Fighting Payday Lending - Little Effect on Poverty
One of the things that deal best with poverty is a job. A person that has got a permanent job and consequently, permanent income is not that affected by cash shortages, no matter how small the income is as long as it is constant and stable. However, this thought seems to be unknown to the Anti-Poverty Coalition of Greater Dallas as they struggle for closing payday lending stores for good, forgetting that a lot of people will be left at the street without salary they get.
Texas takes a lot of steps trying to prevent people getting into the debt circle with all these payday loans and the latter as Texas HB 410 and SB 253 prove that. These regulations actually bar payday lender organizations from the right to be called credit service organizations. Besides, payday lenders have to abide by zoning ordinances in the state - all these measures are directed to secure poor people who are more likely to apply for fast cash loans and are frequent customers of payday loan stores.
However, the end result is not the one that these opponents of the sphere try to reach. In reality, payday lending places elimination in itself won’t solve the problem of poverty - quite vice versa – the more stores are closed, the more people become unemployed and the more they are prone to step down on their income ladder, the more they are likely to seek for alternative ways of getting cash.
Texas zoning ordinances that come with the HB 410 and SB 253 require payday lenders to locate their stores not closer than 1,000 feet from each other. This is not a very good move; however, on the afterthought it seems better than the previous demand that presupposed to set a 36% cap on the loans - such move would end up with loss of jobs by many people. This, as it has already been mentioned, won’t be very effective in terms of fighting poverty.
The thing about such poverty coalitions is that they usually do not make an effort to truly understand what lays at the basis of poverty in the state. The idea that when payday loan stores are eliminated, everything will be fine. However, they fail to understand that it is not because payday loans are evil, whey do so because they have no job. And if these stores close, there will be even more unemployed, the rate of poverty will be even higher due to them.