The Rich Getting Richer off the Poor

An article in The New York Times describes how many employers pay workers with payroll cards instead of cash or paper paycheck:

[...] Employees can use these cards, which work like debit cards, at an A.T.M. to withdraw their pay.

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.

Not only do these people get screwed for taking their money out, they also get screwed for saving their money!

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, according to interviews with consumer lawyers, employees, and state and federal regulators.

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.

Many of the people who are paid with these cards are at the bottom of the economic ladder: they work part-time for McDonalds, Wal-Mart, Taco Bell, and so on.

The banks get employers to coerce employees into using the cards by giving them kickbacks:

In the case of the New York City Housing Authority, it stands to receive a dollar for every employee it signs up to Citibank’s payroll cards, according to a contract reviewed by The New York Times.

The richest banks in the country are using their economic muscle to bribe employers into participating in a scam to nickel-and-dime the poorest people in the country to the tune of hundreds of billions of dollars a year.

Just another example of the rich getting richer off the poor.