By regulatory fiat, a New York official, Ben Lawsky, has destroyed a Chattanooga Internet financial services business employing 400 people. The lending websites were run by Cary Brown, a Christian entrepreneur who got his start on a used car lot in Rossville and who developed a savvy “sovereign individual” business model foreseen in a 1997 book of that name.
The companies offered online loans that brought high interest rates and fees because they were to unsecured strangers.
These customers face a short-term cash crisis who need a few hundred bucks to tide them over until their next paycheck. Hence the handle “payday loan.” The brick-and-mortar vendors of such costly debt are a fixture on American boulevards and near federal bases.
Though called “predatory,” the payday loan industry serves a genuine marketplace need. The need is great because employers do not pay their staffs and work crews promptly. In Chattanooga, the payday loan industry prospers because companies in the city hold the pay they owe, sometimes for a month. A scientist at my church who works for a government contractor is paid monthly. The local newspaper where I worked 24 years pays employees twice a month, though it used to provide a weekly paycheck.
Is holding a man or woman’s pay for a week, or two weeks, right? How does an entrepreneur justify it? It has very likely pragmatic grounds. We’ve always done it this way. We’re billed more by the processor if we don’t go to two weeks. We get to hold money payable to the government (12 percent payroll tax) longer in house if we don’t pay our staff. I haven’t reported on the whys, but the rationales must be widely shared, even cultural.
Christianity has always been about reforming society and culture. William Carey was such a powerhouse in the reformation of India in the early 1800s because he believed the scriptures touch every aspect of life and culture. Thanks to his efforts, India worked toward stopping many manifest evils, from widow burnings, the caste system and child marriages. American culture is swamped with debt, which is customary even in the purchase of bread and milk on the way home from work.
Basis for payroll reform in Chattanooga, beyond
American payroll culture awaits a Christian reform, I suspect, given how prevalent the lending trades have become. The scriptures order quick payment of wages. The passages strike at greed, a vice prohibited in the 10th commandment, which starts off this way: Thou shalt not covet.
” Passages that require rapid payment for employment:
— “Do not withhold good from those to whom it is due, when it is in the power of your hand to do so. Do not say to your neighbor, "Go, and come back, And tomorrow I will give it, when you have it with you.” Proverbs 3:27, 28
— “Wealth gained by dishonesty will be diminished, But he who gathers by labor will increase.” Proverbs 13:11
The scriptures favor equity, justice among people, especially between one who is superior with his inferior. Wages are to be paid daily.
— "You shall not oppress a hired servant who is poor and needy, whether one of your brethren or one of the aliens who is in your land within your gates. Each day you shall give him his wages, and not let the sun go down on it, for he is poor and has set his heart on it; lest he cry out against you to the Lord, and it be sin to you.” Deut. 24:14, 15
— “'You shall not cheat your neighbor, nor rob him. The wages of him who is hired shall not remain with you all night until morning.” Leviticus 19:13
The man among those “who exploit wage earners and widows and orphans” is likened to the sorcerer, adulterer, perjurer and one who turns away an alien (Malachi 3:5)
Employers’ sins need local economy remedy
The payday loan industry is not the primary evil in this crisis of debt that engulfs the clientele. If anything, Cary Brown and such sites as MyCashNow.com provide relief for people who cannot get $200 or $500 from friends or family in a short-term crisis. The problem is the capitalist, the entrepreneur, the Christian who thinks he does his neighbor no wrong by holding wages two weeks or a month.
My first encounter with the biblical arguments above was from John Kozlowski, the programmer in Cleveland, Tenn., working on a secure email system called Shofar Portfolio. One project is payroll software that lets a man pay his employee hourly. Such a system is technically possible in this age of software and direct deposit.
Mr. Kozlowski looks at the perils of the big monthly paycheck vs. the much smaller one that would cover a day’s work. A big check “allows us to blow it more readily,” he says. “Many have argued that it is much less of a burden on them when their employer pays them even monthly so they can pay all their bills at once.” Another possible objection to daily payroll, he says, is that such a system would be a “burden” on the company. “However technology available today can easily be designed to ease this process. Of course there is also the issue of the tax system that has been put in place that makes it more attractive to delay pay. Remove the payroll tax, as a century ago, and you remove a large reason to delay pay.”
How about another idea from Mr. Kozlowski: A friendly cash drawer at the employer’s front office? It’s a terrific local economy concept, and would go far to connect employer and employee as human beings. “One of the designs I was working on with the software to manage pay was the idea of an employee being able to simply take cash from the company, perhaps directly from a cash register, and log that as pay. They simply can take their due as needed. This reduces the cash management burden on the employer, makes it very convenient for the employee, and I suggest brings a stronger emotional tie between the two.”
Local economy is about personal economics, relational economics. It seems the Word of God wholly supports the concept.
(David Tulis hosts Nooganomics.com on Copperhead 1240 AM
from 1 to 3 p.m. weekdays, a talk show that covers local economy and free markets in Chattanooga and beyond.)
Sources: Ellis Smith, “A letter stymies payday empire,” Chattanooga Times Free Press, Aug. 27, 2013
James Dale Davidson and Lord William Rees-Mogg, The Sovereign Individual (New York: Simon & Schuster, 1997), 416 pp; see “Transcending Locality” pp 178-206
See Ruth and Vishal Mangalwadi, Carey, Christ and Cultural Transformation[;] The Life and Influence of William Carey (Carlisle, Cumbria, UK: OM Publishing), 1993, 142 pp.