This is a guest post by Amelia O’Rourke-Owens of America Saves for Young Workers.
This summer, 32,973 summer youth employees in 25 cities have pledged to save a portion of their pay as part of the America Saves for Young Workers (ASYW) initiative, a partner of the National League of Cities (NLC) Institute for Youth, Education, and Families.
ASYW helps youth establish strong financial habits by increasing access to direct deposit and teaching youth employees to save a portion of each paycheck automatically. This behavioral intervention equips young workers with a learned habit to carry forward in future employment.
During Summer 2017, America Saves for Young Workers’ 30 partner programs hired more than 50,000 youth around the country. In addition to gaining work experience, building social capital, and planning and pledging to save, 11,484 youth also completed the ASYW online program by making a savings plan, choosing a savings goal and pledging to save automatically in order to meet that goal.
George Barany, Director of Strategic Initiatives at America Saves thinks the future looks bright for cities that seek to help young workers save. “We’re excited that so many youth are learning to associate earning with saving, and we look forward to working with more cities and youth employment programs in 2018,” he said.
Young Workers from Nashville to Los Angeles and Baltimore – and many places between — planned to save an average of $204 per month toward individual goals such as clothing, education, and “rainy day” funds.
The cities of Chicago and Miami, among ASYW’s pilot partners, have witnessed great success as a result of the partnership.
Since 2014, Mayor Rahm Emanuel’s One Summer Chicago program, in partnership with the Economic Awareness Council, has led a citywide effort to introduce saving banking, and direct deposit to the 31,000 youth employees in the city. Youth applying to the One Summer Chicago program have the opportunity to set a savings goal and promise to save through the America Saves pledge on their application.
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Youth may opt in to receive ongoing information about direct deposit, local youth banking partners and a link to a Chicago-area youth banking locator via email or text. Promising results from summer 2017 – which are still coming in – show that more than 4,000 youth have begun using banks and direct deposit via these efforts.
One youth participant in Chicago said of the program: “One thing I learned was the benefits of … direct deposit. This method saves me commute time, and time waiting for a check to be processed into my account. The most appealing strategy I learned … is setting a savings goal. I suppose, the most disappointing thing about earning money is the aftermath, where you’ve spent all of the money you earn, and you don’t even have a quarter to show for it. With the savings pledge, I keep money that I earned by saving a small amount of your check every month and not spending it.”
The City of Miami also supports youth saving through its partnership with ASYW. The city sponsors recruitment events at local high schools, in partnership with non-profit financial education and empowerment organization Operation Hope. Young people hired over the summer may use any bank or credit union. If they do not have a financial institution, Tropical Financial Credit Union and South Florida Educational Credit Union attend these recruitment events, along with Operation Hope, to create first-time accounts for teens.
This easy access to accounts proves tremendously helpful to helping these young workers save: In summer 2017, the 225 young people hired in Miami successfully saved roughly $80,000 in total over the course of the summer.
City leaders from new ASYW partner cities report satisfaction with the outcomes of pilot summer programs, as well. Mayor Megan Barry from Nashville prioritized the financial health of Nashville Metro’s youth.
“We should all know that having savings is an important key to our financial health but financial habits are hard to form. From day one I wanted our young workers in Opportunity Now to not only have a job experience, but I wanted them to know how to form good savings habits that set them up for a sound financial future. A majority of American households will experience financial shock, and having savings is crucial to ensure financial well-being,” Mayor Barry said.
A common thread among ASYW cities is the essential nature of partnership, as Mayor Barry points out: “Nashville is fortunate to have an excellent workforce board, incredible community-based organizations, national partners, such as America Saves for Young Workers, and the Nashville Financial Empowerment Center who collaborated to integrate financial education into various aspects of Opportunity Now.”
As ASYW continues to expand, America Saves and NLC encourage more cities to move to direct deposit — one of the essential practices highlighted in NLC’s Youth Employment–Financial Capability Municipal Action Guide. Saving automatically provides the most effective way to build financial resilience, and utilizing direct deposit enables automatic savings. As ASYW delivers the automatic savings behavior intervention to youth employment programs across the country, it also serves as one tool in use among the 25 Y.E.S. cities supported by the Consumer Financial Protection Bureau and the U.S. Department of Labor.
“Direct deposit makes a critical difference for improving saving behaviors, especially for young workers. Offering direct deposit to youth employees in conjunction with America Saves for Young Workers is a free and simple way to introduce an effective behavior very early in the earning process for young people,” said America Saves Director Allie Vered.
If your city would like to support its youth to save, find out how you can get involved at www.AmericaSavesforYoungWorkers.org. ASYW has two simple requirements 1) hire youth (ages 12-24) and 2) offer direct deposit as an option to your youth employees.
About the author: Amelia O’Rourke-Owens is a program manager at America Saves for Young Workers.