Cleveland Pioneers in Savings Education

Cleveland Pioneers in Savings Education

May 21, 2002
The Cleveland Plain Dealer
by Teresa Dixon Murray

Here's a weird demand that's in the labor contract approved Friday for the food service workers at Cleveland Hopkins International Airport:

The airport must help the workers learn how to save money.

Save for a rainy day. Save for retirement. Save for a home. Whatever. Just save for something instead of spending every last dime like so many people do. "These are folks who live paycheck to paycheck who can't envision saving money," said Ken Ilg, president of Hotel Employees and Restaurant Employees Local 10, which covers 17 counties in Northeast Ohio. "Now they're going to learn how."

While Ilg is putting the demand for financial education in most of his nearly 50 union contracts up for renewal this year, dozens of other companies across Greater Cleveland are voluntarily allotting work time to help employees manage their finances better.

It's all part of the year-old Cleveland Saves program, which is encouraging local companies and community organizations to help people be smarter with their money.

The carrot for employers? Increased productivity. "If employees are thinking about their money problems, they're not able to concentrate on work as much," said Aletha Adams, project coordinator for Cleveland Saves.

As part of the effort, which is being mimicked by cities nationwide:

Participating companies are giving employees time off to attend sessions on topics such as 401(k)s and budgeting. Some companies even have monthly "savers clubs," through which employees exchange ideas during the workday on pinching pennies.

"It's almost like going to an AA meeting," said Bob Gillespie, senior vice president at Ohio Savings Bank, which joined Cleveland Saves in March 2001. "The employees are motivating each other."

Virtually every area bank and savings and loan last year started offering consumers savings accounts with no fees, regardless of the balance.

Several dozen financial planners and advisers are providing free consultations to people trying to develop budgets and savings plans.

Employers are embracing Cleveland Saves to help boost employee productivity and loyalty, said Pat Perry, executive director of Employers Resource Council in Cleveland, which represents 1,000 companies with 425,000 employees.

"With the debt we've built up in today's society, we have so many American workers who are coming to work so stressed every day," Perry said.

"When companies can help people learn how to save for their child's braces, save for college, . . . you've made an impact on their lives.

"A lot of the results can't be measured on paper, but the employees are going to appreciate it and be more loyal and productive."

It all grew out of national studies that show half of low- to middle-income people don't save a penny.

A year into Cleveland Saves, it has 170 participating companies and organizations and 1,550 individual savers who have vowed save more money.

Cleveland Saves is being managed by the Cleveland non-profit group Working for Empowerment through Community Organizing and by Consumer Credit Counseling of Northeast Ohio.

A key to the program: Learning the discipline of saving. "Even if it's just $5 a week, if you save something, you're going to create a new pattern of behavior," said George Barany, executive director of WECO.

Maybe it's skipping one fast-food meal a week. Maybe it's resisting paying full price for a movie. "It's almost like working out," Barany said. "You think, 'I can't do 50 sit-ups a day.' But you start slow and build up. With money, everybody knows they should be saving. It's a matter of convincing people that they can. They just have to start somewhere."

Jennifer Downey, president of the chain of Ambience retail stores of Middleburg Heights, said she knows that some of her workers are happier and more productive now that they're managing their money a smidgen better than yesterday.

"I've seen too many of my employees have garnishments or have trouble paying bills," said Downey, whose employees typically make $6.50 to $10 an hour. "Or I hear how they can't go to the doctor . . . because they can't afford the co-pay. Then they don't show up to work because they're sick.

Now they understand the high costs of credit card finance charges and the importance of an emergency fund, and some have a savings account for the first time, Downey said.

In Cleveland Saves, about 70 percent of the 1,550 participants are women. Half are black, and most have incomes of less than $50,000. They're saving an average of $60 more a month, Adams said. Many are joining their company 401(k)s for the first time, which is particularly welcomed by employers trying to boost participation by non-management employees, Adams said.

Organizers hope to have 10,000 people enrolled in Cleveland Saves within three to five years.

Cleveland-area employees can expect a big push starting this summer. Executives such as Gillespie this summer will start lobbying the region's 40 to 50 more prominent companies to integrate savings programs into their workplaces, too.

"These are benefits that a company can initiate that cost almost nothing," Gillespie said. "It's still early, and it'll take a while to measure the long-term impact, but we think it'll help people."

And the idea is catching on. Some 15 cities from Charlotte, N.C., to Seattle have set up their own "saves" programs. Cleveland's organizers frequently travel to other cities to help get the efforts started.

The message - that saving is good - is similar to past national campaigns to get people to wear seat belts and curb smoking, said Stephen Brobeck, executive director of the Consumer Federation of America, which is behind the nationwide America Saves program.

"Cleveland has emerged as the national leader by leadership and inspiration," he said. "We're actually changing a culture."

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