<\/a>From the department of good government practices: St. Louis\u2019 City Treasurer Tishaura Jones is helping city workers escape the high-interest, payday loan world and gain the advantages of having bank accounts. She\u2019s doing it with a simple, commonsense measure: paying city workers via direct deposit.<\/p>\n \u201cSt. Louis is near the top of the nation in the number of \u201cunbanked\u201d minority households. We are third in the nation right now, and just a few years ago, we were number one,\u201d said Jones in an interview with Republic 3.0<\/a>, an organization that highlights practical governmental solutions to issues. \u201cThis means that more than a third of our minority residents don\u2019t use a traditional bank or credit union for financial services. Instead, they\u2019re using payday loans or check cashing services or title loans.\u201d<\/p>\n Jones started looking into a direct-deposit payroll system in 2013, soon after she was elected City Treasurer.<\/p>\n I found that we could take our city employees to mandatory direct deposit. Out of 7,000 employees we manage payroll for in the treasurers\u2019 office, 1,600 of them weren\u2019t on direct deposit.<\/p>\n We held three banking fairs for people to choose a traditional bank or credit union, and if they didn\u2019t choose one, they were assigned their benefits on a [pre-paid] card. Eight hundred people chose that option, although another 800 people chose a traditional bank or credit union. Going to direct deposit not only saves the employees money, we saved over $100,000 for the city each year [in fees] by going to direct deposit.<\/p><\/blockquote>\n Jones\u2019 policy addresses an issue that affects workers everywhere, not just in St. Louis. According to a report by the FDIC [Federal Deposit Insurance Corporation]:<\/p>\n Why do so many people remain outside of the financial mainstream of banks and credit unions? Jones says:<\/p>\n One reason is lack of trust in traditional banks or credit unions. We also find that people have had a bad experience \u2013 [they\u2019ve] bounced several checks and as a result have an outstanding balance with the check system that they have to pay off before getting access to another account.<\/p>\n Another reason is that banks and credit unions just aren\u2019t located in their neighborhoods, whereas payday lenders are. The same relationship you may have with a banker or a financial institution, they may have with a payday lender.<\/p>\n The consequences of being unbanked are that the average family could save over $40,000 over a lifetime or over $1,200 a year by using a traditional bank or credit union.<\/p><\/blockquote>\n There are many arguments to be made against the way our banking system works: That our financial system is rigged in favor of banks and against consumers; that the banking lobby has successfully blocked many needed regulations that would help consumers get a fair deal; that banks themselves have created the payday-loan\/checking cashing industry that deliberately preys on low-income people; and that banks have abandoned low-income neighborhoods, forcing residents to use high-cost check-cashing services.<\/p>\n With all that, it\u2019s understandable that some people distrust banks and have opted out. But despite these legitimate concerns, the fact remains that people who are \u201cunbanked\u201d are at a distinct economic disadvantage, and many \u201cunbanked people\u201d aren\u2019t outside the system by choice. Without a bank account, it\u2019s hard to establish a credit rating. Not having a bank account often means that you can\u2019t get a loan at a reasonable rate\u2014you are forced to go through payday lenders, whose interest rates are often extremely high. Without a bank account, you can\u2019t get a credit card. The list goes on.<\/p>\n St. Louis is not the only city that uses direct deposit to pay its workers, and Tishaura Jones didn\u2019t invent this idea all by herself. But kudos to Jones for bringing this practical approach to St. Louis, bucking the ugly nationwide trend of punishing public workers, and instead, trying to improve their lives.<\/p>\n","protected":false},"excerpt":{"rendered":" From the department of good government practices: St. Louis\u2019 City Treasurer Tishaura Jones is helping city workers escape the high-interest, payday loan world and<\/p>\n","protected":false},"author":3,"featured_media":29330,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1514,1726,273],"tags":[777,1330],"yoast_head":"\n\n