Building the Foundations of Economic Literacy

Narrator: Apprentice carpenters in a St. Louis union aren't just learning to build houses. They they're working on building their human capital. Specifically, they're taking an online course about personal finance that was put together with resources from the St. Louis Fed. The self-guided course covers budgeting, saving, buying a car or home, figuring out interest rates, planning for retirement, and much more. Although the course is optional, the apprentices feel it's needed.

Nathan Garrett: I know guys who are in bad home loan situations, who's either their mortgages are underwater, or their car payment is burdensome, and they're in it for many years. And so having a few numbers to share with them about the rate at which that stuff accumulates was helpful.

Ronald Stewart: I just paid off a truck and a car for my son, and we paid the minimum down payment. And what I learned on here is that the finances were way bigger versus if we would have just made a bigger down payment.

Nathan Garrett: A lot of the guys I work with also have families very young. It just puts a whole other level of urgency behind their budget. I mean, they often just don't have-- I mean, they just don't have wiggle room. They're buying diapers.

Narrator:Incorporating the course into the curriculum was a joint labor management effort. Dr. John Gaal, the director of training for the St. Louis Kansas City Carpenters Regional Council was instrumental in getting it off the ground.

Dr. John Gaal: We actually couched this issue of financial literacy as a safety course. You know, with the divorce rate here in the United States with a lot of the bad debt and the payday loans and all that kind of stuff, people bring a lot of baggage onto the work sites. If you think about it, if someone walks onto the job site and they don't have a clear head and they're not thinking about their job, they not just put themselves in danger, they put other people around them in danger. We need a clear mind. And one way to hopefully prevent those kinds of situations was to introduce financial literacy as a safety-related course.

Henry Johnson: It's possibly we can utilize this in our retention efforts as well. A lot of times, our apprentices will experience layoffs. They will experience possible injuries on the job. They will have inconsistent checks throughout their career. And I just felt it was important that the financial literacy was brought into the program.

Todd Erdman: The design portion of the program is my doing. I was the web designer and put the information together. And of all the information that the Federal Reserve has, it's wonderful information.

We had to narrow it down because we couldn't put everything in there. With so much that you have, and it's a wonderful tool. I find myself going back there online all the time and looking at the new stuff that you guys put out there.

Dr. John Gaal: You can Google financial literacy, and you'll find tens of thousands of groups out there that have come up with their own solution to financial literacy, but I needed to go with people I knew and trust. I do deal with people from across the United States and Canada. It's no secret that the St. Louis Fed is a leader when it comes to economics education.

Todd Erdman: Well, there's many things that I learned about this. Fantastic information. I was astounded at the amount of interest rates that the payday loans and title loan companies are getting from our membership because they just don't have a banking account or a checking account to cash checks. They're taking them here. Or if they come into a situation where they need the money, these places can charge up to 300%, 400% interest.

Narrator: Timelines as far as reporting lost or stolen cards. I didn't know there was a difference there on that. The advantages of using a debit card sometimes versus the advantages of when you should use credit. Some of those specific instances, I took away from you guys. I think it's a great course.

Narrator: So what kind of feedback does the union get from the apprentices who choose to take the eight-hour course? And what about older members of the union who can take it too?

Dr. John Gaal: It's actually kind of exciting when you see someone that's 53 years old write a comment back when they send in the course evaluations saying, I wish I would have taken this 20 years ago or something along the lines of this is great. We need more of it. It's very encouraging.

Todd Erdman: A lot of these guys-- I just had a student the other day that just came up to me, and he was so proud. He showed me his keys, and he was like-- I said, well, what are those? And he says, these are the keys to my new house. And so he took this class, and he understands what a balloon payment is and what an Adjustable Rate Mortgage, an ARM loan is, versus a 15-year fixed loan or a 30-year fixed loan and how to go about what points are, paying down points, and just all these things that we talk about in this course that was set up for them.

Henry Johnson: All the feedback that I've received from students has been 100% positive.

Narrator: Anyone can use the St. Louis Fed resources that were the basis for this online course for the carpenters. Go to www.stlouisfed.org/education to see these and hundreds of other tools for teaching yourself and others about the basics of economics and personal finance.