Reality Check: More jobs equal lower pay rates? - Cincinnati News, FOX19-WXIX TV

Reality Check: More jobs equal lower pay rates?

FOX19 -

Earlier this month, following the release of November's unemployment figures, President Obama proudly announced another big gain on the job front saying, "Last month America's businesses created more than 300,000 jobs...now this keeps pace with a growth we have not seen since the 1990's."

The President has cause for optimism, but jobs alone don't guarantee economic recovery. Wage growth isn't keeping pace. In fact, for many people paychecks are going in the opposite direction. Since 2009, the height of the so-called “great recession,” wages for full-time working men have dropped by three and a half percent.

For full-time workers 19 and younger things have gotten even worse;They're making nearly 10 percent less than in '09, while people 24 and younger are making 6 percent less. There may be no better indicator that not everyone's feeling the economic recovery than the record number of payday lenders popping up all over the country.

According to a report filed by the St. Louis Federal Reserve, there are now more than 20,000 payday lenders in America. There aren't that many McDonalds in the US.

Simply Money's Nathan Bachrach tells FOX19 NOW that stagnant wages and inflation are behind the spike. "For someone who was making $56,000 in 2000 they're now making 50-thousand dollars in terms of the purchasing power of their money," says Bachrach.

Who is keeping all of these Payday lenders in business? Mostly, it's the working poor. The typical borrower makes just $22,467 a year and pays $458 just in fees. Interest and penalties force some to turn to payday loans over and over again. "The road to financial ruin is not from one big mistake. It's usually a lot of little mistakes that compound," adds Bachrach.

According to the Consumer Finance Protection Bureau, one-half of every payday loan snowballs into ten or more additional loans.

The news isn't all bad though. Bachrach says that despite the explosion of payday lenders there are signs of economic recovery: "There are people who are doing pretty darn good...just go to Kenwood Town Mall and see what it looks like...and then there are folks trying very hard to figure out how to be part of this economy." That's the bottom line, the recovery is at best uneven. It's true more companies are hiring, but it's also true that a growing number of people are living payday loan to payday loan just to make ends meet.

Copyright 2014 WXIX. All rights reserved.


Powered by Frankly