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Home Publications Blogs Beat the Press Banks Charge Workers Fees to Get Their Unemployment Benefits

Banks Charge Workers Fees to Get Their Unemployment Benefits

Wednesday, 30 January 2013 05:51

This is yet another case where the free market fundamentalists are using big government to fatten their profits. Associated Press has a nice piece on how several states are paying their unemployment insurance benefits through electronic cards issued by banks rather than checks or direct deposits. The banks place various fees on these cards that people with bank accounts, who are most of the unemployed, would not otherwise see. Needless to say, these banks are very happy with big government and would be very much opposed to an efficient more market based mechanism for paying benefits.

Comments (5)Add Comment
food stamps too
written by Jennifer, January 30, 2013 8:17

Most people are probably unware the big banks make money off of food stamps too, charging fees for EBT. What's more the USDA forbids states or anybody else to know the details of these contracts, or the amount of subsidy to retailers such as Wal-mart.

why oh why can't we anticipate this regulatory capture...
written by pete, January 30, 2013 8:57
Take a good idea...feed it to the wolves...the neverending evils of big government are so transparent, yet ignored...unbelievable.

Take the 60s...huge antigovernment rallies..what happens? C0-opted by the Democrats. Results: bigger government, more capture, reduction in real wages....great corporate profits....shigh...
written by skeptonomist, January 30, 2013 10:26
Credit cards are money. In the past providing money was a service of government. Credit card services run by the government would not only be much more efficient but would open up new and more effective kinds of monetary intervention. There is no reason that private bankers have to take a cut of everything in the economy.
written by skeptonomist, January 30, 2013 10:55
Economists are always yakking about how interest rates affect the economy, but interest rates set by central banks operate for the most part on the supply side - presumably influencing investors rather than consumers. Mortgages are a major exception, but central banks do not have an immediate effect on long-term rates. Economists pay essentially zero attention to credit-card balance rates. In the first place, the fact that consumers are willing to run up balances at absurdly usurious rates suggests that interest rates may not be as important as economists generally claim. Secondly, if interest rates are important, why aren't those usurious rates a major hindrance on the economy and why are banks allowed to get away with them?
skepto...credit cars=money?
written by pete, January 30, 2013 11:07
I suppose you mean the cash cards, not the credit cards. With cash cards, like a Target gift card, there is a balance, and the user draws down the balance. The company where the card is used must pay the bank to process the transaction.

Usurious rates? Try payday loans...compared to those rates, credit card rates are a flyspec. A credit card balance is an unsecured loan, no car, no home. Walk into a bank and ask for an unsecured loan with just a credit check, and say you are flying to Hawaii for the weekend and need some cash. What's the rate gonna be, if not different than the credit card rate.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.