Monday, July 01, 2013

I Owe My Soul to the Company's Banker

The people responsible for the system described in this New York Times story are the worst people in the world:
A growing number of American workers are confronting a frustrating predicament on payday: to get their wages, they must first pay a fee.

For these largely hourly workers, paper paychecks and even direct deposit have been replaced by prepaid cards issued by their employers....

But in the overwhelming majority of cases, using the card involves a fee. And those fees can quickly add up: one provider, for example, charges $1.75 to make a withdrawal from most A.T.M.'s, $2.95 for a paper statement and $6 to replace a card. Some users even have to pay $7 inactivity fees for not using their cards.

These fees can take such a big bite out of paychecks that some employees end up making less than the minimum wage once the charges are taken into account....
The people being subjected to this have jobs in the service economy -- at McDonald's, Walmart, Victoria's Secret, and so on. They're the people least able to afford this.
Devonte Yates, 21, who earns $7.25 an hour working a drive-through station at a McDonald’s in Milwaukee, says he spends $40 to $50 a month on fees associated with his JPMorgan Chase payroll card.

"It’s pretty bad," he said. "There's a fee for literally everything you do."

...Many employees say they have no choice but to use the cards: some companies no longer offer common payroll options like ordinary checks or direct deposit....
The old "company store" system, immortalized in the song "Sixteen Tons," at least made sense in terms of pure greed: the employer paid workers in scrip that could be exchanged only for goods on sale (at inflated prices) at the company store. The employer kept that inflated profit -- and kept the workers in debt, which, as Charles Hugh Smith notes, was a means of "insuring a lifetime of profitable servitude" to the employer.

But the employers running this system don't have any interest in keeping their workers around forever -- in a permanently recessed economy, low-wage workers are a dime a dozen, and easily replaceable. In this case, the employer just wants a cheaper payroll system -- as the Times story notes, this payroll system is much cheaper for the employers.

Well, of course it's cheaper. The banks -- the story names Bank of America, Wells Fargo, and Citigroup -- are cleaning up. They offer the employer a great deal and the employees a raw deal.

And then, if you're an employee, you owe your soul to them.


Kevin Drum looks at this -- and at some Citibank overdraft hanky-panky recently experienced by Reuters economics blogger Felix Salmon, which Drum seems to find much more relatable -- and says,
I dunno. Maybe Matt Yglesias is right. Maybe we really do need some kind of basic, no-frills postal banking service. I'm really not a fan of the idea, but I'm also increasingly skeptical that any amount of regulation can prod banks to act decently toward their customers.
Yeah, that would be nice. But it would deprive the megabanks of business, so it will never happen.

Do you know what we really need? We need an angry mob with torches and pitchfork marching on the Hamptons, or wherever the hell the scumbags responsible for this system frolic and gambol.

Seriously, what we need is a genuinely populist political leader who makes this sort of thing a top priority -- not whining about the deficit, or about the existence of the Fed, or about big government, or hemp still being illegal, but about ordinary people being screwed.

And that political leader needs to be someone who connects with heartlanders -- which means I'm not talking about Elizabeth Warren, alas. I think Warren could connect with heartlanders, but she's been too nice, too polite, not sufficiently egotistical or ambitious. She lacks the vaulting ambition of Pat Buchanan or Ross Perot or Ron Paul or Ted Cruz. She connects with Massachusetts residents and with the residents of that Portlandia of the mind known as culturally sophisticated liberal America (i.e., you and me). She's still a boutique taste. (Most of our heroes are -- Wyden, Feingold, and Grayson among the pols, Maddow and even Ed Schulz among the media types, etc., etc.)

Somebody has to get the word out to Middle Americans that it doesn't have to be this way. No national figure has done that, and there's no sign of any such national figure on the horizon. But we're screwed until "real Americans" are awakened, or wake up on their own.


BH said...

I wouldn't hold my breath if I were you, Steve. The deck is way worse stacked now than it was in 1932, and even then it took 3 years of depression beforehand. I suspect, too, that the electorate as a whole is, while on average better-educated, more conditioned to blame scapegoats than in '32. Still some bread, and tons more circuses.

Uncle Mike said...

Someone, somewhere, is blaming Obama for this. said...

It was a bit of a freak that a Wall Street lawyer, whose family had gotten rich with the help of Alexander Hamilton, turned out to have a radical heart to go with his ambition. Of all our Presidents and political leaders, there has only been one FDR.

We Americans believe, have believed, an amazing amount of crap.

Examinator said...

Nothing new in the tactic. This is a wrinkle on an old tactic. TO MAXIMISE THEIR PROFITS AT THE EXPENSE OF THE WORKERS
See the chorus in Tennessee Ernie Ford's 1million selling song "16 tons.". Coal Mine workers in the SOUTH ( as it happens most of those mines were owned by Northerners ) were paid in credits in the Company store.. the only shop permitted in the mining towns. Naturally the prices were inflated. ....Gee I wonder why the south have cultural chips on their shoulders.
Notwithstanding the corporates do it his way because "it reduces their administrative costs"(neo Capitalism 101) legal but I posit the QUESTION "Is it moral ?"

IMHO the company store was immoral as is this card, they are essentially the same in principal. Capitalism has many useful features, like all isms the issue is that ALL EXTREMES ARE UNIVERSALLY IMMORAL.
It comes down to which is more important Profit (an in animate creation, a tool) or the people who are exploited detrimentally by it? To me it's a no brainer. The purpose of Capitalism/ Corporatism and all it entails is the benefit of people not the suppression of them. ( anybody want to argue the Two C's are more important than people (your own most vulnerable citizens? If you do you need to revisit notions like Democracy, Freedom and the opening of the constitution and replace those terms with Plutocratic Tyranny) .
Any country with 350 million (give or take) Whose elections are paid for (read driven) by 350k plutocrats (see Wapo) is a democracy in name rather than fact and this card is merely a minor example of their indifference/arrogance because of their control.
Context is everything.

Victor said...

Look on the plus side - the could make those cards redeemable only with in their restaurants or stores. Or, do combo deals.

You and your family wanna eat?
Need clothes for work or school?
Ya gotta use your card only at Mickey D's or WalMart/Taco Bell or Target, etc.

Who's going to be the politician, who warns people about being nailed onto a cross of plastic credit/debit cards?

Yeah - go with torches to the bankers and rich people's homes.
"Occupy THEIR Street!!!'

PurpleGirl said...

I once worked for a privately-held science/technical publisher. They would direct-deposit your check or issue you a paper check. They also brought in a check-cashing company on pay day who would cash your whole check or cash your personal check. It seemed rather old-fashioned at first but then seemed really good because people with out-of-state accounts didn't have to wait for their checks to clear if they got the cash and those of us with direct-deposit could also get some cash without going to the bank. It really made life easier for us.

This job came after one which gave us out-of-city checks that took several days to clear or you needed to stand on line at only one bank branch to cash it.

Anonymous said...

PurpleGirl: I once worked for a similar organization that gave those of us with out-of-town bank accounts a special ID card we could use to cash our paychecks at the local branch of the bank on which they were drawn. Very helpful indeed.

Insofar as this service is free or cheaper to the employer (i.e. the bank is offering them an inducement) I can't see how this isn't a criminal conspiracy to commit wage theft. Except, of course, that there's negligible chance of prosecution.

Lawrence said...

I proposed the Postal banking on a Slate comment board back when I still read Slate. Matty Y-G, you thieving bastige!