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Yep. I, and I'm sure a lot of others here, have been on both ends of this spectrum. I remember having to roll quarters to go to the city to pay the water bill
by techsupporter 9y ago
Yep. I, and I'm sure a lot of others here, have been on both ends of this spectrum. I remember having to roll quarters to go to the city to pay the water bill (they wouldn't accept loose change and a money order from the corner store was $1.49 which was often 5% of my water bill at the time) and then wait under the clerk's wary gaze while the coin rolls were counted and a couple of random rolls were verified.
The worst was the electric bill. I've been in the exact situation described in the article, past due by under $100 and service remotely cut off. TXU Energy wanted a grand total of $793 to restart service, including the past due balance, a reconnection fee, and a deposit (plus a fee for taking such a large deposit). Fortunately, at least at the time, Texas' deregulated energy market rules didn't prohibit a subscriber from switching companies even when owing a balance to a previous one, so I was able to get my mother to co-sign on my having service with Texas-New Mexico Power.
These days, two jobs and many salary rises later? My water/sewer/garbage bill is direct debited from my checking account, same for the gas bill. Seattle City Light, CenturyLink, T-Mobile, and every other bill? Automatically charged to one of a handful of credit cards I have with >$20,000 limits. The house where I live ran into a medium-sized electrical problem that cost about $5,300 to fix. Instead of panicking, I charged the bill to a credit card and then used a 0% balance transfer on another one to make it be an interest free loan for 18 months.
I spent more in one year on overdraft fees ($1,550) back in the early 2000s than I spend on mobile phone service ($1,200) this year, to say nothing of all of the costs for payday loans and late fees and all of that. Being poor in America absolutely sucks ass and, the worst part is, I'm pretty sure virtually every one of our societal and financial systems is engineered to enforce that feeling of helplessness, not to make it better.
- cobookman 9y agoSounds like a business opportunity. While unlikely to be profitable. I'm sure you could get some donations to offer better financial services to the bottom percentages.
- hkmurakami 9y agoMy understanding is that Walmart and Amex's bluebird program tried to make things a little bit better, but probably doesn't address all the fundamental structural issues in place
- Banthum 9y agoIs it a "structural" issue? Or is it just the fact that, statistically, poor people are really unlikely to pay back loans, so loaning to them profitably means charging really high interest? Or is that a "structural" issue?
- thelock85 9y agoThe profit model is to fleece the most reliable customers.
- so33 9y agoBluebird (mentioned by the parent) is a checking account alternative (read: not a real, FDIC-insured bank account). No one's loaning anything in this case. It's designed to appeal to people who, for one reason or another, cannot afford to open even a basic traditional checking account. Edit: Before such ersatz-bank-account services proliferated, I believe it was common for poor people to cash their paychecks at a check cashing place (which costs time and money).
- ajmurmann 9y agoThis was covered in a recent episode of the a16z podcast: https://a16z.com/2017/12/24/democratizing-fintech-summit-2017/ https://a16z.com/2017/12/24/democratizing-fintech-summit-201...
- jriot 9y agoThere is a good book on this topic by Muhammad Yunnus - Banker to the Poor: Micro-Lending and the Battle Against World Poverty, https://www.amazon.com/Banker-Poor-Micro-Lending-Against-Poverty/dp/1586481983/ref=sr_1_4?ie=UTF8&qid=1516946043&sr=8-4&keywords=muhammad+yunus https://www.amazon.com/Banker-Poor-Micro-Lending-Against-Pov.... Overall, it is difficult to be even stay in business let alone profitable due to structure of how interests work at that income level due to most not paying back on their loans.
- JBlue42 9y agoI thought the point of Yunus's book/movement was that microloans were safe because people, on the whole, DID pay back the loans?
- jriot 9y agoIf I remember correctly it was set up in Bangladesh. You are correct people did pay back the loans but it required much higher interest rates e.g., 60%, due to small size of the loans and having to factor in those who wouldn't pay back.
- alsetmusic 9y agoI spent months repeatedly buying disposable dishes because I couldn’t afford real ones. Ironically, I couldn’t save the meager amount to purchase real dishware because of the perpetual cost of disposable dishes. My brother once told me that he had a similar situation with candles eating into his paycheck when his power had been shut off. If your current paycheck doesn’t take you far enough to solve the problem, you have to pay for substandard stop-gap solutions in between. This serves to prolong the time it takes to accumulate the capital needed for a permanent solution.
- philipov 9y agoThis reminds me of how constantly rushing to fill the client tickets and accumulating technical debt eats into a development team's ability to ever address the core problems in their software.
- WillReplyfFood 9y agoIndustryautomation here: It always takes two. One to tackle customers complaining and keeping the system running, one two actually diagnose and fix the problem.
- jules 9y agoWhy couldn't you wash the disposable dishes?
- gaius 9y agoI assume the OP means paper plates like you would use for a picnic
- jules 9y agoOK, then why not buy plastic ones?
- nathanasmith 9y ago
- pocoloco 9y agoRegarding you feeling that this is engineered, the following could be a reason why if valid: The dual economy didn’t happen overnight, says Temin. The story started just a couple of years after the ’67 Summer of Love. Around 1970, the productivity of workers began to get divided from their wages. Corporate attorney and later Supreme Court Justice Lewis Powell galvanized the business community to lobby vigorously for its interests. Johnson’s War on Poverty was replaced by Nixon’s War on Drugs, which sectioned off many members of the low-wage sector, disproportionately black, into prisons. Politicians increasingly influenced by the FTE sector turned from public-spirited universalism to free-market individualism. As money-driven politics accelerated (a phenomenon explained by the Investment Theory of Politics, as Temin explains), leaders of the FTE sector became increasingly emboldened to ignore the needs of members of the low-wage sector, or even to actively work against them. America’s underlying racism has a continuing distorting impact. A majority of the low-wage sector is white, with blacks and Latinos making up the other part, but politicians learned to talk as if the low-wage sector is mostly black because it allowed them to appeal to racial prejudice, which is useful in maintaining support for the structure of the dual economy — and hurting everyone in the low-wage sector. Temin notes that “the desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector.” America is Regressing into a Developing Nation for Most People https://www.ineteconomics.org/perspectives/blog/america-is-regressing-into-a-developing-nation-for-most-people https://www.ineteconomics.org/perspectives/blog/america-is-r...
- Banthum 9y ago>the desire to preserve the inferior status of blacks has motivated policies against all members of the low-wage sector. So your belief is, the dominant economic-political movement in America regards "preserving the inferior status of blacks" as an end goal in and of itself? Or is this an instrumental goal that somehow serves some other purpose?
- ezrast 9y agoThe sentence previous to the one you quoted suggests the political reasoning. Those in power see diversity as a threat to the status quo, and demonizing an enemy has long been a textbook way for demagogues to raise political capital.
- natecavanaugh 9y agoSpeaking specifically to the urban scourge of check paying places, I wonder if there would be space for a paycheck cashing place that kept half of those 20%+and set it in a small interest bearng account, and they'd have a vesting schedule before they should remove their savings (and percent incentives for them to stay, since the bigger the pot, the more rewards all around). I think this might be an industry that could help mitigate some social ills, not just prolong or exacerbate them. Are there any good gaps in my view that I'm not seeing?
- kaycebasques 9y agoSo, you're proposing a check deposit company that still takes a big chunk of the deposit, but sets aside half of that chunk in a savings account for the depositor?
- natecavanaugh 9y agoYep, exactly that. Maybe a smaller chunk, to be competitive, but ultimately to profit by helping people rather than perpetuating a cycle of debt.
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- nezzle 9y agoI wonder how the profit/risk ratio compares between the poor, slightly better off, and wealthy. How much of these costs are appropriate economics (e.g. due to defaulting, management costs, etc) vs abuse of the relatively powerless.