their debt.  Nearly everyone on-hand signed up for a session, a trend that we've seen across the state.

As we continue to bring the Coaching Corps to hundreds of families, we are thrilled with the results, and so are the volunteer Coaches.  You can see some of their stories below, and you can learn more about the Financial Coaching Corps by clicking here.

Corps Profile: Randy Sacilotto
Corps Profile: Farouk Niazy