Lambert here: I’ve always hated the phrase “financially literate.” The author says we need “more regulation of banks.” We do, but to nobble the “alternative financial services” “industry, so called, we need a Post Office Bank. (Had the Democrats rolled out a proposal for a Post Office bank, it would be a lot harder for the administration to privatize it, but lol no).

By Valerie Vande Panne of the Independent Media Institute. Originally published at Alternet.

There’s an idea in America that if you are “financially literate,” there is a specific way you bank: You have a checking account and a savings account at a big-name bank. You have your checks from your employer directly deposited every two weeks, like clockwork, and you save at least 10 percent out of every check, until you have enough saved to cover living expenses for six to eight months. You contribute to a 401k your employer matches, and your health insurance—which your employer pays for—offers full coverage for you and your family with, perhaps, a $30 co-pay.

The problem with this scenario is that, increasingly for a growing segment of the American population, it is a total myth.

The reality is that a growing number of Americans don’t have this type of employment. Mainstream banks are expensive to use. And the middle class has been rapidly pushed—well, down.

Enter Lisa Servon, a professor and chair in the Department of City and Regional Planning at the University of Pennsylvania. She’s also the author of The Unbanking of America, an at-times startling look at the way Middle America is surviving in an increasingly tumultuous U.S. economy.

Servon started her research on specifically how the middle class is using check cashing and payday loans when she started reading about how low-income people didn’t know any better. The theory—which you are probably familiar with—says that the poor and people of color don’t use mainstream banks because they aren’t financially savvy. They are, the insinuation goes, stupid about money.

“Something struck me as off,” with that theory, Servon told the Independent Media Institute in a phone interview. “I knew people weren’t stupid. Or wasting money.”

So, Servon started looking at how, and why, people use check cashing and payday loans.

In a nutshell: Most people are using them because they’re not making a high enough minimum wage, and the economy is unstable—the perfect environment for the “alternative financial services” industry to flourish in.

The mainstream often sees this type of financial model as “something that’s wrong with the person using it,” Servon says. “I think there has been a belief people start as unbanked [not using mainstream banks] and move to banked and then they stay there.”

“The job of policymakers,” she says, “is to get them to be banked and to stay there.”

The problem with that is, of course, life, and employment, in the U.S. is more like a jungle gym than the traditional ladder of success that was popularized nearly a century ago. The ladder model is archaic.

Today, people are working at gig economy jobs more and more—they no longer know how much money they’ll make next month or next year, let alone next week.

Adding to the uncertainty is that health insurance is costly and comes with expensive co-pays that policies didn’t have just a few years ago. While it might not have cost much to give birth in a hospital (for someone gainfully employed and with health insurance) just a few years ago, the cost—even if the employer hasn’t changed—has gone up: What cost a few hundred dollars before is suddenly $3,000. That same family might have to turn to a payday loan just to have a baby.

Using these alternative financial services, then, “is not really a function of intelligence,” says Servon. It’s a part of surviving.

Therefore, says Servon, the idea that “If they only knew how to do things right, they would bank the way we think they should,” is not what’s happening.

“People who are taking payday loans are people who make $50,000, $60,000, $70,000 a year, own their homes and have a college education. That’s the fastest-growing group. It’s not people who ‘don’t know better.’”

Banks have become more expensive, says Servon, making more of their money from fees, and that automatically excludes people who can’t afford it.

There are three other primary reasons for the switch of the middle class from big banks to check cashers and payday loans: The increase in income volatility—people making different amounts of money week to week. “Income volatility has doubled in the last 30 years, so we have twice as much instability today. People’s ability to predict what is coming into the household has changed radically,” says Servon.

Additionally, since the 1970s, people have been making less money. “We see productivity rising, but the benefit of that is being accrued to a smaller number of people,” Servon adds.

Finally, Servon says we’ve experienced what’s known as the “great risk shift”: Decades ago, the public and corporate sector took on more of the risk of being sick or retiring early. Today, she says, “people’s employment comes with less insurance, less benefits. All that risk is now shifted on to individuals.”

All of this, she says, puts the middle class into a much more precarious situation.

According to her best estimation, nearly 30 percent of the U.S. population now uses alternative financial services. While check cashing specifically will decline as more and more people use technology to make payments, there will still be growth in the industry, such as with loans.

“People aren’t stupid,” says Servon. “It’s not just the poor and people of color, but one of your kids teachers, your dental hygienist. We have so much shame about money, people aren’t comfortable talking about it.”

So what’s to be done?

For one, we need more, and better, regulation of banks, she says.

Even though she acknowledges that might not be realistic right now, “You can’t give up,” she says. “You need to be ready,” so when the time comes, you’re prepared to take action to push for the right change.

In the interim, she supports educating people of all kinds of what better financial options are, such as shifting from a bank to a credit union. (Credit unions are non-profit.)

People can also find a community bank or a bank that is social justice–oriented.

Another point Servon stresses: “It’s not just low-income people suffering.” For her, it’s important people understand the people suffering from the current economic climate are those they can relate to.

After all, check cashing and payday loans or lack of financial literacy aren’t the source problems. Rather, these types of systems are symptoms of an unhealthy economic climate overall.

“Even if you could completely change the financial services, it doesn’t address poverty,” Servon says. Higher minimum wages are an important component, along with better health care, child care, and “all the things that make people more stable… We need to keep arguing for those things.”