In The Confiscation of Economic Prosperity, I have a short section on
fees (and other costs borne almost exclusively by the poor), because
such costs do not count when the government measures real income. I
think it is an important subject. A former student who works for the
BLS tried to interest people there in the question, but without success.
In addition, the reported income of the poorer segments of society does
not account for the many extra expenses that poor people pay. For
example, the data ignores the late fees that banks and other
corporations charge. In 2004, banks, thrifts, and credit unions
collected a record $37.8 billion in service charges on accounts, more
than double what they received in 1994, according to the Federal Deposit
Insurance Corporation and the National Credit Union Administration.
Banks continue to raise fees for late payments, low balances, and
over-the-limit charges to as much as $39 per violation. Some banks even
charge for speaking with a service representative. Naturally, these
fees predominately fall on the poor (Chu 2005; Foust 2005).
Insurance companies charge more for people in poor neighborhoods.
The poor also find themselves at the mercy of predatory lenders. To
make matters even worse, their food costs more because they lack
convenient access to grocery stores. Even though the government
disregards these factors in assembling its statistics about wealth and
income, they can be significant (Brookings Institution 2006).
--
Michael Perelman
Economics Department
California State University
michael at ecst.csuchico.edu
Chico, CA 95929
530-898-5321
fax 530-898-5901
www.michaelperelman.wordpress.com
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