Fat Times for the Poverty Industry

[Doug V]

I agree with my friend Phil that there is little value in many of the angry discussions on neighborhood issues.  So may I propose a new subject - one pretty relevant to our neighborhood - the businesses that either serve or exploit the poor, depending on your perspective.  Cash advance stores, title loan shops, pawn shops, tax preparers, and I'll include internet cafes.  The price for entry into this discussion is reading "Broke, USA - How the working poor became big business", by Gary Rivlin.  Alternatively, you can read the Cliff Notes version in Atlantic Monthly at http://www.theatlantic.com/national/archive/2010/06/fat-times-for-the-poverty-industry/57906/ .

I propose that such businesses are generally designed to take advantage of the lack of financial skills, and frequent financial crises of poor folks, and that the end result ir much more often an exacerbation of poverty, rather than any real benefit to their customers.  I believe that the government should regulate these businesses more closely, and that the type of regulation that would protect such poor folks would also likely reduce the numbers of these businesses as it reduces their profitability.

So there - there's something to discuss.  But remember, you have to read first.

[Doug V]

Rivlin's book includes pawnshops, rent-to-owns, tax preparers (those that push "refund anticipation loans") and subprime mortgage lenders.  We certainly have our share of these businesses in and around Springfield.

[sheclown]

We are so lucky to have Springfield Superette -- good produce and cheap prices.  And their eggs are so good.

I wish Surfside Furniture was still open.  I've heard that it brought a lot of traffic to our block.  When did it close?

I've never rented furniture, don't know about that.  I do go into the pawn shops.  They are a great place to buy used DVDs.  I get used TVs for the houses in those pawn shops.  Funny thing is that they have been there for over 20 years and few other businesses have survived on Main Street for that long. And their business is down just like all businesses.   

Springfield would really be hurting without them on the upper part of Main.  But I guess these aren't the businesses mentioned in the article anyway.

Tax places are down.  One of them closed and won't be opening again next year.  

[Doug V]

The eggs certainly are great.

Pawnshops seem to operate in two modes, as second-hand stores and as lenders.  As to the former, I've always been worried that the porch furniture I buy may have been stolen from a neighbor last month, even though the police say they have a fairly effective way to reduce the amount of stolen stuff in pawnshops.  As to their role as lenders, Rivlin didn't go into the same detail as for tax preparers and payday loan stores, but I understand that pawnshops typically charge exhorbitant interest rates.

[Doug V]

As to the tax preparers, Rivlin says that the big money here is in RAL's (refund anticipation loans), with very high fees, especially when expressed as APR's.  Michael Bryant was one of the organizers behind a program that offered an alternative - "Real Cents" I think it was called - that offered free tax prep, and no RAL's.  Wait a week or two, and save a bundle.

[sheclown]

I don't know about the rates that the tax prep places charge nor do I know about the rate of interest on pawns, but I do believe that the way to make changes (especially in SPR) is to embrace the businesses there, frequent them, talk to the business owners and get to know them.  If they are successful, they will open the door for mom's and pop's to open up, and so we grow into a vibrant couple of blocks.

Now, it is just sad and lonely up there.  Especially with ash issues to deal with, Springfield needs to support what is there and work toward gently guiding businesses.

Right now, if it weren't for the tax places and the pawn shops, upper Main would be utterly and totally deserted.

[mtraininjax]

Payday loans work for people who have poor credit and cannot get a bank account. Few people realize that you need to have good credit to get a checking account, so having one is a priviledge. If it were not pay day loans, the goon squads would be in charge of fronting money to people.

[Springfield Chicken]

Where is the Springfield Superette?  I'd love to find good produce, especially locally grown.  I frequent the Beaver St. market but most of that, even though well priced, is from out of state.

[sheclown]

7th and Pearl