Best of the Week
Most Popular
1. Climate Change Mass Extinction - Birds, Bees and Bugs: Going Going Gone - Richard_Mills
2.A Purrrfect Gold Price Setup! - Peter_Degraaf
3.Who Finances America's Borrowing? Recession Indicator for Independent Thinkers Part 2 - F_F_Wiley
4.America’s One-sided Domestic Financial War - Raymond_Matison
5.Gold Price Summer Doldrums - Zeal_LLC
6.Two Key Events Will Unleash Gold - Jim_Willie_CB
7.Billionaire Schools Teacher in NAFTA Trade Talks - Richard_Mills
8.Get Out Of Crypto Cannabis Bubble Before It Pops and Move Into Bargain Basement Miners - Jeb_Handwerger
9.Stock Market Could Pullback for 1-2 weeks, But Medium Term Bullish - Troy_Bombardia
10.G7 Chaos, Central Banks and US Fed Will Drive Stock Prices This Week - Chris_Vermeulen
Last 7 days
SPX/Gold, Long-term Yields & Yield Curve 3 Amigos Update - 22nd Jun 18
Gold - How Long Can This Last? - 22nd Jun 18
Dow Has Fallen 8 days in a Row. Medium-long Term Bullish for Stocks - 22nd Jun 18
Trouble Spotting Market Trends? This Can Help - 22nd Jun 18
Financial Markets Analysis and Trend Forecasts 2018 - A Message from Nadeem Walayat - 21st Jun 18
SPX Bouncing Above Support - 21st Jun 18
Things You Need To Know If You Want To Invest In Bitcoin Now - 21st Jun 18
The NASDAQ’s Outperformance vs. the Dow is Very Bullish - 21st Jun 18
Warning All Investors: Global Stock Market Are Shifting Away From US Price Correlation - 20th Jun 18
Gold GLD ETF Update… Breakdown ? - 20th Jun 18
Short-term Turnaround in Bitcoin Might Not Be What You Think - 19th Jun 18
Stock Market’s Short Term Downside Will be Limited - 19th Jun 18
Natural Gas Setup for 32% Move in UGAZ Fund - 19th Jun 18
Magnus Collective To Empower Automation And Artificial Intelligence - 19th Jun 18
Trump A Bull in a China Shop - 19th Jun 18
Minor Car Accident! What Happens After You Report Your Accident to Your Insurer - 19th Jun 18
US Majors Flush Out A Major Pivot Low and What’s Next - 18th Jun 18
Cocoa Commodities Trading Analysis - 18th Jun 18
Stock Market Consolidating in an Uptrend - 18th Jun 18
Russell Has Gone Up 7 Weeks in a Row. EXTREMELY Bullish for Stocks - 18th Jun 18
What Happens Next to Stocks when Tech Massively Outperforms Utilities and Consumer Staples - 18th Jun 18
The Trillion Dollar Market You’ve Never Heard Of - 18th Jun 18
The Corruption of Capitalism - 17th Jun 18
North Korea, Trade Wars, Precious Metals and Bitcoin - 17th Jun 18
Climate Change and Fish Stocks – Burning Oxygen! - 17th Jun 18
A $1,180 Ticket to NEW Trading Opportunities, FREE! - 16th Jun 18
Gold Bullish on Fed Interest Rate Hike - 16th Jun 18
Respite for Bitcoin Traders Might Be Deceptive - 16th Jun 18
The Euro Crashed Yesterday. Bearish for Euro and Bullish for USD - 15th Jun 18
Inflation Trade, in Progress Since Gold Kicked it Off - 15th Jun 18
Can Saudi Arabia Prevent The Next Oil Shock? - 15th Jun 18
The Biggest Online Gambling Companies - 15th Jun 18
Powell's Excess Reserve Change and Gold - 15th Jun 18
Is This a Big Sign of a Big Stock Market Turn? - 15th Jun 18
Will Italy Sink the EU and Boost Gold? - 15th Jun 18
Bumper Crash! Land Rover Discovery Sport vs Audi - 15th Jun 18
Stock Market Topping Pattern or Just Pause Before Going Higher? - 14th Jun 18
Is the ECB Ending QE a Good Thing? Markets Think So - 14th Jun 18
Yield Curve Continues to Flatten. A Bullish Sign for the Stock Market - 14th Jun 18
How Online Gambling has Impacted the Economy - 14th Jun 18
Crude Oil Price Targeting $58 ppb Before Finding Support - 14th Jun 18
Stock Market Near Another Top? - 14th Jun 18
Thorpe Park REAL Walking Dead Living Nightmare Zombie Car Park Ride Experience! - 14th Jun 18

Market Oracle FREE Newsletter

5 "Tells" that the Stock Markets Are About to Reverse

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