NY Times Tracks Onerous Paycheck Fee, Cites Milwaukee Example

Someone, somewhere in the financial industry got an Employee of the Month award for this nasty new way to take money from low-income workers, and the New York Times uses a Milwaukee example to highlight how it works:

A growing number of American workers are confronting a frustrating predicament on payday: to get their wages, they must first pay a fee. 

For these largely hourly workers, paper paychecks and even direct deposit have been replaced by prepaid cards issued by their employers. Employees can use these cards, which work like debit cards, at an A.T.M. to withdraw their pay.

But in the overwhelming majority of cases, using the card involves a fee.  

And those fees can quickly add up: one provider, for example, charges $1.75 to make a withdrawal from most A.T.M.’s, $2.95 for a paper statement and $6 to replace a card.

Some users even have to pay $7 inactivity fees for not using their cards. 

These fees can take such a big bite out of paychecks that some employees end up making less than the minimum wage once the charges are taken into account, according to interviews with consumer lawyers, employees, and state and federal regulators. 

Devonte Yates, 21, who earns $7.25 an hour working a drive-through station at a McDonald’s in Milwaukee, says he spends $40 to $50 a month on fees associated with his JPMorgan Chase payroll card 

“It’s pretty bad,” he said. “There’s a fee for literally everything you do.”