PAYROLL CARDS : WITH FEES ATTACHED, NOT A GOOD IDEA

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Let’s talk about “payroll cards.” If you’re low-income, you already know what they are. They are proof that you’re not in charge of your own life.

To be low-income in today’s America is to do without. It’s your fault if you can’t make ends meet, say the Tea party folks. 

You drove uninsured because you couldn’t afford car insurance and you need your car to get to work ? Too bad; pay the fine, pay to reinstate your driver’s license. Pay, pay, pay. That’s just about all that the low-income person hears in America today. Pay.

Such is the context in which “payroll cards” now enter your life.

What are payroll cards ? They’re a kind of prepaid debit card onto which some employers deposit their workers’ weekly wage. The gimmick is that almost all payroll cards have fees attached. You can’t take money off a payroll card without paying a withdrawal fee. Want to use your payroll card as a savings vehicle instead of withdrawing the money ? Some cards charge an “inactivity fee.”

That’s fine, if workers CHOOSE to use a payroll card. If they make that choice, they agree to the fees attached.

What isn’t fine is that some employers make it mandatory for their workers to receive wages on a payroll card; or, they offer direct deposit or check but either don’t tell their employees or make clear that they frown on an employee making that choice.  The payroll card is a favorite especially of firms that pay its workers minimum wage or just above minimum. For their workers, it’s payroll card or nothing — or a displeased boss.

It is unlawful for an employer to require workers to pay fees to access their wages. It matters economically, too: because to a $ 7.50 an hour worker taking home $ 265 a week, a $ 2.00 withdrawal fee cuts into vital cash. The only way to do it is to withdraw one’s entire pay check at one time and keep the cash at home, just like in the 18th Century before banks existed. Some payroll card employers are doing just that. And if that cash gets stolen — by a family member; it happens often — well, that’s just the way it is when you are low-income in today’s America.

The firms that insist on paying by payroll card, with all the fees that come with them, argue that many of their workers don’t have bank accounts and that the fees attached to payroll cards cost far less than those charged by check cashers. This is true; but the argument is a fake one, because the reason that employers use payroll cards has nothing to do with saving their workers some money. It’s about saving the EMPLOYER money.

It is much cheaper for a large firm to pay its thousands of low-wage employees by payroll card than by electronic deposit or by check.That, and not the convenience of workers, is why the payroll card is this season’s hot employer item. Payroll cards are yet another example of how many of  today’s large employers view their employees not as an asset but as a “cost item.”

Payroll cards do work for social security recipients, because Federal law prohibits card issuers and ATM companies from charging any fees to social security recipients paid by card. If this Federal law cannot be extended to cover cards used by private employers, then payroll cards simply should never be mandatory or pretended to be so. The Attorney General of New York is suing to force companies headquartered in his state to offer payment by direct deposit or check. Good for him.

No-fee payroll cards should be required everywhere in today’s America. It is hard enough to be low-income without having fees unavoidably attached to one’s (mostly) minimum wage paycheck.

—– The Editors / Here and Sphere

Author: hereandsphere

Here and Sphere is an online journal of news, opinion, reviews, advice, & bits n' pieces of everything else - from HERE to SPHERE...... Co-founded by Michael Freedberg, a long-time Boston Phoenix journalist, and Heather Cornell, a South Coast Massachusetts columnist and editor.

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