“There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that ‘my ignorance is just as good as your knowledge.” ― Isaac Asimov
FEDERAL REGULATORS EARLIER this month unveiled new rules aimed at reining in payday lenders and the exorbitant fees they charge. Now expect to hear a lot of what one payday lender named Phil Locke calls “the lies we would tell whenever we were under attack.”
The new rules announced by the Consumer Financial Protection Bureau are relatively straightforward, if not also a disappointment to some consumer advocates. A payday loan is typically a two-week advance against a borrower’s next paycheck (or monthly social security allotment, for that matter); lenders commonly charge $15 on every $100 borrowed, which works out to an annual interest rate of almost 400 percent (600% in Virginia). Under the CFPB’s proposal, lenders would have a choice. One option would require them to perform the underwriting necessary to ensure that a borrower, based on his or her income and expenses, can afford a loan. Another option requires them to limit the customer to no more than six of these loans per year (and no more than three in a row).
The state-by-state interest rates customers are charged on payday loans. The rates are calculated based on a typical $300, two-week loan. Source: Center for Responsible Lending
In 2016, a worker would need to make $20.30 per hour to rent a two-bedroom accommodation comfortably—without devoting more than 30 percent of income on housing costs. Last year, NLIHC pegged this “housing wage” at $19.35 an hour. (And we’re not talking about luxury apartments here. The report tallies this average hourly wage against the Department of Housing and Urban Development’s Fair Market Rent, an annual estimate of what a family might pay to live in a simple apartment.)
To really understand the weight of 2016’s housing wage, consider this: The average hourly wage for Americans is actually $15.42 per the report, which is not nearly enough to afford a two-bedroom. And the federal minimum wage, at $7.25, is around a third of what’s required. That means minimum-wage workers would have to work three jobs, or 112 hours a week, to be able to afford a decent two-bedroom accommodation.
For poor Americans, even a one-bedroom place is out of reach. There’s not a single state in the U.S. where a minimum-wage worker can comfortably afford a one-bedroom by working a 40-hour week. The map below shows the hours per week this worker would have to put in live in a modest one-bedroom in each state: