[Marxism] [Pen-l] Chase Manhattan late fee

[michael perelman]

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).


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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