Opinion | How companies keep their own workers in debt


This exploitation reflects the worrying emergence of a new threat to Americans already struggling to make ends meet: debts that companies impose on their own workers or that workers assume as a condition of doing their jobs.

Gig economy drivers often finance their cars with expensive ones Subprime car loans or by “buy here pay here”Car dealers who offer charge high interest rates, sometimes higher prices than the value of the car, and possibly even put a device on the car to disable it when a payment is missed. Amazon employees can “Pay anytime”To access their wages a few days earlier, and other companies offer similar programs; these can prove to be functional Short-term loan with unexpected fees. Meanwhile, immigrant nurses remain trapped in their jobs from the threat of life owe their employer thousands of dollars if they stop too soon.

Ordinarily, we consider debts that ordinary people and families have to companies as debt consumer Problem, but in today’s marketplace, it does significant harm to workers as workers. Very often, employer debt holds workers hostage in their jobs and undermines their bargaining power to get better business.

President Joe Biden has vowed to be the most worker-friendly leader this country has seen in years, and luckily he can use the authority of the federal government to tackle these abuses without the action of a stalled Congress.

A simple but powerful solution is to instruct certain key agencies, including the Consumer Financial Protection Bureau and the Department of Transportation, to set up dedicated labor protection bureaus. Such a move would ensure that abusive worker-consumer situations are systematically and routinely addressed – not just one-off cases – and serve as an important acknowledgment that worker protection needs to be different in today’s economy.

Actions at the Ministry of Transport would be particularly useful as these problems are endemic to the trucking industry. Some long-distance transport companies offer exorbitant but inadequate training for drivers and require them to sign “Training compensation agreements“So if drivers leave the company before a certain time, they will owe thousands of dollars to the company. In one process, The debt to trucking giant CRST was $ 6,500, far more than the actual cost of the training. Seth Frotman, Executive Director of the Student Borrower Protection Center described such predatory training loans as “shadow debts of students”. As with other private student loans, these are debts of people seeking an education to learn and advance their careers. Truck drivers are also often attracted to raids Leasing-to-purchase models that promise vehicle ownership – again financed by wage deductions – that do not lead to ownership at all.

Measures at the consumer protection office would also be helpful. Employer-related debt can also be used to Subsidize wages that are too low or unpredictable planning. Cash advance and small loan programs that allow workers to borrow from their employers to pay rent or put food on the table can include hidden interest and fees that force workers into a spiral of debt with their employers. Similarly, workers faced unexpected overdraft fees and other charges as employers began to co-pay wages Payroll cards (like debit cards) a few years ago.

Aside from their general predatory nature, the type of lending that is at the center of workplace scams is often discriminatory. (In the Washington janitorial franchise case, the company targeted immigrants). Much like reverse redlining, where bad credit product providers target people of color, predatory companies often target immigrants and black and brown workers by offering bogus opportunities to gain access to the American Dream.

When companies turn their employees into consumers or debtors in such scams and systems, the company’s misconduct can easily fall through our regulatory and enforcement systems. But it doesn’t have to be.

Establishing an employee protection office at CFPB would be in line with the agency’s mission to protect people from unfair, fraudulent or discriminatory financial products. The CFPB has a long list of key priorities to tackle, but the past two years amid the pandemic have highlighted and exacerbated the asymmetry of power between businesses and ordinary people, be it in their capacity as workers, consumers, or both. Corporate abuse of power doesn’t always fit neat boxes, so agencies charged with leveling the playing field in the market should take a full look at their mission.

And the CFPB has already shown the value of naming a position within an agency with a focus on a specific topic. During the Obama administration, the CFPB created a student loan ombudsman under the Dodd-Frank Act that collected data, made policy recommendations, and helped advance the enforcement of illegal delivery practices, including: a 2017 CFPB case against the largest student credit company in the country. Similar examples exist in state and local governments, from prosecutors who have established dedicated work units, to set up immigration offices in new York and other major cities. Having a dedicated office is a surefire way to ensure that work gets done and continues to get done.

A CFPB worker protection bureau could enforce applicable laws and protect worker-consumers from predatory practices. She could study these subjects and issue reports. It could work with enforcement partners such as the Department of Labor, the DOT, and the Federal Trade Commission to address interrelated issues such as labor antitrust violations, wage theft, worker misclassification, discrimination, human trafficking, and abuse of consumer finance due to employer-related debt.

Similarly, the DOT could set up an office focused on protecting workers in the various transport sectors, including truck drivers subject to abusive training repayment or lease-to-owner agreements, as well as other predatory practices. (An occupational health and safety office at the DOT could also help with additional, unrelated issues, from the lack of motorway service stations to ensuring Covid safety at airports and on airplanes). Labor and Transport Ministries are already working together on worker-centered efforts: Labor Secretary Marty Walsh and Transport Secretary Pete Buttigieg were working in July Co-moderator of an event and co-author of an Op-Ed to this topic. Creating a long-term worker protection unit in the DOT would improve working conditions and help the agency build more attractive and sustainable careers for transport workers. It would also improve travel safety for everyone.

The creation of special units or ombudsmen in the CFPB, DOT and other relevant agencies would embed workers’ concerns into these offices so that patchy financial products or other new exploitative practices would not go by without consequences. This would also ensure workers are at the center of the federal government’s mission and help Biden achieve the holistic worker-friendly vision he has advocated.


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