Symbolizing two ugly trends in employment and finance, payday loans have invaded the workplace. In an article in today’s Wall Street Journal, Workplace Loans Gain in Popularity, the paper notes that more employers are offering “short-term” loans as a alleged benefit to their employees.
Such benefits carry fees that add up to an annual percentage rate of 100 to 165 percent. That’s a benefit? Give me a break. Usury is more like it.
To add insult to injury, employers who make these these loans available are also, apparently without any irony, offering online personal financial and budgeting tools to help employees. Really?
By calling these payday loans benefits and wrapping them in the mantle of education, employers are doing their employees a grave disservice. They are setting them up to be trapped in a cycle of payday loan hell, instead of doing the right thing, which is to pay them enough so that they don’t have so much trouble making ends meet.
American employers have benefitted greatly from increased productivity and higher profit margins during the past few years. Much of these gains have been at the expense of their workforce, which is losing ground, as wage growth is actually lower than inflation.
For those on the lower end of the employment spectrum, where most of the employees are whose employers are offering these payday loans, there isn’t much hope. When employers add payday loans to their slate of “benefits”, mount food drives for employees and encourage them to apply for public assistance, it’s pretty bad.
One bright spot for employees are the efforts of groups of employees of low-wage employers, such as fast food employees, who are organizing and holding one-day strikes around the country. One example is Fight for 15, a group of Chicago fast food and retail employees, who are fighting for a livable minimum wage of $15 an hour. I applaud their efforts and the efforts of others who are campaigning for wages that will allow people to not only pay their bills, but save for retirement and meet the other hopes embodied in the American Dream, which has become more out of reach for millions the longer the alleged economic recovery goes on.