Over the last year, an increased degree of worry has hit Coloradans due to the COVID-19-induced recession. With many affected by job losses, our state has seen residents struggle to meet their financial needs, and for the most vulnerable, there are limited options to help them with financial constraints that unemployment causes.

We face a long road to recovery, as indicated by projections that show less than one-third of jobs lost during 2020 will be regained in 2021. A statewide office of financial empowerment (OFE) can play a key role in this recovery, as it can be a hub that connects struggling residents to direct assistance and helps them navigate the challenges they currently face. Here are a few specific areas an OFE can address to move Coloradans toward recovery.

Direct tenants & homeowners facing eviction or foreclosure to resources that can help them keep their home

Since housing is often one of the largest expenses for families, job loss and lack of income can contribute to evictions and foreclosures. During the 2008 recession, many households lost their wealth due to having their homes foreclosed. Black Americans had less wealth than white Americans, but much of the wealth Black Americans did have was tied into their homes. The median wealth of Black households fell by 33.7 percent compared to a 2.4 percent loss for white households, a loss that set Black Americans back. Many still have not recovered.

A similar loss can happen this time around because unemployment and its associated income loss means households are struggling to make mortgage payments. Black and Latinx households facing eviction or foreclosure would benefit from help, as they have endured three times the rate of job losses white workers have faced and are therefore more likely to struggle to make rent or mortgage payments. Widespread job loss had led to one-quarter of adults in Colorado who are behind on rent or mortgage saying they are likely to be evicted or foreclosed on within the next two months.

To address the growing eviction and foreclosure crisis, Colorado needs to step in. For instance, a statewide OFE could provide a hotline residents can call when they are facing an involuntary eviction. Once on the hotline, a navigator connects people with rental assistance, legal services, mediation services, or other services available through local government agencies and nonprofits. Right now, this type of assistance is offered through Denver’s Office of Financial Empowerment, but a statewide office would ensure this help is available across all of Colorado. 

Direct residents to navigation resources for legal issues, debt repayment, & access to direct assistance

The stress of choosing between paying the rent or making debt payments on time has required Coloradans to make difficult decisions over the last year. Many of the people seeking assistance with managing expenses come from middle class backgrounds and have seen their disposable income drop drastically due to the pandemic. OFEs like the one in San Francisco put clients in touch with lawyers who can provide free legal advice to contest bankruptcy or unfair debt collection. Other services include financial coaching and scam assistance, so residents do not compound any losses they already face. Scam assistance helps consumers identify when they are being fraudulently pursued for debt and helps them avoid making payouts that they don’t have to. People also need to meet direct needs, such as paying their bills. San Francisco’s OFE has helped residents experiencing budget shortfalls by helping them enroll in public benefits.

In cases of heavy indebtedness, consumers can be overwhelmed by finding a strategy to cope with repayments. An OFE helps people prioritize which bills to pay first and devise a strategy to help people meet their obligations under the financial constraints they are experiencing.

An OFE can help people who have lost income due to unemployment through job-finding assistance

At the end of December 2020, over one-quarter of Colorado adults said they expected someone in their household to lose employment income over the next four weeks. This underlines the need to assist Coloradans in finding ways to earn an income, a key goal of the job search assistance provided by Boston’s OFE. Additionally, some workers may be limited in the range of jobs they are eligible for due to a lack of digital literacy. Many jobs require basic digital literacy at the very least, and by helping clients build that skill, an OFE broadens the employment opportunities that could be available to clients. As part of the job search assistance it offers, Boston’s Office of Financial Empowerment has computer literacy training to help clients improve their chances of finding a job.

An OFE directs residents away from predatory loans that could be damaging to their long-term financial well-being & toward healthier alternatives

Over the past several months, up to 42 percent of Colorado residents report taking on debt to meet daily expenses. Without a resource to direct them to non-predatory lending products, this can initiate a cycle of debt it would be difficult to exit. Predatory lending products include high-cost, small-dollar loans often taken to meet unexpected expenses. The high interest rates mean a missed payment can evolve into expenses that constrict the ability to meet the rest of one’s needs. Any difficulty with asset building is compounded by lost employment or a lack of savings.

Stimulus payments have helped residents stay afloat, although not all could readily access them because they did not have bank accounts. In Lansing, Michigan, an OFE directs unbanked clients who had previously been put off by high fees to safe and affordable bank accounts so they can access stimulus payments. By opening the account and receiving the supplementary funds, they avoid having to further deplete their savings or resort to payday lending in order to meet their expenses. Moving forward, the statewide office of Colorado would be tasked with developing new affordable loan products or scaling up existing ones to provide an alternative to predatory products.

A statewide OFE can connect residents to financial resources such as non-predatory lending products, information about how to navigate financial crises, and alternative means for asset building. While these services address current needs, they ultimately lead to building long-term financial resilience that allows residents to better navigate future economic downturns.