The payday lenders may have shut down their loan shark shops in South Dakota following the voters’ sensible and overwhelming judgment last November that charging more than 36% interest on a loan exploits the poor and desperate. But in continuing sore-loser fashion, the payday lenders are throwing their corporate propaganda at us again to say we’re hurting something other than their sleazy profits by capping interest rates in South Dakota:
…”Unfortunately, customers are now paying higher costs for their credit products, when they can get them, and they’re forced to turn to illegal operators, as well,” says Jamie Fulmer, Senior Vice President for Public Affairs with Advance America.
…Fulmer says that the survey shows that 58 percent of its former South Dakota borrowers are now forced to pay late fees and 53 percent are neglecting their bills. In addition, the survey shows that 40 percent did not fix a vehicle, and 37 percent did not pay a medical expense, when faced with money troubles due to a lack of short term lending [Mark Russo, “Survey: Unintended Consequences of Payday Loan Rate Cap,” KELO Radio, 2017.04.28].
Hmm… survey conducted by a corporation, promoting its own corporate line… sounds about as independent and reliable as Donald Trump telling us how effectively he vetted Michael Flynn.
Even if their proprietary survey has uncovered any facts, I will maintain as I did right along with Al Novstrup and my Lutheran friends during the 2016 campaign that those South Dakotans who may have had more difficulty getting emergency cash are still better off having to turn to friends, family, employers, and churches for help than they were when the payday lenders could trap them in inescapable debt. Some industries are just too exploitative, too inhumane, and too evil to allow.
But hey—I’ll spot the payday lenders this line: according to the South Dakota Department of Labor, there are a few hundred more South Dakotans not working now than were working one year ago in our fair state:
| Month | Labor Force | Employed | Unemployed | Unemployment Rate |
| January, 2015 | 442,333 | 425,181 | 17,152 | 3.9% |
| February, 2015 | 445,573 | 428,452 | 17,121 | 3.8% |
| March, 2015 | 448,462 | 431,626 | 16,836 | 3.8% |
| April, 2015 | 449,437 | 435,269 | 14,168 | 3.2% |
| May, 2015 | 452,657 | 438,674 | 13,983 | 3.1% |
| June, 2015 | 459,497 | 445,516 | 13,981 | 3.0% |
| July, 2015 | 459,362 | 446,445 | 12,917 | 2.8% |
| August, 2015 | 455,138 | 442,326 | 12,812 | 2.8% |
| September, 2015 | 448,477 | 436,979 | 11,498 | 2.6% |
| October, 2015 | 451,270 | 440,431 | 10,839 | 2.4% |
| November, 2015 | 450,900 | 438,957 | 11,943 | 2.6% |
| December, 2015 | 448,769 | 435,762 | 13,007 | 2.9% |
| January, 2016 | 443,642 | 429,183 | 14,459 | 3.3% |
| February, 2016 | 446,985 | 432,251 | 14,734 | 3.3% |
| March, 2016 | 449,225 | 435,063 | 14,162 | 3.2% |
| April, 2016 | 450,583 | 438,315 | 12,268 | 2.7% |
| May, 2016 | 453,250 | 441,299 | 11,951 | 2.6% |
| June, 2016 | 461,502 | 448,718 | 12,784 | 2.8% |
| July, 2016 | 462,389 | 450,478 | 11,911 | 2.6% |
| August, 2016 | 458,179 | 445,669 | 12,510 | 2.7% |
| September, 2016 | 451,351 | 439,945 | 11,406 | 2.5% |
| October, 2016 | 454,982 | 443,886 | 11,096 | 2.4% |
| November, 2016 | 454,040 | 441,825 | 12,215 | 2.7% |
| December, 2016 | 450,700 | 436,952 | 13,748 | 3.1% |
| January, 2017 | 449,654 | 434,609 | 15,045 | 3.3% |
| February, 2017 | 453,285 | 438,043 | 15,242 | 3.4% |
| March, 2017 | 454,623 | 440,043 | 14,580 | 3.2% |
The 36% rate cap took effect on November 16, 2016. In November and each of the four following months, South Dakota had hundreds more unemployed workers than it did in the corresponding months of the previous year.
Stop right there, and the payday lenders have their economic story: those hundreds of additional out-of-work South Dakotans are the hundreds of workers payday mogul Chuck Brennan said would lose their jobs because we’re such regulatory meanies.
But look more closely at the numbers. Unemployment over the winter isn’t much different from unemployment the previous winter. While there were hundreds more people unemployed this winter than last, there were also thousands more working in South Dakota this winter than last. Compare: there were 435,000 jobs in South Dakota in March 2016; there were 440,000 jobs in South Dakota in March 2017.
So even with the payday lenders out, there are thousands more jobs to do in South Dakota than there were when Chuck Brennan was squeezing thousands of low-income folks with his predatory triple-digit interest rates. Those thousands-more jobs are good for the people who used to work at Brennan’s loan-shark shops, and they are good for the tens of thousands of South Dakotans whom Brennan and his fellow loan sharks exploited.
And remember: if anyone is going to calculate why jobs might not be growing as fast as they might otherwise, they first have to calculate the impacts on employment of the sales slump that predates the 36% rate cap.
If the payday lenders really want to keep crying over their spilled sour milk, if they really want to demonstrate that our regulating their industry has hurt South Dakota’s economy, they’re going to have to produce more reliable, independent data than their in-house propaganda. Even then, they won’t sound much better than pimps and drug dealers complaining that their hookers and mules have had to find other sources of income.
So, the deceptive payday lending outfit (Advance America) who tried to manipulate me/us in 2014, now sends out a press release about a poll they did in our state that supposedly shows that people miss them.
It’s fake news.
Has anyone seen the poll? I’d question its very existence.
The real story is the sky didn’t fall in our state for the poor like they warned would happen. Employees had ample time to find new jobs, and they did. And, six months out, there is no evidence these lenders leaving the state has had an ill-effect on anyone but the lenders themselves.
Ah! Steve! It exists: Advance America has posted the survey online:
http://advanceamericanews.com/SD-Executive-Summary-042417.pdf
KRC Research, a Washington D.C.-based marketing research firm, called 200 former Advance America customers, meaning ±6.82 percentage point margin of error. KRC appears not to be meatheads—they work for some pretty big-ticket clients.
37% of the former customers surveyed said they had “needed a storefront payday loan in the past five months and could NOT get one in the state of South Dakota because of the new law eliminating short-term payday lenders”. Notice the loaded wording of that question: The law itself does not eliminate short-term lenders; it only says short-term lenders can’t charge more than 36% interest.
So it looks like 73 of the 200 former customers said they’d needed a payday loan since the 36% rate cap took effect and 127 said they hadn’t.
Among those 73 who wanted to borrow, 26% said the rate cap “will have” some positive effect on them; 66% predicted some negative impact; 8% said no impact.
Among the 127 who said they hadn’t needed a payday loan since the rate cap, 31% said the rate cap will have some positive effect on them; 27% predicted some negative effect; 39% said no impact.
Multiply those numbers and percentages, and you find that 114 of 200 former customers surveyed—57%—say that (in the survey’s words) “the new law that forced all storefront payday lenders in the state out business” has either zero or positive impact on their lives. Less than half say the rate cap has hurt them.
KRC offers demographics on the 200 respondents. 40% make less than $30K; 42% make $30K–$75K; 14% make over $75K. To that 14%, I must ask: what the heck are you thinking?
I think Steve’s conclusion is still correct. Fake news.
Their former customers are going to accurately understand and answer questions? I doubt it.
Bob, the sample is certainly biased. KRC sampled the subset of the population that has the least moral objection to the payday lenders—i.e., the people who are willing to walk in the door and do business with them.
I can’t speak to the intellectual capacity of every respondent, but we may find something telling in the survey item that finds 30% had heard nothing in the news recently about payday loans in South Dakota. Another 12% said that “yes, maybe” they had heard something in the news on the topic.
…. and how many could grasp the interest rates ??
I would contend this survey has some inherent value; they explicitly state the question as it was asked which is a lot more than many polls do.
There’s some interesting demographic data to unpack. While buckobear and Bob Klein automatically assume everyone who gets a payday loan is a rube, the demographic data of the people surveyed indicates almost 60% were college educated. Apparently a college education is no inoculation.
I wouldn’t be too worried by the 30% not having recently heard about payday lenders in the news. The question is pretty subjective, using the word “recently.” The survey was conducted in March. I don’t recall “recently” hearing anything, either.
What’s also interesting to me is 72% claimed to be registered to vote, but 74% said they actually voted. I hope there’s some error there…
But I’ll assert a considerable amount of this survey echoes what the Pew Trust finds when it does surveys:
– It’s not just low income folks getting loans
– The vast majority of people to take out payday loans are doing it for bills and groceries, not emergencies (page 8)
– people have a different perception of what they could do to get a loan vs what they actually do when they need one (look to page 9 and the differential between getting a loan from a bank or using a credit card).
I agree, Wayne: the survey exists, and while its sample is terribly biased, it still provides some discussion-worthy information about that subset of the population.
Error in the registered/voting discrepancy? Indeed, let’s hope so! I’ll chalk that difference up to some portion of the 30% who said they heard nothing about payday lending in the news. The difference could also be a product of the “recently” factor you cite: maybe some portion of the sample committed a felony and lost their registration, or got so fed up with the system that they went in and canceled their registration after the election. (Wait a minute: can a voter cancel her own registration?)
I see the basics/emergencies contrast in the bar chart on page 2. However, I notice that “emregency” is tucked into the item “a medical issue or emergency,” which respondents could have heard as “medical emergency.” The majority-response uses for basics/groceries and utility bills may also have been “emergencies”. Let’s be cautious about reading that survey item to minimize the desperation that borrowers are in when payday lenders take advantage of them.
I remain utterly puzzled by why someone making $75K+ would need or even consider a payday loan. How does one make that much money and not have a cookie jar with $500 for groceries or new tires in it?
Cory,
Those people making $75K+ are probably living way above their means. Probably $300K-400K Home, Brand new cars, going out to eat all the time. That salary can go pretty quick if you live that way. Gotta one up the neighbors, you know.
WAPO reports Wells Fargo not much different than payday lenders From Article
“On “Hit the Streets Thursday,” Wells Fargo bankers and tellers, specifically those of Latino descent, scouted the streets and Social Security offices for potential clients. Their goal: Find undocumented immigrants, take them to a local branch and persuade them to open bank accounts.
Others hit construction sites and factories, according to court documents. Knowing that undocumented workers there needed a place to cash their checks, Wells Fargo employees urged them to open new accounts while promising to waive check-cashing fees. Some offered the immigrants money to open an account.”
Anything for a buck with these robber barons. trump wants to protect all of these scam artists.