Broke, USA

Broke, USA:  From Pawnshops to Poverty Inc.:  How the Working Poor Became Big Business by Gary Rivlin, 358 pages

James Baldwin famously observed, "It's expensive to be poor in America," and it is certainly true today.  In this book, Gary Rivlin demonstrates that it is also big business.  In 2008, payday lenders charged their customers over 7 billion dollars in fees.  Rent-to-own shops made a similar sum.  Pawnbrokers made $4 billion, check cashers $3 billion, money-wiring services $6 billion.  And then there are the title loan businesses, the instant tax refund businesses, and sub-prime credit businesses.  Today there are more payday lender outlets in Missouri than there are McDonald's.

Rivlin understands that these businesses fill a real need, since more reputable lenders often fail to lend to the poor and minorities.  Further, few are willing to make the kinds of small, short term loans people living from paycheck to paycheck sometimes need, and charge more for bounced checks and overdrafts than payday lenders do for loans.  But payday loans are often made with interest of over 300 percent APR.  Rent-to-own stores make two or three times as much profit per item as ordinary retailers.  Some sub-prime credit cards charge over 70 percent interest.  When does service become exploitation?

Broke USA is, above all, about the people who work for and against "Poverty Inc."  It is very readable and relatable, the personalities are engaging, and the economics involved are easy to understand.