Best of the Week
Most Popular
1. Ray Dalio: This Debt Cycle Will End Soon - John_Mauldin
2.Stock Market Dow Plunge Following Fake US - China Trade War Truce - Nadeem_Walayat
3.UK House Prices 2019 No Deal BrExit 30% Crash Warning! - Nadeem_Walayat
4.What the Oil Short-sellers and OPEC Don’t Know about Peak Shale - Andrew_Butter
5.Stock Market Crashed While the Yield Curve Inverted - Troy_Bombardia
6.More Late-cycle Signs for the Stock Market and What’s Next - Troy_Bombardia
7.US Economy Will Deteriorate Over Next Half Year. What this Means for Stocks - Troy_Bombardia
8.TICK TOCK, Counting Down to the Next Recession - James_Quinn
9.How Theresa May Put Britain on the Path Towards BrExit Civil War - Nadeem_Walayat
10.This Is the End of Trump’s Economic Sugar High - Patrick_Watson
Last 7 days
UK House Prices Momentum Forecast 2019 - 18th Dec 18
Will US Government Shutdown Cause The Stock Market To Crash? - 18th Dec 18
The Coming Financial Storm - 18th Dec 18
Jeff Gundlach thinks that a Stocks Bear Market has started. Is he Right? - 18th Dec 18
Gold’s Not An Investment – You Won’t Get Rich - 17th Dec 18
Stock Market At Medium-Term Lows, Which Direction is Next? - 17th Dec 18
This Stock Will Drive America’s 5G Buildout - 17th Dec 18
Stock Market Turn In The Tide - Have a Happy Bear Market! - 17th Dec 18
How A NASA Scientist Could Trigger The Next Cannabis Boom - 17th Dec 18
iShares Russell 2000 IWM Leading Stock Market Decline - 17th Dec 18
Where is the Dow Stock Market Santa Rally? - 17th Dec 18
With Weaker Climate Consensus, Expect Elevated Climate Change - 16th Dec 18
SMIGGLE Advent Calendar 2018 UK Contents - What You Get Look Inside Review - 16th Dec 18
Is there a Lump of Coal in Santa's Stock Market Bag? - 16th Dec 18
This Market Will Drive Gold in 2019… - 16th Dec 18
Gerald Celente:Central Banks Can’t Stop a 2019 Debt Disaster - 16th Dec 18
Gold Stocks Triple Breakout - 15th Dec 18
The stock market fails to rally each day. What’s next for stocks - 14th Dec 18
How Low Could the S&P 500 Go? - 14th Dec 18
An Industrial to Stock Trade: Is Boeing a BUY Here? - 14th Dec 18
Will the Arrest of Huawei Executive Derail Trade War Truce? - 14th Dec 18
Trump vs the Fed: Who Wins? - 13th Dec 18
Expect Gold & Silver to Pullback Before the Next Move Higher - 13th Dec 18
Dollar Index Trends, USDJPY Setting Up - 13th Dec 18
While The Stocks Bulls Fiddle With The 'Fundamentals,' Rome Burns - 13th Dec 18
The Historic Role of Silver - 13th Dec 18
Natural Gas Price Setup for a Big Move Lower - 13th Dec 18
How to Get 20% Off Morrisons Weekly Supermarket Shopping - 13th Dec 18
Gold Price Analysis: Closer To A Significant Monetary Event - 13th Dec 18
Where is the Stock Market Santa Claus Rally? - 12th Dec 18
Politics and Economics in Times of Crisis - 12th Dec 18
Owning Precious Metals in an IRA - 12th Dec 18
Ways to Improve the Value of Your Home - 12th Dec 18
Theresa May No Confidence Vote, Next Tory Leader Betting Market Analysis and Forecasts - 12th Dec 18
Gold & Global Financial Crisis Redux - 12th Dec 18
Wow Your Neighbours With the Best Christmas Projector Lights for Holidays 2018! - 12th Dec 18
Stock Market Topping Formation as Risks Rise Around the World - 11th Dec 18
The Amazing Story of Gold to Gold Stocks Ratios - 11th Dec 18
Stock Market Medium term Bullish, But Long Term Risk:Reward is Bearish - 11th Dec 18
Is a Deleveraging Event about to Unfold in the Stock Market? - 11th Dec 18
Making Money through Property Investment - 11th Dec 18
Brexit: What Will it Mean for Exchange Rates? - 11th Dec 18
United States Facing Climate Change Severe Water Stress - 10th Dec 18
Waiting for Gold Price to Erupt - 10th Dec 18
Stock Market Key Support Being Re-Tested - 10th Dec 18
May BrExit Deal Tory MP Votes Forecast, Betting Market Analysis - 10th Dec 18
Listen to What Gold is Telling You - 10th Dec 18
The Stock Market’s Long Term Outlook is Changing - 10th Dec 18
Palladium Shortages Expose Broken Futures Markets for Precious Metals - 9th Dec 18
Is an Inverted Yield Curve Bullish for Gold? - 9th Dec 18

Market Oracle FREE Newsletter

How You Could Make £2,850 Per Month

How McDonald’s and JPMorgan Chase Help Keep America Poor

Companies / Social Issues Jul 08, 2013 - 12:19 PM GMT

By: Money_Morning

Companies

Greg Madison writes: Natalie Gunshannon, a McDonald's worker from Pennsylvania, has just won the right to... draw a paycheck. Work-for-pay is a fairly straightforward system that the Western World has been using for the past six or seven centuries, give or take.

Ms. Gunshannon was an hourly employee at a McDonald's franchise in Shavertown, Pennsylvania. Her degree is in massage therapy, but jobs in that field are scarce. A single mother, she took whatever work was available, which brought her to McDonalds, where she worked the line for $7.44 an hour, 30 to 70 hours per week.


After her first pay period, she was given not a paycheck, but a "debit" card loaded with her wages. This card, backed by JPMorgan Chase & Co. (NYSE:JPM), could be used anywhere Visa was accepted - including ATMs. It all seemed very convenient.

It wasn't.

A "Fine" Service
The problem was the JPMorgan debit card itself. It's a fine card... There are "fines" every time it's used:

  • ATM withdrawals: $1.50 each
  • Over the counter cash withdrawals: $5.00
  • Balance inquiries: $1.00 per inquiry
  • Online bill payment: $0.75 per bill
  • Lost or stolen card: $15.00 replacement fee
  • Inactivity fee (not using the card enough): $10.00 per 30-day period

At $7.44 per hour, these fees could easily send a person like Natalie Gunshannon right under the water. Losing her card would cost her better than two hours' worth of work. She has a checking account, and access to a debit card issued by a federally-backed financial institution.

Why would she want to be paid under this usurious system? She had no choice.

Ms. Gunshannon asked her manager if she could be paid with a check, as is the custom in these parts. Pennsylvania law says a worker can be paid in cash or check upon request.

She was told that checks weren't available, and that there was no way to transmit her wages other than this JPMorgan debit card. McDonald's managers and assistant managers can be paid by direct deposit, but hourly employees can't at this franchise.

Cost-Cutting Run Amok

This McDonald's franchise wanted to cut down on the overhead, the cost needed to actually have a payroll company cut a check and send it.

Not willing to roll over for McDonald's or JPMorgan Chase, Ms. Gunshannon took her case to court. Since doing so, employees at other local McDonald's are coming forward, which may lead to the case being a certified class action.

McDonald's Corporation
(NYSE:MCD) itself is not being sued, rather the franchisee. Under the "It wasn't me!" paradigm used in the fast food business, the specific franchise is named in the suit. McDonald's line is that the individual franchisee is responsible for its own payroll methods and practices.

The franchisee has already backed down, although the suit hasn't been tried or settled yet. As of this week, employees of the local franchises will have the choice of paper check, direct deposit to account, or payroll debit card.

But it's a fairly safe bet that practices like this persist elsewhere, away from the media glare. CNN reports that fast food employees often have to contend with abusive practices like union-busting and wage theft, where overtime is illegally and unethically paid at the straight-time rate. These practices are being investigated, but they continue in the meantime.

This isn't the only way companies like JPMorgan are colluding to make a buck off those who can least afford it.

It's Expensive to Be Poor

We've reported that companies like JPMorgan Chase have a vested interest in keeping Americans on public assistance and under-banked.

The Electronic Benefits Transfer cards that many receive instead of paper checks are operated by large banks like JPMorgan. The bank collects a small fee every time the customer uses the EBT card, which functions much like a debit card. The fees don't seem like much at first, or to those who are in trouble, but they add up.

Multiply this by a few tens of millions for those who are on at least some form of public assistance, and you can see that the poverty game makes banks like JPMorgan a lot of money.

According to the FDIC, nearly 29% of American households are unbanked or under-banked. The unbanked have no checking or savings accounts open in federally-backed banks, while the under-banked may have at least a checking account, but limited or no access to credit or capital.

These people use check-cashing outlets, payday lenders, rent-to-own services, pawn shops, and "refund anticipation loans" to process financial transactions. These businesses charge a relatively steep premium for any of their services.

A 30-day, $200 loan may cost the borrower $60 at the end of the term, an annualized rate far north of 300%. When a check is cashed, the check casher collects a 1% - 10% fee. If an unbanked individual were to use rent-to-own services for, say, a refrigerator, the cost at the end of the term would invariably be more than double the retail price.

No Easy Solution

To be fair, these services are taking a pretty big risk by lending to this demographic. There is a better than average chance that a payday lending customer will default or fall behind. Some consumer advocacy groups have stepped in to influence legislation which would reduce or mitigate these high rates.

But cities like Washington, D.C. that have attempted to re-regulate or crack down on payday lending and other alternative financial services have seen these outlets disappear in droves. A community which may have relied on the services of, say, ACE Check Cashing for cashing paychecks or cash advances may be completely cut off from any financial services now.

There's no easy fix to this problem. Wages have to rise, financial literacy has to take root, regulations must be carefully considered. None of this is likely to happen in the near future, not when there's just so much money to be made from poverty.

Source :http://moneymorning.com/2013/07/05/abuses-at-mcdonalds-and-jpmorgan-chase-help-keep-america-poor/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules