Shaping Economic Progress, Connection by Connection

Our Community Development team at the St. Louis Fed is known for pinpointing issues facing our District’s constituents and identifying promising solutions to improve the economic well-being of neighborhoods across our seven-state footprint. I value the leadership Julie Stackhouse provided in building a strong community development program and am energized by our mission to promote economic mobility across the Fed's Eighth District.

Understanding the places we serve has been and will continue to be the foundation of our work. Findings from our most recent Community Development Outlook Survey—representing community institutions across the Eighth District—reveal that generational poverty, a lack of affordable housing and a lack of job skills are exerting the greatest negative effects on our low- and moderate-income (LMI) communities and households. 

Our Community Development team uses insights such as these to set priorities in responding to the District’s needs. This may entail expanding our work across specific areas (such as the Arkansas and Mississippi Delta region) or deepening our knowledge of specific topics (such as workforce investment opportunities or ways to expand affordable housing).

We are also strengthening our role as a convener by assembling stakeholders to explore critical questions emerging in our communities. Recently, we brought together community leaders to examine:

• How best to support entrepreneurship among African American women
• Policies for promoting neighborhood revitalization in distressed areas
• The challenges and opportunities facing the white working class

This year we will host a virtual symposium on the influence of community development financial institutions and social impact investing over the past quarter century. And the Center for Household Financial Stability (see box below) will invite researchers to consider whether homeownership’s role in building wealth has been oversold.

Our community development program builds on a strong tradition of research and analysis. We have explored how wealth outcomes vary by race, age and education level, and we will delve into how wealth outcomes differ by gender later this year. We are working to understand how the flow of government, private and philanthropic capital is impacting some of the nation’s most distressed communities. Our team also is examining the market for and use of low-cost transaction accounts at financial institutions for previously unbanked and underbanked individuals as part of the Bank On National Data Hub.

Fostering partnerships between community-based organizations and funders interested in investing in LMI and underserved communities has been a hallmark of our community development program. We have laid the groundwork for financial institutions to connect with Community Reinvestment Act (CRA)-eligible projects prescreened by the St. Louis Fed through our Investment Connection program. We also continue to assist our Consumer Affairs examination staff by sharing our knowledge of communities across the Eighth District to assist in their evaluations of District banks’ CRA performance.

Looking ahead, our Community Development team will continue to identify and broker what works to help move our communities forward, serving as a bridge for a vast and diverse array of stakeholders. I look forward to leading and supporting these efforts and am eager to see how our next chapter of impacting communities across the Eighth District unfolds.

The Center for Household Financial Stability was launched by the Federal Reserve Bank of St. Louis in May 2013. The mission of the Center, which is part of the Community Development department, is to research and strengthen family wealth—what a family saves, owns and owes.

The Center’s work, which has been featured in top national news outlets, has especially focused on the bottom 50% of U.S. families who, collectively, own about 1% of the nation’s wealth.

The pioneering “Demographics of Wealth” research series by the Center has found that one’s age or birth year, race and ethnicity, and level of education are strong indicators of who is building wealth, and who is not. In general, younger, less educated and black or Hispanic families in the U.S. are, from a wealth-building perspective, “struggling,” while older, better educated and white families are generally “thriving.”

The Center has also documented the economic and population decline of the white working class, or whites without four-year college degrees.

The Center’s novel research on postsecondary education found that:

1. College is not the great equalizer but actually widens racial wealth gaps.
2. College income premiums (the additional income generated from having a four-year college degree compared with that generated by someone without a degree) are holding steady across generations.
3. But wealth premiums are generally diminishing, especially among nonwhite and younger Americans.

The Center also forged a symposia series on when household debt “tips” from being constructive and wealth-building to destructive and wealth-depleting.

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Coming Up

• New research on the Hispanic wealth gap in an updated “Demographics of Wealth” report
• First-time Center research on the relationship among family structure, gender and wealth; and on balance sheet liquidity and diversification
• A research symposium on the hopes and hazards of homeownership

 

Carl White is senior vice president of Supervision, Credit, Community Development and Learning Innovation. Prior to his current role, which includes serving as a member of the Bank's Management Committee, he focused for 32 years on bank safety and soundness supervision.
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