Financial Literacy: The Myth of Structural Change
Research shows that persons of colour, but especially those in Black communities, have significantly less knowledge of saving and investing than their White counterparts. Although improving financial literacy can indeed help with individual wealth growth, educating communities cannot solve the structural sources of racial and religious economic inequality within our society. This is not to say that improving financial literacy within marginalised communities isn’t important, but, rather, it should be done in addition to addressing many of the structural problems our societies have in keeping marginalised communities poor.
Much is documented on the racial economic disparities in the U.K. However, religious economic inequality often gets overlooked in these conversations. Muslim communities especially experience the greatest economic disadvantages in the U.K. According to a study done focusing on the social mobility challenges faced by young Muslims, Muslim communities are more likely to “experience neighbourhood deprivation, housing, educational and health disadvantage, and unemployment.” Although many CEOs and non-profit leaders have noted that financial education and job training can help individuals improve their own financial condition, this added financial training would not make up for the systemic shortcomings.
As Marguerite Ward noted in an article from the Business Insider, “your personal finances aren’t just the product of you the person, but how you fit into literal centuries of systems, structures, and laws.” Although her article focuses on the U.S., her article helps illuminate problems that the U.K. faces as well. Ostensibly, increasing financial literacy in these communities would resolve the economic disparity that many members of the community face. However, as economists from Duke University and the Federal Reserve Bank of St. Louis noted, this so-called solution is more akin to a “commonly offered myth”.
In the U.K. these structural inequalities are particularly harsh for those in the Muslim community. In a study done comparing the wealth of people in the U.K. based on religious affiliation, Muslims were by far the poorest group. A later report concluded that, for Muslims in the U.K. community, there was a “broken social mobility promise”. For young Muslims specifically, “educational success did not translate into good labour market outcomes”. This aligns with studies that show higher unemployment rates among Muslims than those in other religious groups. This inequality is even more pronounced for Muslim women in the U.K.
Although financial education is indeed important, more needs to be done in order to help bridge the gap, not only between White people and people of colour, but also for Muslims. Structural changes need to occur in order to mend the broken social mobility promise that Muslims face. Helping individuals improve their financial literacy may not be the solution to the pervasive economic inequality in the U.K., and initiatives to provide more support for these communities may be a good retrospective measure, but the work shouldn’t stop there.
JAN Trust works to empower marginalised communities in order to combat structural inequalities that these communities face. We believe that everyone should have equal opportunities in society. At our women’s centre, we provide free services for the most vulnerable women to increase their chances of having a better life. To learn more about our work see our website.