The recent hilarity and turmoil associated with certain hedge funds encountering a mob of amateurs online have certainly done a great deal to showcase the illusory nature and absurdity of our financial reality here in America. That is, assuming it wasn’t already obvious, from the massive disconnect on display with the stock market rising while millions of Americans are still jobless, homeless, or facing poverty.This seems like a good time to discuss the costs and financial burdens that exist only for people below certain levels of income.
Crimes for which the only penalty is a financial one:
For an individual making $70,000 a year, a fine of $100 amounts to only 0.14% of their income. Assuming a $15 minimum wage (which isn’t a reality yet), that same $100 fine amounts to 0.32% of the individual’s $31,200 annual pay (nevermind the fact that federal minimum wage has been $7.25 since 2009, which is an income of only $15,080 per year). That translates into more than twice the proportional loss for the individual at this hypothetical minimum wage. If the higher-income earner in this thought experiment was making an income of $500k annually, we’d be looking at only a loss of 0.02% of their overall income with the payment of a $100 fine. For someone at the hypothetical minimum wage of $15 an hour, that percentage of their income would be only $62.40 (it would only be $30.16 for someone at the actual minimum wage of $7.25)…but in reality, no matter how much or how little the individual earns, the fine is still going to be the same $100.
A single overdraft fee can range from anywhere between $15 and $50, with the average being $35. These are costs that are ultimately only levied against those below certain income levels, yet these fees earn financial institutes an average of more than $30 billion a year (it’s worth noting that the Trump administration wanted to potentially make it easier for banks to penalize customers with overdraft fees only a couple of years ago).
Someone might suggest simply not having a bank account, but that’s hardly a viable option for most people these days. Increasingly, employers push for direct deposits in place of paper checks (even those direct payment cards provided by certain employers are backed by financial institutions), and payment of monthly bills is becoming more inconvenient (if not outright impossible) with cash. God forbid these same people want to save money by utilizing automatic payments for many of their bills because that isn’t an option without a debit or credit card. They had better keep a close eye on their finances because a single $60 payment for their gas or water bill can suddenly run them $95 or higher if they don’t quite have the money in their account yet. Naturally, this sort of thing can cause a cascade effect.
Late payment fees for bills are something we’re unlikely to see if we’re above a certain income level as well, especially if we can comfortably utilize automatic deductions for the bills in question. Paying your monthly electric bill ten days late doesn’t cost the electric company anything, but it will cost you…either a percentage or a flat-rate late fee. Paying your rent three days late (in South Dakota) probably doesn’t cost your landlord or property management company anything, though it can come with late fees or trigger the beginning of the eviction process.
Whether it’s your home, your car, or even your own body, sometimes one simply can’t afford to get something checked out promptly. A minor tooth pain that would cost less than $100 to address when only a cavity will cost upwards of $500 when it requires a root canal. A small vibration in your car may be a minor repair of only $300, but if one can’t afford that, it could end up being something that costs thousands (or takes the vehicle out of commission entirely). A crack in the living room window could be too expensive to address, but when it shatters during a blizzard and allows freezing temperatures and snow to accumulate inside of the home, the costs could be insurmountable.These are additional financial burdens that typically aren’t experienced by those above certain income levels (assuming they aren’t living ridiculously beyond their means).
More things could be tossed into this list of ways our financial system is rigged at the expense of those who have little, to the benefit of those who have plenty, such as student loan payments (whether we’re talking about college/university or trade school) and debts sent to collections…but I’d never finish typing this up. It’s worth thinking about ways these issues can be addressed and the inequity can be resolved. With the sheer absurdity of our financial institutions on display, there’s no time like the present to think about ways to fix what is clearly a broken system.
This post was originally written for my Facebook page. I hadn’t done anything with my blog for quite some time, so I figured I’d copy it over here as well.