Employers Switching From Payroll Checks To Prepaid Cards With Fees 1103
An anonymous reader writes "The New York Times reports a growing number of American workers are being paid by prepaid payroll card. The cards often have fees attached to basic services like making a cash withdrawal or for inactivity. Some employees report that the employers pay by card by default, with paperwork barriers to opting out, and some report that their employers refuse to pay them by check or direct deposit. The issuing banks pitch the cards to employers as a cost-cutting payroll alternative, and sometimes even offer a financial reward for each employee they sign up."
I thought (Score:3, Interesting)
Most companies switched to direct deposit by now.
Re:Weekly/Monthly Salary (Score:5, Interesting)
I should have mentioned -- I'm also paid via direct deposit. If my 'default' pay were via one of these crappy cards, I'd do *whatever* paperwork was needed to get a normal check or direct deposit...
Well, wait... (Score:5, Interesting)
Ostensibly, this is a means to help folks who don't have a bank account to carry electronic money around. In some cases, it's on the up-and-up; many of these cards charge monthly fees that are lower than what, say, Bank of America will weasel out of you on a monthly basis. I had a NetSpend card for awhile as an experiment of sorts, and it worked out very well... enough to get me to drop my old BoA account for about a year, until I found a credit union that better suited my needs.
OTOH, many of these cards are shady as hell, and little wonder some employers push them - the kickbacks have got to be extremely tempting, to say the least. Then again, many banks are just as bad, if not worse.
Long-term, I see it as an overall move towards ditching cash altogether - the poor are the last barrier to such a society, and these card programs are aimed squarely at them. Most are unable to get a bank account (bounced checks, etc), they often get state assistance nowadays in the form of debit cards now. OTOH, cash has a wonderful way of getting paid without the IRS knowing about it, so I can see government's angle in wanting e-money over the regular stuff. Cash also makes it hard for police to track money flow, etc... so yeah, I can see the allure from that viewpoint. I can also see the allure of not having to print and distribute paychecks from the employer's end.
All that said, I wonder how long it will be until cash is done away with altogether, and what the drawbacks to society will be from doing so. Cash is a beautiful means of buying things without the purchase being tracked (and yes, most times it is not only legit, but done for good reasons), and it has the advantage of being accepted pretty much anywhere (even if you have to convert currency first. Finally and most important, cash doesn't require a transaction fee every time it gets used - way too much room for abuse and corruption there.
Re:Perfect is the enemy of good. (Score:5, Interesting)
Re:How is this legal? (Score:5, Interesting)
This is what you get when you believe that ever freer markets will do anything and everything more efficiently than ever before -- Chaos.
Any company that cannot handle its own payroll should not be licensed to trade. It's that simple.
Re:How is this legal? (Score:2, Interesting)
This is idealized and only a few unions ever truly seemed to work for the employees.
A friend recently told me why he is no longer part of his union. This particular union provides legal protection, and that's the only reason anyone joins. The employees all keep a minor amount of petty cash on hand, which was against policy but everyone does it out of necessity (but everyone knows that requesting a check to be cut could take weeks or months, so they get away with it). But my friend's coworker got on bad terms with someone else, and that was taken to his supervisor who by policy had to take disciplinary action.
So he called his union. The union's response? "We suggest you resign."
This person had the same job for 29 years, mind you.
But he took his union's advice (which wasn't smart)... now he works in a grocery store and can't get a job in his field, because his action of resigning was basically admitting guilt.
Paying union dues for 29 years got him this.
Re:How is this legal? (Score:4, Interesting)
While unions have a potential upside for some workers, in an unregulated fashion, just as corporations, they will expand and abuse their power. In non-right to work states, this is very prevalent. Unions in such states have become mafia run organizations, bullying business for more contributions and bullying workers to participate and pay into these unions. They play both sides of the isle because they can, not helping either.
The point is Unions, unchecked, are no better than any other organization competing for your money and tend to lead to worse market conditions.
Re:Perfect is the enemy of good. (Score:4, Interesting)
Um I worked in banking all though College part time for 7 years (day off for half saturday work to get all my homework done). Every Bank i worked at had free checking with 0 min balance.
Maybe it's a state thing, but NY i'm pretty sure every bank has to offer a free checking account, no min balance (maybe $100 to open but you can go to $0.01 without penalty/closing it).
Also, why do people still use banks, use a credit union. Better terms/fee's/interest rates/etc. Don't know why people are still using banks.
Next, most of those cards have free use. Free wherever mastercard/visa is. If you want the cash, you can go to banks that do credit card advances, and get the cash most times.
Someone posted about OK's tax refund from their website:
You can use the card anywhere MasterCard is accepted. At the gas station, grocery store, department store, on-line store and many more. You can also take the card and PIN number to any bank or credit union that accepts MasterCard and ask the teller for the full amount of the card balance in cash or deposit it into your checking or savings account. You can also withdraw funds from the card free of charge from any MoneyPass ATM location in Oklahoma.
I know in NY NY issues benefits for Workers Comp/Disability on Master Card state cards. They would come in and withdraw the full amount without fee's.
Re:Weekly/Monthly Salary (Score:5, Interesting)
Re:How is this legal? (Score:5, Interesting)
Indeed. Here in Australia many of the top professions (lawyers, doctors and the like) are both union shops and closed shops. The professional bodies set the rules and decide how many people to allow in.
Funny though, these bodies are never called unions. What's good for the goose does not appear to be good for the gander.
nothing new, same old shit is spreading (Score:5, Interesting)
It started with some states, getting rid of both checks and direct deposit for unemployment benefits. Yeah, you get your card, and there's some way to get some cash for free, but there's all sorts of limits and restrictions. You either use it to buy stuff so that the merchants end paying the issuing bank, or you get your cash to your checking account in one payment and it costs you.
As an employer I can attest that payroll services have been pushing this on me hard since at least 2008. They're obviously getting a commission, or they would not be promoting it so aggressively. My default is always direct deposit, but I do pass along the paperwork for the debit card to new hires--this results in a blank uncomprehending stare as they process the idea; "why in the hell would I want to do that???" ;-)
If the banks could charge us fees for paying in cash, they would. From their point of view this is the next best thing.
Re:How is this legal? (Score:5, Interesting)
Well, yeah, if you like to skew your history to suit your political bias, that's the story.
There's plenty examples of cycles like that in history. What really happens is that there's an inequality (employers vs employees), the employees band together to address the inequality (unions), then the inequality slowly slips the other way (union corruption), forces gather to displace the unions, and the cycle starts again. It's an alternation between two inequalities, with only a brief period of equilibrium. Portraying either the employers or the unions as pure of heart is equally disingenuous.
Re:Weekly/Monthly Salary (Score:5, Interesting)
I remember when they started this....I thought it was a great thing to see checks clear instantly. Then i realized, banks still kept their "hold" on the money. So it was the worst of both words, the check writer has no float time, AND the person cashing it still has to wait that whole float time. Basically, the banks stole the float time for themselves.
Re:How is this legal? (Score:5, Interesting)
1, if they've written bad checks, the bank simply won't give them an account. 2, when your money is in the bank, it can be easily taken without your consent - various kinds of debt, credit agencies, lawyers, even the feds. Cash money in hand (or hidden wherever), much harder for third parties to access, hence, you can live easier when in trouble. 3, banks keep shitty hours: when you need your money in the evening and you can't get it, that can be a problem when the issue at hand is diapers, etc. 4, even when "free", make an error (common with low income types), and the bank will hose you with a huge fee (or fees... they can be pretty tricky about things like the order they cash/bounce when you overdraw. 5, location can be an issue if you're not mobile. There's probably more than this too; these were just off the top of my head.
Re:How is this legal? (Score:5, Interesting)
About low-income people and bank accounts --- in many cases, they don't have one because they don't want to accumulate more than $2000. In many states, that's the asset limit for Medicaid. So if you go over that limit, you have to pay all your medical bills. So people get into the habit of living hand-to-mouth and never save any money.
In 2014, the asset limit for Medicaid disappears! So theoretically, people will be able to open bank accounts and start saving up money. But after all these years of not saving, I don't expect any sudden shift to people being smart about money.
Re:Not for hourly workers they don't. (Score:3, Interesting)
I've seen this before... but it's "Undocumented Worker", aka Illegal immigrant work. People lined up hoping to find work for the day, being picked up and paid not by the hour but by the job, which ends up to be less than min-wage in most cases... Pre-Paid cards handed out because it could be obfuscated in the books, and not tracked. This is why I support stronger border security. We are importing a slave class that is paid under the table and abused. We need to bring these people in legally, so they have some legal ground to fight back against unfair practices.
But I disagree that there is very little income mobility. I found there is quite a bit of income mobility. I was making just under min-wage... hmm 10 years ago. Now I'm making more in a week than I did in a month before. The biggest issue I saw in "Movin' on up" was crabs in a bucket. A lot of my old 'poor' friends weren't happy to see me get a better job, better skills, and more income (especially that). I am not seen as a role-model, or even anybody to be looked upon favorably. I am looked at as a sell out. I haven't talked to them in years. Last time I had my old friends over, some of my stuff went missing. I'm sure it was rationalized in their mind, but really... I don't need that.
Re:Weekly/Monthly Salary (Score:5, Interesting)
Right... this is the whole strong helping the weak philosophy at play here. My only statement is that the weak need to remember it's a choice for the strong to help them, not a right.
What you'll find though is pride gets in the way, when I was younger I did try to help people I didn't really know that well only to get "who is this guy and why does he thing he knows better" type attitudes / responses.
So... as a result, call me a terrible person, but I leave people to their own problems now no matter how basic, I have my own to deal with.
And when I read something like TFA, I immediately flag atm fees and know that I would mitigate them (my bank has free atm withdrawals at their atms), but passing that knowledge on? Words to the wind.
Re:How is this legal? (Score:5, Interesting)
Here's another one:
If you're low-income, you could live in low-income housing. Which, for reasons related to abuse of the system (think about Steve Jobs' $1 salary and apply that to someone with absolutely zero shame), is not based on your actual income (cash flow), but is instead based on your net worth including savings. But it has the effect of making low-income housing dwellers either A) not save anything and never improve their lot in life, or B) save, but keep it under the mattress because keeping it in a bank makes it traceable and will get you kicked out of your home.
I have a friend that lives in low-income housing, and he fits into scenario B. He makes probably $15k/year and definitely needs the low-income assistance. His savings is a wad of cash, locked up in a box in his closet. If he put it in a bank, he wouldn't qualify to have his apartment. But his savings isn't near enough to live anywhere else and his income is still low. He'd be homeless.
Re:How is this legal? (Score:4, Interesting)
Re:Weekly/Monthly Salary (Score:4, Interesting)
I don't know if you've read Rand, but that's not quite what she says.
It is perfectly alright for one to help others according to Rand. The only condition is that you do it with consideration for your own benefit. The thing most people miss is that this benefit does *not* need to be material. You can help someone because it makes you feel good. That's entirely valid according to Randian principles on the condition that you value that good feeling more than the cost of said help. That is compatible with your Gandhi quote, btw.
- OK with Rand: Giving 20 bucks to some homeless guy because you want to.
- Not OK with Rand: Giving 20 bucks to some homeless guy because his condition somehow *entitles* him to your help.
- Definitely NOT OK with Rand: Some thug(s) using force or threat of force to take that 20 bucks from you and handing it to an arbitrary group of bums they feels deserves your help. Typically as a selfish political strategy to maintain and increase that ability to use force.
State of New Mexico too (Score:2, Interesting)
I happen to know the state of New Mexico was also using this stuff a while back, for their unemployment insurance.
Posting AC because I know juicy bits. I didn't learn about this by being unemployed; I learned by knowing someone who works at their Department of Labor. Basically what happened is that Bank of America came in pushed it hard, since it's so profitable for them to take this money away from the claimants. The state doesn't resist, because paying people costs some money anyway (not just the money you're paying; I mean other overhead) and Bank of America set it up so that it cost the state of NM less, if they shafted the people. So it was a cost-savings thing, combined with "who cares what problems we're causing for others" attitude and the usual corruption that is just totally rampant and unopposed in our state govt.
What I find intersting about that last thing, is that externalizing costs is totally rational, but when you've got governments doing it, you have left the path of wisdom. Part of the reason we have government, is to fight unfair externalization.