Literature Review Financial Literacy and Job Turnover Rates of African-American Males.

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Literature Review: Financial Literacy and JobTurnover Rates of African-American Males.

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Literature Review: Financial Literacy and JobTurnover Rates of African-American Males.

Financialawareness is one of the primary concepts that characterize the lifeof modern American households. The financial well-being of anindividual has tended to become his/her responsibility even when thecomplexity of financial products and pressure on budgets has beenincreasing tremendously. Recently, research has focused on the trendsof financial literacy among African Americans with relation to theturnover rates. In this regard, it is important to note that peoplein a community, mainly those unified by their cultural background,tend to have a similar stance towards different aspects of life,including the finances as argued by Lucey and Laney (2012).


Accordingto a survey conducted by the Pew Research Center, the unemploymentrates among African Americans is “consistently twice that of thewhites” (DeSilver, 2013). The author identifies the attachment ofmembers of this population to their jobs, which is a factor offinancial literacy, as the primary cause of high unemployment. Evenwith the relatively low employment rates, the level of financialconfidence among African Americans has been rising gradually asindicated in the findings of a study by Prudential Financial (2016).According to the study, over 50 percent of the respondents gavethemselves high sores on matters pertaining the management ofhousehold expenditure, debt, insurance, and budgets. Even so, theengagement of African Americans with financial professionals wasfound to be significantly low around one in ten participants. Thefinancial knowledge and behavior of African Americans has an upwardtrend considering that around 52 percent of their population ishighly prepared to make wise financial judgement compared to 40percent of the general population.

Reviewing Black Male Job Turnover

Theemployment cycle, which is highly determined by the economical state,has consistently affected job turnover among Black males. The cycleinvolves a series of rising and falling demand for human resourcesand employment opportunities. Black males are often victims of thecycle due to the high rates of discrimination during recruitment.D’Alessio, Stolzenberg, and Eitle (2013) study the ‘Last Hired,First Fired’ phenomena and conclude that it has an implication ofthe financial decisions made by African Americans with regards toengagement in crime. Ideally, companies tend to employ Black maleslast when opportunities arise and fire them first when the economicsituation changes for the worse. Also, it is important to note thatthe opportunities provided to Black males are often more challengingand physically involving compared to their white counterparts. Withphysically demanding jobs and a relatively low pay, Black turnoverrates are high as argued by Morrison (2015). Besides the low pay,working conditions in the labor intensive settings are often veryharsh, especially with consideration of the risk to health,insurance, and working hours.

Ethnic Financial Literacy

Asmentioned earlier, people having a common ethic background tend tohave similarities in financial matters. Notably, the financialsocialization of communities has systematic differences as aconsequence of differences in financial literacy across the culturaldivide. With regard to financial knowledge, it is important to notethat education is a primary determinant. According to a study byFernandes, Lynch and Netemeyer (2014), educational advancementprovides a suitable opportunity for financial education and, as aresult, higher economic literacy. Basic levels of education providelittle, if any, financial education to students compared to higherlevels of learning such as college and university. In addition,financial education is gradually integrated into the student’seducational content as they progress academically. In this regard, itis important to note that African American males have significantlylower educational achievement compared to the whites, which is animplication of a broad range of socio-economic factors such aspoverty and ignorance.

Financialliteracy is a factor of different concepts such as financialunderstanding, responsibility, competence, and mathematical literacyas well as standard intelligence. In all instances, the Black malesare disadvantaged considering that education is a common denominator.For instance, mathematical literacy can be defined as the ability ofthe individual to make coherent mathematical thinking while financialunderstanding largely involves the exchange of money and its movementwithin the micro-economy. An individual with higher educationalachievement is more likely to have better skills than one with basicacademic achievement in both cases (Jappelli &amp Padula, 2013).

Theculture of a population, often defined on the grounds of sharedpractices, is a key determinant of financial literacy as argued byTheodore (2017). The author argues that culture can affect theconsumption trends of a population, their savings, and decisions oninvestment, as well as the likely financial growth. Among minoritygroups such as the African Americans, the trends are even morevisible due to the distinct and almost predictable cultural behavior.One of the principle precedents of the argument is the manner inwhich Black households tend to absorb the financial culture of theirparents, especially among the low-income earners. The culturalbuild-up results in a pattern of wrong financial decisions,especially when it comes to saving and retirement security. In manycases, parents pass on their financial beliefs to their children who,in turn, them to the grandchildren.

Connection between Black Financial Literacy andTurnover Rate

Cultureis a constant in both financial literacy and job turnover within thegeneral population. The contribution of culture in the determinationof an individual’s level of the education forms another ground ofrelating financial literacy and job turnover rates among Black males.In this regard, it is prudent to argue that an individual whosefinancial literacy is low will likely have a high turnover intentionat his current employment. The understanding that the level ofeducation will affect the individual’s financial understanding aswell as their job security can explain the causal relationship. Onthe other hand, it is important to note that the financial literacyof an individual will likely determine his willingness to stick totheir current employment (Arthur, 2012). A financially literateindividual understands the concept of economic utility and cash flow,which means that he values employment as a source of income.Implicatively, such an individual is very unlikely to leave theircurrent employment without the surety of another employmentopportunity. Financial literacy involves proper management of budgetsand development of wise investment decisions with consideration ofthe current and potential income, which implies that irrespective ofthe earnings, an economically intelligent individual will strive tomake ends meet. On the grounds of contentment and proper management,a financially literate individual has little chance of seekingalternative employment (Lusardi &amp Mitchell, 2014).


Arthur, C. (2012).&nbspFinancial Literacy Education.Rotterdam: SensePublishers.

D’Alessio, S., Stolzenberg, L., &amp Eitle, D. (2013). “LastHired, First Fired”: The Effect of the Unemployment Rate on theProbability of Repeat Offending.&nbspAmerican Journal Of CriminalJustice,&nbsp39(1), 77-93.

DeSilver, D. (2013).&nbspBlack unemployment rate is consistentlytwice that of whites.&nbspPew Research Center. Retrieved16 March 2017, from

Fernandes, D., Lynch, J., &amp Netemeyer, R. (2014). FinancialLiteracy, Financial Education, and Downstream FinancialBehaviors.&nbspManagement Science,&nbsp60(8),1861-1883.

Jappelli, T. &amp Padula, M. (2013). Investment in financialliteracy and saving decisions.&nbspJournal Of Banking &ampFinance,&nbsp37(8), 2779-2792.

Lucey, T. &amp Laney, J. (2012).&nbspReframing financialliteracy&nbsp(1st ed.). Charlotte, N.C.: Information Age Pub.

Lusardi, A. &amp Mitchell, O. (2014). The Economic Importance ofFinancial Literacy: Theory and Evidence.&nbspJournal Of EconomicLiterature,&nbsp52(1), 5-44.

Morrison, A. (2015).&nbspBlack Unemployment Rate 2015: In BetterEconomy, African-Americans See Minimal Gains.&nbspInternationalBusiness Times. Retrieved 16 March 2017, from

Prudential Financial. (2016).&nbspThe African American FinancialExperience. Prudential Financial.

Theodore, D. (2017).&nbspHow Does Culture Affect FinancialLiteracy? Future of Business and Tech. Retrieved 16 March 2017,from