With bipartisanship in short supply, Congress must search for areas in which cooperation is both possible and beneficial for the health of our nation—and financial literacy would be a wise place to start. The lack of financial literacy is blind to politics. It affects young and old, rural and urban, and every ethnicity, gender and creed. The passage of the bipartisan criminal justice reform bill late last year and recent bills addressing retirement are evidence areas do in fact exist on which both parties can come together for our nation’s greater good. I believe financial literacy is among these pressing issues of mutual concern and bipartisanship.
Despite its status as the world’s largest economy, the U.S. ranks just 14th in Standard & Poor’s Global Financial Literacy Survey with an adult literacy rate of 57 percent. For context, that percentage is significantly behind similarly developed peers like Canada and Germany. Perhaps because we lack financial literacy, more than half of Americans have no emergency savings (FINRA), and 72 percent of Americans say they are stressed about money (APA).
The ramifications of financial illiteracy are numerous, as it impacts not only an individual’s personal standard of living but also our nation’s ability to compete on a global scale. We know, for instance, that financial illiteracy limits workforce participation and impacts employee productivity, the latter of which cuts across all walks of life, irrespective of socioeconomic status, race or gender. It also strains our social services when individuals are unable to secure their own financial future and must rely heavily on financial safety nets like Social Security.
As an issue of national impact, it is ripe for Congressional action.
This action should take two forms. First, financial literacy should be required as part of the public-school curriculum. Although a variety of states teach financial literacy in schools already, these efforts are fragmented and underfunded. Since 2016, not a single state has added financial literacy to their curriculum, and fewer than 16 percent of U.S. students are required to take a personal finance course to graduate high school.
Second, Congress should encourage private enterprises to include financial literacy in their workforce development programs. When I served on President Obama’s Advisory Council on Financial Capability and advised a similar council under President George W. Bush, we called this concept a “just-in-time” opportunity because it provides a last chance course in financial education just as young people enter the workforce and receive a consistent salary for what is likely the first time. That’s sorely needed, and fortunately, a recent precedent exists within Congress for the deployment of tax incentives to encourage workforce training.