For tens of millions of Americans without a bank account, paying a bill isn't just an odyssey. It's a part-time job.
Alex was doing the thing he loved most, singing and playing his acoustic guitar onstage when, after one show, he met Melissa. "We kinda hit it off," Melissa said. "No kinda about it." Alex corrected. "We just hit it off." He proposed ten weeks after their first date. They moved into a house in Scituate, Rhode Island, and had two kids, whom they raised comfortably on two incomes.
In a flash, their lives changed dramatically. Alex was diagnosed with multiple sclerosis and had to quit his job. Now he walks with a cane. A few weeks later, their young son Jonah was diagnosed with severe autism. Their medical costs suddenly soared as their incomes dwindled. To manage their finances as responsibly as they knew how, Alex and Melissa chose to live on cash. But they weren't making enough money to meet their bills. Without a credit history, they couldn't qualify for a bank loan. Desperate for something to tide them over, Melissa visited a payday lender.
"In the moment that we needed it, I was glad that it was there," she said. But soon, they were both trapped in a cycle of dependency that wracked up more than $1,700 in fees. With one diminished salary and rising medical costs, they couldn't make it alone. They needed the help of their neighbors to pay off the original loan.
The amount of that original loan? Just $450.
One of the fundamental principles of progressive economics is that a rich country should do what is reasonable to make life for the poor feel easier - even cheaper
What does that mean? Medical care should feel cheaper, so we invented and expanded Medicaid. Food should feel cheaper, so we have food stamps. Mortgages should be cheaper, so banks offer mortgage write-downs for struggling households. Children should feel cheaper, so we offer tax credits for kids that phase out as income rises. Being unemployed should feel cheaper, so low-income workers receive a larger share of their pre-unemployment income. Going to college should feel cheaper, so many families don't pay the full sticker price. Working should feel cheaper, so the money you earn under $10,000 is taxed less than the money you earn over $100,000.