Defining Wealth and Creating Pathways for All with Julie Stone

[Amy Hulst]:
Today we’ll discuss why a good job isn’t enough to build a secure future. Our guest Julie Stone joins us to define what it actually takes to achieve wealth and economic mobility.

Hi, this is Amy Hulst, and you’re listening to From Poverty to Prosperity, where we ask what keeps people in poverty in America and what it takes to break free.

[Jason Janz]:
Welcome to our next podcast here from poverty to prosperity. We’re excited about today because we have a special guest, a friend of mine and of our organization. We are pleased to have Julie Stone with us, the director of family economic mobility at Gary Community Ventures. She’s been a huge partner to us throughout the years at CrossPurpose. Welcome Julie to the show. We’re glad you’re here.

And a little bit, we all have some commonality. Amy, you and myself, we were all born in the Midwest. I’m from Green Bay, Wisconsin, moved out here in nineteen eighty five. Amy, you’re from Iowa City, Iowa, which is about two hours north of where Julie’s from.

[Julie Stone]:
Yeah. My entire family’s from eastern Nebraska, both halves of it.

[Jason Janz]:
And we’re all now Westerners.

[Julie Stone]:
We all landed here. I don’t know if I’d say this is the West.

[Jason Janz]:
You don’t think Denver’s the West?

[Amy Hulst]:
I think it’s the Rocky.

[Julie Stone]:
The Rocky Mountain West. Yeah.

[Amy Hulst]:
Yeah, Intermountain West.

[Jason Janz]:
Intermountain West. Okay, West is still in there. What do you like about Colorado more than the Midwest?

[Julie Stone]:
The weather.

[Amy Hulst]:
The winters, that it’s not a dome of grayness from November to March.

[Jason Janz]:
Yeah, three hundred days of sunshine is hard to beat, Julie?

[Julie Stone]:
I’ll go with that. There’s a lot of opportunity in Colorado. I think this is such a dynamic and comparatively diverse place. There’s a lot of different kinds of people and a lot of different activity. I will also make a plug for less humidity.

[Jason Janz]:
Yeah, I often hear people say that Colorado is a place of fresh starts, either running from something or to something when you come here. But we are the state of new beginnings, and I would say fresh thinking is what I love about the air itself. Colorado’s been a frontier and a pioneer in so many ways.

So all right, we’re here to talk about really wealth building and economic mobility. One of the reasons we’re here is because CrossPurpose, we have now started to evangelize this free way to think about poverty in our cities, and we call it affectionately the mountain model. There are four steps up the proverbial mountain.

Step one, which we call give a fish, according to that Chinese proverb, is basically helping people with essential needs. Step two is teach the fish, which is education. Step three is people need a job, so that’s equipping with a good fishing pole. And then step four, the one that I think has become the differentiator, is owning the pond. We want our neighbors to own the pond, and this is economic empowerment.

This really came out of the relationship, Julie, that we’ve developed with you and Gary Community Ventures. What I say is we have a poverty of vision when it comes to the bottom half of the country and where they live economically. We are so consumed with steps one and two. We don’t really think a lot about beyond that. We do think about jobs sometimes, but step four is like foreign to people and how they think about it. We call that the poverty of vision. We need to have a whole mountain vision, actually see that we want to live in a country where the dream is available to all people.

That actually started with a comment by you, when I think you first visited our organization and saw what we did. You were complimentary of everything, and then you said, hey Jason, I want you to know that wage growth is great, but if we don’t actually build wealth, we could be spinning our wheels here.

In eighteen sixty five, Black Americans owned point five percent of the nation’s wealth. It’s a hundred and fifty years later, and they own one point five percent of the nation’s wealth. If we don’t move beyond simple wage growth and into asset building, we’re actually shorting the possibilities for our neighbors and the promise of this country. And that got me going down this pathway that has now turned into even a program within our own organization around wealth building.

So I’m going to turn it over to you and say, what’s been boiling up in you around this issue of having a bigger vision than simply livable wage or self-sufficiency? Those are the buzzwords within the system. What made you reach those conclusions?

[Julie Stone]:
Well, I want to be fair. Self-sufficiency and livable wages, those are my buzzwords. Those are things that I came committed to, and it’s because we should all want for that. Those are the right things to believe that work makes possible for everybody who goes to work every day. We should want for nothing less. This has to be a dignified experience.

And also, even before the AI revolution and a future that feels pretty hard to bet on when it comes to how work might actually deliver income to households, we could see that over the last fifty or eighty years of our country, at the median, wages have been flat, even as our economy and all the things that we measure that signify economic health continue to grow at historic rates. If you live in the United States, you are part of a generation of the most extraordinary economic prosperity in human history.

So as we watch S&Ps, as we watch GDPs, as we watch productivity, these are all the places where we know something extraordinary is happening and value is being created. But when it comes to the portion of that value that goes home with families who go to work every day in paychecks, that piece of it hasn’t grown even as the overall gains of the economy have grown at extraordinary rates.

This leads us all to have to slow down and say to ourselves, what are the implications of a society and an economy where the wealth and the economic possibility and security accrue to a smaller and smaller group of people over time, despite their participation? What does it mean that we minimize costs? We know that labor is a cost of goods, a cost of services. What does it mean if we continue to minimize the cost of goods in favor of maximizing investor returns, when the group of folks who are investors is much smaller than the group of folks who are laboring contributors?

And so at Gary, this brought about a moment where we thought to ourselves, hey, capitalism does a pretty good job at being capitalism. This is producing value in ways that have never been seen before. And also, why wouldn’t we entertain this wild question, which is what would it take for families to be earners and owners at the same time? Why would we not want them to be beneficiaries of both curves, the investment curve and also the earning curve? Because you need both to make it in the United States.

[Jason Janz]:
And what kind of reaction are you getting as you talk in that language, in that way?

[Julie Stone]:
So I’ll say there’s a knee-jerk reaction to this, which is entirely fair. And that is, hey guys, we’re in the middle of an affordability crisis. I don’t know how you propose to be talking about wealth. That seems a little bit disconnected from the reality and the urgency of people paying their bills.

And what’s remarkable about why we’re talking about wealth is it is specifically in response to an affordability crisis, one that is only a continuation of what has long been true for low and middle income families. It’s beginning to creep up into the income spectrum in terms of who’s uncomfortable. But when we think of what has been unaffordable for a very long time, this will only become more true.

So the question we’re asking ourselves, and let me give you a couple of examples in real numbers in Colorado. Over the last twenty five years, the cost of healthcare is up a hundred and seventy six percent, childcare is up a hundred and thirty nine percent, rental housing is up a hundred and twenty one percent. In the metro area, the price of homes to purchase has nearly tripled. So now we’re forty seventh in the country when it comes to affordability. Anybody who cares about affordability is caring about the right thing. But these are not trends that good jobs and wage growth are going to tackle.

[Jason Janz]:
Especially if it’s stagnant.

[Julie Stone]:
Flat, but almost in a provocative way, even a good job, you are unlikely to see wage growth. You are unlikely to be promoted at a rate of a hundred and thirty nine percent in any meaningful amount of time in your employment, no matter what credential or degree you have. And so for the majority of people in Colorado at this point, wages can’t keep pace with the cost of living. But what can? The S&P can keep pace with the cost of living in Colorado. And we think you should be the beneficiary of that trend and of your own wage trend.

[Jason Janz]:
When I started talking about wealth even to donors, people started thinking of yachts and vacation homes. And then I started doing this study on what we mean by wealth, and I found this article, I believe it was by Forbes, which said the bottom half of the country, upon their passing, will leave nine thousand dollars to their families. Fifty one to ninety percent will leave forty seven thousand, ninety one to ninety nine percent will leave two hundred and fifty thousand, and the upper one percent leave seven hundred and fifty thousand.

And I thought that says terrible things about whether we’re prepared to stop generational poverty through our estate plans. But at the same time, if you had fifty thousand dollars of net assets, you’re in the top ten percent of the American economy. So for us, we could then create plans around building generational wealth to at least get to a fifty thousand dollar marker, so their kids could buy a home in their twenties as opposed to in their forties and fifties. That’s how we started thinking about it. I call that foundational wealth versus transformational wealth. We’re not talking about transformational wealth, just enough that families who have had intergenerational wealth for four and five generations have been able to pass down. Those families are doing well, but due to a lot of reasons, that hasn’t happened for the majority of America.

[Julie Stone]:
No, and let me confirm what you are saying. In the United States, if we care about economic mobility, that means families being economically better off one generation to the next, there is a single factor that is the most determinant. And that is whether or not there is a generational wealth transfer, period. We’ve left that piece of the conversation off the table for the enormous segment of society that most needs and would have their lives changed by a generational wealth transfer.

I will say the way I’ve started talking about this, because you’re right that the term wealth carries meaning for different groups in different ways, and we’re wrestling with that. Is wealth the right word to use when we want to talk about compounding assets that create long-term durable growth over time and can be transferred one generation to the next? We’re not sure.

But when I present on this, there’s always a question in the room that’s like, wait a minute, are we trying to make everybody rich? Is that our plan here? And I’ve long had a slide that’s not worded quite as well as the phrase in your new book. And that was that no, what we’re up to here when we talk about wealth, as Gary talks about it, essential wealth is the freedom to pursue wholeness. And we believe that is due everyone.

[Amy Hulst]:
Julie, talk to us about individual wealth, and then lead us into how you and the folks at Gary think about community wealth.

[Julie Stone]:
It’s a conversation that Gary sort of started out with. If we were going to imagine how to know where we are today, wealth is incredibly hard to measure, by the way. We use surveys, national surveys by the Fed, to try to understand and estimate. We use a lot of proxy measures, but unless there’s a taxable distribution, we actually don’t see people’s assets. We can just estimate what they might be.

Coming around a metric that could be universal, where it holds the right kind of meaning but is also rigorous in terms of how it gets measured and how it gets updated, was an enormous challenge, one that the people at the Aspen Institute Financial Security Program took on in a way that we could never have taken on ourselves. It required us to say, what does wealth mean? What is that wholeness, that pursuit, that freedom of wholeness look like? And we knew we had to arrive at a way of quantifying it.

Which is a funny thing to say, because wealth means so many different things to so many different people. But it’s to acknowledge that wealth changes by age band, and it also changes in terms of who’s in your family and where you live, just like self-sufficiency. If you have six people in your home, self-sufficiency for you is different than for a single person.

So we arrived at a place where we started to talk about milestones that move people forward, at least in the United States, knowing that our culture is unique. What does a down payment look like if you were to imagine that before the age of thirty? And should we anchor this milestone to what down payments look like in Colorado, if this is going to be a Colorado essential wealth metric? So we did. And then for the successive age groups, we looked at down payment plus living wage and enough money for both resilience and investments. In other words, you’ve got enough cash in the bank to be able to draw quickly for a price shock, but you also have something that’s sitting and growing on your behalf.

And then as the age bands continue, it’s linked to an elder index, it’s linked to retirement, it’s linked to other milestones. But it caused us all to open our eyes to, holy cow, it’s a huge thing to imagine everybody making a living wage.

[Jason Janz]:
Unpack that for me. Give me at least an example of an age band and how you’ve defined it, because I think this gives us targets that we can go after, and it allows us to have a standard of vision. I think that’s what the MIT living wage calculator said, that’s right, it said, hey, let’s quit talking about federal poverty guidelines, let’s talk about livable wage. So you’re on the forefront of creating this new metric. Give me the picture of what it looks like.

[Julie Stone]:
Well, I would say it like this. We imagine that this metric is a way to complete the formula around economic mobility, that it is about income and it is about wealth. Income plus wealth equals economic mobility. One short of the other is going to leave a family without what they need, even if they go do all the things that we tell them are really important in our society, graduating from good schools and getting good jobs.

[Jason Janz]:
This is what I’m running into. When I talk about wealth building in a room of people who are on economic mobility, the conversation is mired in the safety net, Pell Grants, and job placements at warehouses or in the trades. This is as high as the vision goes. You’re now throwing wealth onto the table. I’m in rooms with foundations and family offices and donors and business owners. How are you even getting people to digest that this is a goal?

[Julie Stone]:
Maybe it’s to clarify an understanding of what is really true for the majority of families in Colorado. I want to acknowledge there is a set of families who have barriers to work, who have challenges and reasons that they can’t fully participate, or that they are on the path to fully participating, and their wages or their opportunities to be employed are complicated and low.

But it turns out that three quarters of the families in Colorado who don’t make a living wage are families that exist above the benefits threshold but below what it costs to live here. These are the folks who are at work every day without a public program for which they are eligible. And the question is, for that three quarters of families who are the dramatic majority of working people, what is their opportunity to make it?

Today we think that the equation is missing a more complete conversation around assets. That is not at all to diminish the importance of public benefits that hold and secure, we hope much better in the future than they do today, folks who are living in poverty and whose basic human needs must be met. That is an absolutely important community and set of families to prioritize. But it turns out that if we assume in our minds that all low income people are folks living in dramatic poverty, we’ve actually missed three quarters of the truth. And that is that working people can’t make it here.

[Jason Janz]:
The paycheck, the paycheck.

[Julie Stone]:
That’s right. That is the story that turns out to be far more common.

[Amy Hulst]:
We’ve talked amongst ourselves here about how it’s not just the job and getting them a job. It’s what can they do in five years with the money that they’ve gotten from the job, and why does that change something for them? So it’s not just the warehouse job or navigating the benefits cliff. It’s saying, what is their future in five years? So where do you see that, Julie, on the community level, of individuals, neighbor to neighbor, changing the wealth game for the individual? What does that do for a community, and how can we look at wealth from a community standpoint?

[Julie Stone]:
Yep. So I think, Amy, you’re asking the question that I hope is Gary’s unique point of view, or one that we hope can be the way we all start to think about it. And that is, we have to care about individual families. We want for people to be able to have autonomy and education and make good choices for themselves and become contributors and participate in the economy. All of those things have to be true. And also, we will not income our way to wealth, especially in an affordability crisis.

The question on the table is, what would it take for both public and private and philanthropic dollars to imagine a world where the systems, the policies, the financial institutions, the product platforms center a group of customers that today are largely off their radar? What if we set about wealth building for low and middle income people, not because wealth is what happens after you cross the finish line, but because compounding assets are actually the only way that you ever will cross that finish line? What if it was a means to prosperity instead of the result of it?

So we’re asking, instead of a world where we want families to make better choices, what if we committed to giving them better options? What if we designed products that were for them? What if we weren’t asking them to set aside money that they don’t have, but we were defaulting them into products that compound on their behalf, even before they could have done that for themselves?

I think we can all appreciate that homeownership isn’t the thing for everybody all the time, but boy, do we wish more people could access a home, both because it caps the expense of the rent going up, and also because it’s an asset. It grows and it can be transferred to the next generation.

In the last legislative session, we agreed in the state of Colorado that we would crack open the school permanent fund, which sits on a couple billion dollars, and allow the earnings from that fund to go into down payment assistance, significant down payment assistance for all public school employees. And that funds distributions to public school employees when they purchase homes would be repaid out of future equity, and the rest of it would stay with the teacher.

[Jason Janz]:
So you’re basically taking a public fund, allowing there to be a loan product coming out of that that gets repaid, but it opens up access to capital, which is one of the key ways to build wealth. And I would say probably the primary way people think about building wealth is homeownership.

[Julie Stone]:
That’s the first thing people think of.

[Jason Janz]:
So now for the public servants who are out there teaching our first graders, we now have an opportunity for them that’s only available to them. That’s what you’re talking about as far as products go.

[Julie Stone]:
It’s an example of where two thousand people will have a new kind of access every year than was true before.

[Jason Janz]:
Go back to the wealth metric and those milestones. Give us a picture of a couple of those milestones, so we can actually picture what wealth would look like in this age band, and so therefore, if we had other products, we could activate these milestones.

[Julie Stone]:
All right, so I’m going to tell you these milestones, but I do it with some hesitation, because off the jump you begin to think, my goodness, these are dollar amounts that might be discouraging. How are we going to even think about these numbers? But as you hear them, I want you to also acknowledge, if this is sort of the minimum for participation, shouldn’t we be more honest and transparent about what those numbers look like, so that we can aim at things that allow people the freedom to pursue that.

[Jason Janz]:
At least we can have a common target.

[Julie Stone]:
At least we can figure out what has to be true. And frankly, families who fully participate don’t blink at these numbers, because they’re like, yep, that sounds about right. So when it comes to folks thirty and under, as you’re getting started in your life, if you were to have the minimum amount you need for a down payment on a home in Colorado, knowing that number is higher than it would be in other places, and six weeks of liquid savings, you’ve got to have those two things. We’re talking just north of fifty thousand dollars as an essential wealth threshold.

[Jason Janz]:
So that’s not wages, that’s just money and savings, or in home equity, or in your retirement account.

[Julie Stone]:
That’s right. It’s growing somewhere, and you’ve got a savings cushion in there so that you don’t raid your assets if something were to happen.

[Jason Janz]:
I have this conversation with a lot of rooms, and I usually do a raise of hands and say, how many of you got to the top of the mountain, meaning you actually owned a home or started investing in retirement by the age of thirty? It’s almost eighty to ninety percent of the rooms, middle income folk or upper income folk, that say, I did that by the age of thirty. That’s the average age of a student in our program. They’re at step one of the mountain.

But then I say, who helped you? And everybody has somebody who helped them, with an introduction to a job, capital for the down payment on a home, my parents paid for my college. Then I say, well, would you then help somebody who doesn’t have someone like that to provide them access to capital to move up the mountain? This is kind of the conversation.

But I think what you’ve done here, I’ve looked at this for probably five years now, what I really appreciate about the work you’ve done is we actually have some thoughtful metrics by which we can now start saying, are we on track if we’re going to get to nine hundred thousand dollars at retirement? Because we do this millionaire plan now for a twenty five year old. A matching four oh one k can get you to a million bucks with a couple hundred dollars a month in your twenties.

[Julie Stone]:
That’s right. The sooner you start this, the less those numbers feel outrageous, because you’ve got your lifetime to make them come true.

[Amy Hulst]:
Julie, I just want to ask you a question. Why does this matter to you? Why generational wealth? Why care about this? Why be part of a community that cares about this and is changing our thoughts and practices around the bottom half of our neighborhoods?

[Julie Stone]:
So a little of this ties to my personal story. I grew up in a family business that owns and runs truck stops. I grew up in rural Wyoming as that truck stop business expanded west. The first half of my life was alongside working people. That truck stop chain, Sapp Brothers Truck Stops, happens to be employee owned, which at the time was not a remarkable fact to me, but today it matters a lot more. I simply have heart, and I think we all do, for what it means to go to work every day in order to contribute, in order to give gifts, in order to be a part of something bigger, and also because we all have families and kids that we love.

Part of my identity, or my hope for America, is that everybody gets a way to be a part of what makes this country great. And I recognize that the work that has sort of been the story now has to be updated to include an even more meaningful kind of participation.

But I can say it from a different angle. This is a story that’s actually been told in history, where a growing number of people over time get carved out of opportunity that accrues to a small set. That is destabilizing to our very foundations. It’s destabilizing to peace. I believe in a liberal democracy. I believe that we should all be able to pursue a dream and do it in a place where we welcome everybody’s opportunity.

And if we continue down the path where more and more people believe that they did everything right and they didn’t make it, we won’t hold peace, we won’t hold democracy, we will see more of what we have now. And that path is one that I don’t want us to be on, especially when the prosperity is this great. There’s a part of me that doesn’t even believe that lots of people need to give something up. There is so much economic value being created that even a minimum, essential kind of sufficiency for everyone creates no sacrifice for those that hold it today.

[Jason Janz]:
Beautifully said. I close with this because you’ve been a champion of this idea. I think it’s the vision that we need as a country. Gary Community Ventures has been a thought leader in this, but on a very basic level, Jen and I’s adopted daughter, who worked on our team, was able to apply to the Dearfield Fund, which you created to provide down payment assistance, and she was able to buy her first home with that fund. She also got a first bank loan. She also got a nonprofit that gave her additional down payment assistance. She did a really great deal, and she’s building equity every month, first in her entire family to own a home. And her assets are building.

She had never even been on an airplane, and now she’s been to, I don’t know, fifteen different countries. She’s living a life of peace, prosperity, and she’s just a golden human. She blesses everybody who walks through the doors of our organization. So on a very neighbor to neighbor level, thank you for your work, thank you for trying to bridge the grasstops and the grassroots to make solutions work for our community. We appreciate it. Thank you.

[Julie Stone]:
Yeah, you’re welcome.

[Amy Hulst]:
Thank you for joining our conversation today on From Poverty to Prosperity. To order your copy of Together We Climb, visit our website or Amazon. And to check out the Colorado Essential Wealth Metric, visit garycommunity.org.