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Preying on the Poor: How Government and Corporations Use the Poor as Piggy Banks May 17, 2012

Posted by rogerhollander in Criminal Justice, Economic Crisis, Poverty.
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By Barbara Ehrenreich, TomDispatch | News Analysis

Thursday, 17 May 2012 10:09

Individually the poor are not too tempting to thieves, for obvious reasons. Mug a banker and you might score a wallet containing a month’s rent. Mug a janitor and you will be lucky to get away with bus fare to flee the crime scene. But asBusiness Week helpfully pointed out in 2007, the poor in aggregate provide a juicy target for anyone depraved enough to make a business of stealing from them.

The trick is to rob them in ways that are systematic, impersonal, and almost impossible to trace to individual perpetrators. Employers, for example, can simply program their computers to shave a few dollars off each paycheck, or they can require workers to show up 30 minutes or more before the time clock starts ticking.

Lenders, including major credit companies as well as payday lenders, have taken over the traditional role of the street-corner loan shark, charging the poor insanely high rates of interest. When supplemented with late fees (themselves subject to interest), the resulting effective interest rate can be as high as 600% a year, which is perfectly legal in many states.

It’s not just the private sector that’s preying on the poor. Local governments are discovering that they can partially make up for declining tax revenues through fines, fees, and other costs imposed on indigent defendants, often for crimes no more dastardly than driving with a suspended license. And if that seems like an inefficient way to make money, given the high cost of locking people up, a growing number of jurisdictions have taken to charging defendants for their court costs and even the price of occupying a jail cell.

The poster case for government persecution of the down-and-out would have to be Edwina Nowlin, a homeless Michigan woman who was jailed in 2009 for failing to pay $104 a month to cover the room-and-board charges for her 16-year-old son’s incarceration. When she received a back paycheck, she thought it would allow her to pay for her son’s jail stay. Instead, it was confiscated and applied to the cost of her own incarceration.

Government Joins the Looters of the Poor

You might think that policymakers would take a keen interest in the amounts that are stolen, coerced, or extorted from the poor, but there are no official efforts to track such figures. Instead, we have to turn to independent investigators, like Kim Bobo, author of Wage Theft in America, who estimates that wage theft nets employers at least $100 billion a year and possibly twice that. As for the profits extracted by the lending industry, Gary Rivlin, who wrote Broke USA: From Pawnshops to Poverty, Inc. — How the Working Poor Became Big Business, says the poor pay an effective surcharge of about $30 billion a year for the financial products they consume and more than twice that if you include subprime credit cards, subprime auto loans, and subprime mortgages.

These are not, of course, trivial amounts. They are on the same order of magnitude as major public programs for the poor. The government distributesabout $55 billion a year, for example, through the largest single cash-transfer program for the poor, the Earned Income Tax Credit; at the same time, employers are siphoning off twice that amount, if not more, through wage theft.

And while government generally turns a blind eye to the tens of billions of dollars in exorbitant interest that businesses charge the poor, it is notably chary with public benefits for the poor. Temporary Assistance to Needy Families, for example, our sole remaining nationwide welfare program, gets only $26 billion a year in state and federal funds. The impression is left of a public sector that’s gone totally schizoid: on the one hand, offering safety-net programs for the poor; on the other, enabling large-scale private sector theft from the very people it is supposedly trying to help.

At the local level though, government is increasingly opting to join in the looting. In 2009, a year into the Great Recession, I first started hearing complaints from community organizers about ever more aggressive levels of law enforcement in low-income areas. Flick a cigarette butt and get arrested for littering; empty your pockets for an officer conducting a stop-and-frisk operation and get cuffed for a few flakes of marijuana. Each of these offenses can result, at a minimum, in a three-figure fine.

And the number of possible criminal offenses leading to jail and/or fines has been multiplying recklessly. All across the country — from California and Texas to Pennsylvania — counties and municipalities have been toughening laws against truancy and ratcheting up enforcement, sometimes going so far as to handcuff children found on the streets during school hours. In New York City, it’s now a crime to put your feet up on a subway seat, even if the rest of the car is empty, and a South Carolina woman spent six days in jail when she was unable to pay a $480 fine for the crime of having a “messy yard.” Some cities — most recently, Houston and Philadelphia — have made it a crime to share food with indigent people in public places.

Being poor itself is not yet a crime, but in at least a third of the states, being in debt can now land you in jail. If a creditor like a landlord or credit card company has a court summons issued for you and you fail to show up on your appointed court date, a warrant will be issued for your arrest. And it is easy enough to miss a court summons, which may have been delivered to the wrong address or, in the case of some bottom-feeding bill collectors, simply tossed in the garbage — a practice so common that the industry even has a term for it: “sewer service.” In a sequence that National Public Radio reports is “increasingly common,” a person is stopped for some minor traffic offense — having a noisy muffler, say, or broken brake light — at which point the officer discovers the warrant and the unwitting offender is whisked off to jail.

Local Governments as Predators

Each of these crimes, neo-crimes, and pseudo-crimes carries financial penalties as well as the threat of jail time, but the amount of money thus extracted from the poor is fiendishly hard to pin down. No central agency tracks law enforcement at the local level, and local records can be almost willfully sketchy.

According to one of the few recent nationwide estimates, from the National Association of Criminal Defense Lawyers, 10.5 million misdemeanors were committed in 2006. No one would risk estimating the average financial penalty for a misdemeanor, although the experts I interviewed all affirmed that the amount is typically in the “hundreds of dollars.” If we take an extremely lowball $200 per misdemeanor, and bear in mind that 80%-90% of criminal offenses are committed by people who are officially indigent, then local governments are using law enforcement to extract, or attempt to extract, at least $2 billion a year from the poor.

And that is only a small fraction of what governments would like to collect from the poor. Katherine Beckett, a sociologist at the University of Washington, estimates that “deadbeat dads” (and moms) owe $105 billion in back child-support payments, about half of which is owed to state governments as reimbursement for prior welfare payments made to the children. Yes, parents have a moral obligation to their children, but the great majority of child-support debtors are indigent.

Attempts to collect from the already-poor can be vicious and often, one would think, self-defeating. Most states confiscate the drivers’ licenses of people owing child support, virtually guaranteeing that they will not be able to work. Michigan just started suspending the drivers’ licenses of people who owe money for parking tickets. Las Cruces, New Mexico, just passed a law that punishes people who owe overdue traffic fines by cutting off their water, gas, and sewage.

Once a person falls into the clutches of the criminal justice system, we encounter the kind of slapstick sadism familiar to viewers of Wipeout. Many courts impose fees without any determination of whether the offender is able to pay, and the privilege of having a payment plan will itself cost money.

In a study of 15 states, the Brennan Center for Justice at New York University found 14 of them contained jurisdictions that charge a lump-sum “poverty penalty” of up to $300 for those who cannot pay their fees and fines, plus late fees and “collection fees” for those who need to pay over time. If any jail time is imposed, that too may cost money, as the hapless Edwina Nowlin discovered, and the costs of parole and probation are increasingly being passed along to the offender.

The predatory activities of local governments give new meaning to that tired phrase “the cycle of poverty.” Poor people are more far more likely than the affluent to get into trouble with the law, either by failing to pay parking fines or by incurring the wrath of a private-sector creditor like a landlord or a hospital.

Once you have been deemed a criminal, you can pretty much kiss your remaining assets goodbye. Not only will you face the aforementioned court costs, but you’ll have a hard time ever finding a job again once you’ve acquired a criminal record. And then of course, the poorer you become, the more likely you are to get in fresh trouble with the law, making this less like a “cycle” and more like the waterslide to hell. The further you descend, the faster you fall — until you eventually end up on the streets and get busted for an offense like urinating in public or sleeping on a sidewalk.

I could propose all kinds of policies to curb the ongoing predation on the poor. Limits on usury should be reinstated. Theft should be taken seriously even when it’s committed by millionaire employers. No one should be incarcerated for debt or squeezed for money they have no chance of getting their hands on. These are no-brainers, and should take precedence over any long term talk about generating jobs or strengthening the safety net. Before we can “do something” for the poor, there are some things we need to stop doing to them.

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  • TedMfftt 2 comments collapsed CollapseExpand

    Ahh, a return to Nixon’s “War on Poverty” which was rebranded as a war on drugs. If only we were a nation of Christians who followed the teachings of Christ rather than those of his supposed followers.


  • Patti Haynes 1 comment collapsed CollapseExpand

    Religion causes problems. It never fixes them. There are always different factions fighting for their beliefs; that their beliefs are the true and only correct beliefs and all the others are wrong and should be punished. That’s why many wars have been fought throughout history. Government and religion do not mix!! Everyone in America has the right to practice their own personal religious beliefs, but not force those beliefs on others. Sadly, that is what’s happening now with this Evangelical push in this country. They want to set up their Theocratic government and force us all to do as they believe.


  • Linda Mae Chover 1 comment collapsed CollapseExpand

    Sounds like a bad dream, but many realities do.


  • Brooke 1 comment collapsed CollapseExpand

    Debtor’s prisons just changed their name to corrections facilities. It’s ironic that often corrections systems spend a lot of money educating inmates – get the GED, learn salable skills, get counseling, learn social skills, so you can reenter society and get a job. Returning military will be in competition w/those already out of work. For those paroled, getting a job has a myriad of difficulties that start with parole rules that are virtually designed to help them fail parole.

    This snowball effect on the poor trickles up and drags down the middle class. Unfortunately, most taxpayers are clueless to the negative effects of ‘tough on crime’ and ‘zero tolerance’ regulations they vote for. Programs that actually help get people off drugs and alcohol (drug), get training, etc. are generally viewed as ‘soft on crime’. If forward thinking judges cannot get the public to accept the positive effects of those programs then the poor are not going to get the help they need.


  • KiaMistilis 1 comment collapsed CollapseExpand

    I knew that squeezing the poor was bad in the U.S…I didn’t know it was THAT bad. Thanks for this concise and well written piece.


  • Wescal 1 comment collapsed CollapseExpand

    My wife was just charged $70 to change her insurance company paperwork at a doctors office. Imagine what we’ll pay if every doctors office does that.


  • Patti Haynes 2 comments collapsed CollapseExpand

    I had to pay to get my records from every one of my doctors! They used to be considered ‘your’ records and given to you free of charge, since you’ve paid for your visits to the doctor. Not anymore! It took several months and an attorney to get my doctors to release my records and a hefty sum of money!! This is not the same country I grew up in the 1950’s. America is a sad, sad place now. I used to be so proud to be an American because what this country stood for and how we took care of our people… now, I am not proud anymore. I am disgusted that the rich have bought this country, even the government! SCOTUS has given ‘Money’ the power and rights of speech while taking them away from WE the People! Five Justices are conservative, card carrying, Koch associates! Yet they are allowed to have the last word on all Constitutional conversation in the USA! This doesn’t even begin to touch on the Tea Party, who has taken over the Congress and pays NO attention to their constituency and their needs! They had their agendas set before they were ever elected and those agendas were to rape and pillage the poor and indigent and pass legislation counter-intuitive to the betterment of the American society! Theirs is an agenda to dupe all of us into believing this is all for Religious Freedom and to save unborn babies. It’s all LIES!! They could could NOT care less for anything or anybody!!! It’s all about MONEY and POWER of a very few old, white men!!!

    I am bereft of hope, but will keep fighting!


  • Dwaldon13 1 comment collapsed CollapseExpand

    I can relate to your final sentence Patti. I guess what struck me hardest concerning this article was the number of times “government” was implicated in the fleecing of the poor. And despite your correct analysis of the Tea Party and The Supreme Court, BOTH parties are heavily enmeshed in their abdication of principles and seeing government other than a self-aggrandizing machine designed to “aid” the wealthy, fight perdurable “wars on terror,” expand empire,and provide
    “perks and benefits” to those who have made their way into the political “club.”
    I am not a religious person but after hearing “God Bless America,” for the zillioneth time since the “government manufactured” tragedy of 9/11, I find myself desiring to inquire of any “honest” Christian…why would God bless America? I grew up in the 60’s and it seemed, for a time, despite the atrocity of Vietnam, we might be headed in the right direction in terms of shared equality.
    It sure doesn’t appear to be the case now. From an aging white man who “doesn’t” have any money or power. Perhaps that’s a blessing. I’ll keep fighting too!


  • Don Roberts 1 comment collapsed CollapseExpand

    Really need to look at the Workforce Investment Act (WIA) and the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) as mechanisms the gov’t uses to force poor people into low wage, meaningless jobs.


  • Kellie 1 comment collapsed CollapseExpand

    I know someone who got 2 years in prison for stealing an ipod…while I read stories like the one I recently came across about a 20 year old girl with no drivers license (never did acquire one) who ran over and killed a biker, but got 90 days probation because she was related to the sheriff….Where I live if you can afford an attorney, no matter what the offense, they pretty much leave you alone or drop the charges, but if you are poor – you are incarcerated, drilled to death with fines, fees, probation costs, and excessive harassment by the police.