HARRISBURG, Pa. - The pluses and minuses of payday lending are playing out in Harrisburg.
The state House Consumer Affairs Committee has advanced legislation that would legalize what some call "predatory" payday lending. Supporters say allowing lenders to charge annual interest rates as high as 369 percent for a two-week loan will help create jobs. However, a new report from the Keystone Research Center shows otherwise, says labor economist Dr. Mark Price.
"Payday lending, when you have an expansion of it, it certainly creates some jobs on the side of the payday lending operation. But it also destroys other jobs in the economy, because consumers are paying these excessive fees, which end up crowding out other spending in the local community."
While payday loans are born from the desperation of people needing money between paychecks, Price says those who don't qualify for them are better off in the long term than those who do.
"There are consumers that payday lenders actually do turn down and are unwilling to make them a short-term, $300 loan. If they don't get a loan, they're less likely to file for bankruptcy than people that the lenders actually do choose to make a loan to."
Lender fees such as those being considered by state lawmakers are what can turn a relatively small loan into an insurmountable mountain of debt, Price says.
"They end up having to take out another loan, and another loan and another loan - and each time, they're racking up these enormous fees, putting those households in worse shape financially."
Payday lending hits rural sections of the state hardest, Price says, areas that often have limited economic opportunities for residents to repay their debts. He notes that a higher concentration of these lenders is typical in rural communities, which he calls "a perfect landscape" for them.
The report is online at keystoneresearch.org.
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The United Auto Workers union is negotiating its first union contract with Volkswagen at its Chattanooga plant, covering more than 4,000 members.
The union said its key demands include higher wages, affordable health benefits and retirement protections.
Steve Cochran, co chair of the bargaining committee, said the workers should have the same pay structure as the other automotive groups recognized in contracts with the United Auto Workers.
"Right now, at the end of the Big Three's contract, compared to what we have now is 24% higher," Cochran pointed out. "We're asking for right at about a 24% pay raise over the length of our contract, just to get us equal with the Big Three."
Cochran noted Volkswagen has offered a 16.5% raise over four years, leaving them several percentage points behind the current rates of the Big Three automakers. He added the cost-of-living raises are capped, unlike theirs. The Big Three -- Ford, General Motors and Chrysler -- were the first Southern autoworkers to unionize.
Cochran noted affordable health insurance is a key demand. His family plan costs around $400 a month, totaling $11,000 a year with deductibles and out-of-pocket expenses, an amount he said is unaffordable for many workers. He added some UAW autoworkers have secured fully paid family coverage with low co-pays.
"Some of us have to make a decision based on, 'Am I going to pay for this doctor visit and get this treatment, or am I going to pay my mortgage?'" Cochran observed. "We've had several members take 401(k) loans out, for example, or they may even remortgage your house. We've had several had to file bankruptcy."
Cochran emphasized the company recently eliminated its attendance bonus, which offered 8% of quarterly wages for perfect attendance. However, the strict policy meant even missing a single minute would forfeit the entire bonus.
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A bipartisan nonprofit group in Michigan is opposing pending legislation which would reverse a Michigan Supreme Court ruling, stripping paid sick leave and minimum wage protections, slated to take effect this month.
In 2018, Michigan voters approved initiatives to raise the minimum wage and provide paid sick leave but the GOP-led Legislature amended them in the same session, which the court ruled was unconstitutional.
Michigan's minimum wage is currently slated to rise to $12.48 on Feb. 21 and reach $14.97 by 2028.
Monique Stanton, president and CEO of the Michigan League for Public Policy, stressed how the proposed laws would affect Michiganders, especially low-income residents.
"If you get sick, your child breaks their leg, and you need to take a day or two off from work, you're not able to do so," Stanton pointed out. "That means you're making a choice between taking care of your child or being able to pay your utility bills, or being able to make your rent."
The new proposed legislation sets the minimum wage at $12 an hour this year, with tipped wages at 38% of the regular wage. If it becomes law, some Michigan workers' yearly pay will be reduced by $1,000 to $2,400 in the coming years.
Stanton noted polling data revealed keeping the paid sick leave and minimum wage increase has support from both Republicans and Democrats. She added her group is engaging with Michigan residents, businesses and other organizations to raise awareness and gain support.
"This is an issue that really will help people make ends meet, especially as we're worried about the economy and the costs of prices going up," Stanton stressed. "Both the boost to the minimum wage as well that protection for earned sick time are really essential."
The new bills have passed in the House and are now headed to the Senate. If they become law, the change will take effect on Feb 21.
Disclosure: The Michigan League for Public Policy/Kids Count contributes to our fund for reporting on Budget Policy and Priorities, Children's Issues, Livable Wages/Working Families, and Poverty Issues. If you would like to help support news in the public interest,
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Pennsylvania lawmakers return to Harrisburg on Monday, facing renewed pressure to address long-standing issues, including improving the economy and education.
Advocates said it is a crucial opportunity to make meaningful progress on many policies.
Gillian Kratzer, deputy director of the advocacy group Better Pennsylvania, said one key priority Democrats are focused on is improving school funding.
"Making sure that we are equipping schools to do the best that they can for every child in every school district," Kratzer emphasized. "Obviously last year, we had the court case that laid out, finally, that Pennsylvania does not have fair funding for schools, which is part of our state constitution."
Kratzer noted her group anticipates Gov. Josh Shapiro's third budget address on Feb. 4. In the last budget, Shapiro made the largest investment in Commonwealth history for K-12 public education, at just over $1 billion.
Medical marijuana is legal in Pennsylvania but not for recreational use. In the face of a budget shortfall, Kratzer acknowledged it will take bipartisan support, especially from the Republican-controlled state Senate, to secure new revenue sources, which could include legalizing recreational marijuana use.
"Something that we will hopefully see get done this year is doing something on recreational marijuana," Kratzer observed. "As a state, we have to find new sources of revenue, because we are either going to have to dip into our rainy day fund or raise taxes."
She added the state minimum wage remains stagnant at $7.25 an hour. A bill to raise it will be reintroduced. And she stressed the need for lawmakers to consider paid family leave, as the U.S. falls behind globally on the family-friendly policy.
Disclosure: Better PA contributes to our fund for reporting on Civic Engagement, Health Issues, and Livable Wages/Working Families. If you would like to help support news in the public interest,
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