The Time for Work Sharing in Indiana is Long Overdue

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Indiana must take advantage of the opportunity included in the CARES Act to help workers, businesses, and our economy weather this storm and bounce back as quickly as possible!


The Indiana Institute for Working Families has LONG been a proponent of a work sharing program in Indiana because we recognize that working Hoosiers want to keep their jobs, even when times are tough. During times of economic hardship, work sharing offers opportunities for employers to keep a greater number of valued employees working with reduced hours, and allows those workers to earn close to full pay. Starting with our first report on work-sharing back in 2011, we have consistently tried to build support for and momentum behind this idea.

A work sharing program is:

a voluntary unemployment insurance (UI) program that targets jobs preservation by providing employers with an alternative to layoffs during times of decreased demand. Typically, if a firm sees a 20 percent decrease in demand, it would lay off 20 percent of its workforce. Under work sharing, the employer has the option to decrease pay for a particular line or department within the firm by 20 percent for a short period of time—usually about 6 months. 
The 20 percent loss incurred by the employee is partially made up by the state—usually half. For example, an employee normally earning $600 per week would, under a work sharing program, receive $480 in wages (or 80 percent of $600) and $60 in UI benefits (half of the 20 percent employee loss). Instead of the $390 she would receive under normal UI benefits, the employee is temporarily earning $540 (90 percent of her original income) and is able to maintain health benefits and avoid the ranks of the unemployed.[i]                                                                                      

Work sharing programs exist in 28 states across the country and 17 of those states have programs that predate the Great Recession, meaning they were able to use their programs to mitigate job losses during the downturn. Our 2011 analysis showed that if Indiana had had a work sharing program in place prior to the Great Recession, anywhere from 1,862 - 9,984 Hoosier mid- to high-wage jobs – such as manufacturing – could have been saved between 2007 and 2010. While that is a relatively small dent, it is a meaningful difference to both employees and employers in those industries.

The estimated number of jobs saved is based on take up rates from a recent Upjohn Institute report. For a range of take up scenarios, we applied the U.S. average and Rhode Island’s take up rate. We applied Washington State’s distribution of industries to determine our distribution (cited in our report on page 20).

Legislation to establish a work share program in Indiana has been offered in every single legislative session since 2011, with support from the Indiana Chamber of Commerce, the Indiana AFL-CIO, employers such as Subaru Indiana, and Indiana lawmakers from both political parties, at federal and state levels.

While we haven’t been able to get a permanent program in place through our state legislature, the CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY (CARES) Act, which became law on Friday, March 27, 2020, gives Governor Holcomb the opportunity to establish a work sharing program through an agreement with the federal Department of Labor.[ii] The CARES act says, “any State which desires to do so may enter into, and participate in, an agreement under this section with the Secretary provided that such State’s law does not provide for the payment of short-time compensation under a short-time compensation program.” It also allows that “there shall be paid to each State with an agreement under this section an amount equal to— (A) one-half of the amount of short-time compensation paid to individuals by the State pursuant to such agreement; and  (B) any additional administrative expenses incurred by the State by reason of such agreement.”  

 This means that Governor Holcomb can put in place a work sharing program - at least temporarily - and that the federal government will pay 50% of benefits, and will pay for additional administration moving forward while we have the program in place. The CARES act also includes grants to pay the costs to implement a program.

In addition, Indiana is in a position to act on this quickly. We can use past pieces of legislation as a blueprint for getting our state’s plan in place quickly, as well as best practices from the 28 states that already have a work share program in place. Most of the past legislative proposals have already been vetted by stakeholders and had bipartisan support. They are the perfect jumping off point for a state plan.  

We urge the state to initiate this agreement with the Federal Department of Labor as soon as possible. For years, the Institute has asked policymakers to “fix the roof while the sun is shining,” and put a work share program in place while the economy was strong.  Sadly, now it is not just raining: it is a torrential downpour. The need for policy action is urgent.

*We sent a version of this blog post as a letter to Governor Holcomb and Commissioner Payne as well as to their respective staff members. Stay tuned for updates!

Selected Resources from IIWF on the Potential Benefits of a Work Share Program:





Monday, March 30, 2020
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Indiana Coalition for Human Services Praises First Steps, Calls for Further Action

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Indiana Coalition for Human Services Praises First Steps, Calls for Further Action to Protect Hoosier Families

As a member of the Indiana Coalition for Human Services, IIWF was eager to participate in the development of a coordinated, member-driven call for a strong policy response. 

 Now more than ever, Hoosiers need to pull together and support one another. The COVID-19 pandemic and the steps needed to end its spread will undoubtedly deepen the financial challenges many households in Indiana were already experiencing, and will cast many others into crisis. Making the right policy choices in this moment is critical. We will need our state leaders and federal delegation to advocate for solutions that allow Hoosiers to meet their basic needs, stabilize their household, and rebuild toward financial well-being.
We want to commend the Holcomb Administration for acting quickly to put many important policies in place to protect Hoosier Families. In particular, we support the decisions to:
●      Suspend all utility disconnects during the COVID-19 crises, including gas and electric, broadband, telecom, water and wastewater services.
●      Ensure Hoosier workers have access to Unemployment Insurance due to COVID-19 related job losses.
●      Suspend evictions and foreclosure proceedings, ensuring that at this critical time, Hoosiers do not lose their housing.
●      Waive premium payments for those participating in the Healthy Indiana Plan and the Children’s Health Insurance Program.
●      Waive job search requirements for those applying for or receiving Temporary Assistance for Needy Families.
●      Expand the ways in which telehealth services are being offered and paid for, including for mental health services.
●      Waive licensing requirements for therapists so that Hoosiers can see out-of-state therapists without requiring that therapist to be licensed in Indiana.
●      Delay renewal processing for Medicaid and HIP recipients. 
●      Waive work requirements for able bodied adults without dependents on SNAP.
●      Make all WIC appointments by telephone and issuing three months of benefits.
While we applaud these policy changes, we know that more policy changes at both the state and federal level will be critical if we are to keep Hoosier families safe, healthy, and financially stable. The policies outlined below are the ones that are still needed if we are to help our communities and our nation cope with and recover from this crisis.
Housing
Hoosiers need to maintain safe, stable housing throughout the crisis. Indiana has multiple localities that, in normal circumstances, already lead the nation in terms of eviction. Loss of housing is always incredibly stressful, but in this moment it could also result in the spread of infection to shelters or other households. 
●      Veto SEA 148 to prevent making law from dangerous, unvetted language that would worsen Indiana’s affordable housing, eviction and homeless crisis.
●      For those experiencing homelessness, provide supplemental financial assistance directly to housing authorities, housing assistance providers and homelessness service organizations. Free housing counseling services should be provided as well.
●      Urge OCC and FDIC to require banks and other lenders to waive fees and work with distressed borrowers who need to skip or modify mortgage payments. 
●      Urge Congress to include emergency assistance funding to help prevent housing instability and homelessness as a result of the coronavirus outbreak to any supplemental funding bill.
Health Care
Access to healthcare is essential for screening and treatment. For our most vulnerable populations, such as those with pre-existing medical conditions and the elderly, it is also necessary that they have access to healthcare that keeps them as healthy and resilient as possible. Medicaid expansion has given millions of Americans access to healthcare but those who remain uninsured, those who elected for non-ACA compliant coverage, and those who have burdensome requirements for retaining their coverage need further protection.
●      Temporarily freeze CHIP redetermination compliance.
●      Increase CHIP eligibility threshold to 400% FPL ongoing to increase current access and mitigate future risks.
●      Open a nationwide Marketplace Special Enrollment Period that allows for the uninsured and those with non-ACA plans to gain access to comprehensive coverage.
●      Require insurance companies to allow for teletherapy, which is not automatically covered by the changes that were announced recently by CMS.
●      Allow teletherapy and pay for it even if it’s only by phone. Many areas of the state don’t have internet access and even in areas with service,  individuals may not have internet access.
Utilities
As families attempt to navigate schooling and working from home, caring for children who are affected by daycare and school closures, or quarantining, access to communications and internet, natural gas, electricity, and running water will be even more critical.
●      Restore access to all utilities, including communications and water, to those households currently without service.
●      Provide access, through hot spots or other means, to broadband internet service for those communities and households currently lacking access.
Food
Access to nutritious foods is critical to health and well-being. Certain groups will be especially vulnerable as access to school meals and other services are shut down. Policymakers should take steps to ensure that no-one goes hungry and that Hoosiers can maintain their health through nutritious food options during the pandemic and beyond.
●      Offer automatic boosts in Supplemental Nutrition Assistance Program payments through waivers for temporary, emergency CR-SNAP as well as for households with children who would otherwise receive free or reduced-price meals if not for school closures.
●      Streamline application processes and extend renewal processes for existing SNAP caseload.
●       Apply for USDA and other applicable waivers to allow continued food service to children and families affected by school closures.
Other Expenses
Income matters to vulnerable families and at no time is this more true than during a public health crisis that is making going to work and work activities difficult. Hoosiers will need access to alternative sources of income as they take leave without pay, see shifts cut, or lose their jobs altogether. Hard-hit businesses will need support as well.
●      Expand access to unemployment insurance to workers whose employers temporarily shut down, workers who are required to self-quarantine, parents or guardians who were forced to quit or take unpaid leave due to emergency school closures, and workers who have been forced to quit or take unpaid leave to care for loved ones affected by the virus.
●      Enact an emergency paid sick days rule to cover workers in occupations with high public contact that often lack paid sick leave, such as leisure and hospitality, food services, child care, transportation, and home health. 
●      Expand access to Temporary Assistance to Needy Families by:
○      Suspending work requirements, placing a moratorium on sanctions and terminations.
○      Considering only continuing income for eligibility and benefit amounts - we should not be taking into account lost wages as we calculate benefits and continuing eligibility.
○      Providing a one-time additional payment to all TANF families to cope with added expenses, such as additional at-home meals for children, increased utility usage, and other needs related to COVID-19.  
●      Provide direct, robust stimulus to working families, the self-employed, and small business owners. Prioritize forms of aid that will replace lost earnings, especially to those least likely to have savings, paid leave, or the ability to work from home.
●      Any stimulus to companies should be accompanied by expectations that they will keep workers employed and offer paid sick leave. 
Civil Rights

National emergencies like the COVID-19 outbreak often lead to increases in antisemitic, xenophobic, and racist rhetoric and violence.  Already, organizations like the Anti-defamation League and the Southern Poverty Law Center are seeing hateful messages, memes, and conspiracy theories proliferating online. 

●      Local law enforcement agencies, to the best of their ability, should maintain regular proactive communication with communities of color, immigrant communities, and minority faith communities.
●      Local law enforcement should continue, to the best of their ability, to maintain the reporting and tracking of bias-motivated crimes as a priority so that national law enforcement agencies know when and where support should be provided. 
●      Congress should continue to support programs and federal grant opportunities for non-profit organizations to better secure their facilities and be better prepared for emergencies and emergency management.
Immigration/Public Charge
It is incumbent that all individuals currently residing within the United States seek any and all medical attention that they believe they need without fear of retribution. On March 17, 2020, USCIS published guidance stating that all immigrants with symptoms that resemble COVID-19 should seek necessary medical treatment and that treatment would not negatively affect any immigrants’ future public charge determination, even if treatment that is provided is paid for by a public benefits program such as Medicaid.
●      All elected officials should publicly share information regarding the USCIS determination on public charge and encourage all immigrants to seek any necessary medical treatment they may need. 
Consumer Protection
Now more than ever, consumers are vulnerable to price gouging, predatory lending, and scams. Delayed and delinquent bills that appear on their credit reports could also cause serious and long-lasting harm to their ability to secure access to credit, jobs, housing, and insurance.
●      The Attorney General and other regulators should warn consumers about scams and predatory lending, encourage them to file complaints, and direct them to alternative resources. Create a centralized hub of resources and institutions willing to offer assistance and/or low-cost loans.
●      Freeze negative credit reporting and require loan forbearance periods with no interest or fees.
●      Stop all debt collection activities, including wage garnishments and repossessions.

For the Future

This pandemic has brought into sharp relief many of the existing flaws in our public policy framework. Moving forward, leaders should look to create a policy environment that supports public health & financial stability by making housing and health care more accessible, boosting the quality of U.S. jobs, and enacting and enforcing strong civil rights and consumer protections.

We recognize that this list is by no means comprehensive, but represents some of the initial policy considerations from advocates who care about and are regularly engaged in safeguarding the physical and financial well-being of Hoosiers. We hope state officials will consider these recommendations. It is time for us to bring all available resources together and take care of each other.

Friday, March 20, 2020
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Open Letter: Hoosiers Need Paid Sick Days - Now, and For Our Future

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Hoosiers Need Paid Sick Days - Now, and For Our Future


With coronavirus cases rapidly emerging across the United States, health officials are advising workers to stay home when symptomatic. That advice is much easier to follow if you have paid sick days.

The United States is an outlier when it comes to paid leave. Nationally, policymakers have set no baseline standards for what employers should offer. And while some employers recognize that it is not to their benefit for sick employees to come to work for a variety of reasons – including that employees are less productive and could infect fellow employees and clients – far too many still do not. According to the most recent Bureau of Labor Statistics data (2019), about one in four workers nationally - and as many as one in three workers in Indiana – do not earn paid sick days. This is likely because, unlike a number of other states, Indiana has not stepped up to set minimum standards on this front. Digging deeper, the statistics on who does and does not earn paid sick days becomes even more problematic: fewer than half of workers in the lowest wage quartile – often, the people who care for children and the elderly, prepare food, or handle transactions at a cash register and also the people who can least afford to go without a paycheck – lack the ability to earn paid sick days.



When workers lack paid sick days, they are far more likely to go to work sick. In one Center for Disease Control study, nearly sixty percent of workers who prepare food reported going to work sick. Parents with sick kids and no paid sick leave are much more likely to send those kids to school when they are contagious, or to take them to emergency rooms rather than doctors’ offices for treatment. They do so for good reason: beyond an inability to pay the bills without a paycheck, nearly one in four workers without paid sick days have reported either losing a job or being threatened with job loss as a result of needing time off. 

A payroll tax holiday will not encourage workers to stay home when they are ill. Reducing the amount of wages withheld from a paycheck only works for those who continue to earn a paycheck, and it disproportionately benefits higher-income earners. Even for those workers, though, the boost would be relatively small. A generous payroll tax cut of 5% would provide only $80/month to someone earning $20,000 per year. Meanwhile, a worker earning $100,000 would receive over $400/month, and people without earnings – either because they are sick or caring for a loved one – would receive nothing at all.

Instead, policymakers should be looking at approaches to shore up the lost wages of workers who must stay home but cannot do their work there. Disproportionately, these are Black and Hispanic or Latino workers. They are workers without a bachelor’s degree. They are workers who lack savings and are one lost paycheck away from a financial downward spiral. They need robust support quickly, not the trickle of reduced taxes on diminished or nonexistent paychecks.

This crisis will eventually pass, and families will fare better or worse depending on our policy responses. I hope we make smart decisions to meet this moment, and then learn from it to bolster our policy framework for the future. People will continue to get sick, and a single illness shouldn’t wipe out a family’s financial future. It is time to set a minimum national standard for paid sick days in the United States.

Monday, March 16, 2020
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36% in All the Wrong Places

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"Communities of color and other economically vulnerable populations have long been subjected to discriminatory and abusive financial services practices, including redlining and other forms of overt discrimination, as well as predatory and deceptive mortgage and consumer lending, which are disguised as “easy solutions” to credit needs, and have suffered particularly devastating consequences as a result of many of the lending practices that led to the 2007-08 financial crisis."

Among other recommendations, the Leadership Conference urged "all states to follow the lead of 16 states including the District of Columbia, some Native nations, and the military by imposing a 36 percent interest rate cap on payday and deposit advance loans extended to borrowers within their jurisdictions; and to vigorously enforce their laws against unlicensed lenders and work in partnership with federal regulators to address attempts at subterfuge."

 In Indiana, a coalition of veterans groups, faith leaders, civil rights and community organizations, and social service providers has united to advance the call for reform. This year, legislators have introduced SB 26 and SB 415 to put a 36% cap on payday loans, and SB 407 and HB 1239, which aim to provide more tools to reign in unlicensed lenders. 

 The Journal Gazette and South Bend Tribune editorial boards have called for reform.

 There is overwhelming public support for a rate cap. 

 There is new evidence that predatory online lending may see an uptick thanks to lax federal regulation.

 But instead of advancing these bills, on Wednesday the Senate Insurance and Financial Institutions Committee will hear SB 395. It puts 36% in all the wrong places.

 With the exception of the carve out for payday lenders, which allows them to charge up to 391% APR on short-term loans of up to $605, Indiana law currently allows other lenders to choose from a blended rate of 36% on the first $2000, 21% on $2000-4000, and 15% on $4000+ OR a flat rate of 25%.

SB 395 would allow a rate of 36% on ANY SIZE LOAN. Take a moment to digest the thought of a car loan at 36%. THAT'S. NOT. GOOD.  

 Here's what that could look like, using some common loan types:

It also allows a fee of $150 to be layered on top. 

 Meanwhile, SB 395 does not put 36% in the one place consumer advocates want to see it: in the payday loan chapter. So if this bill passed, payday lenders could continue to drain millions per year in finance charges from vulnerable borrowers - a reality SB 395 would make even more likely, as the majority of payday loan borrowers turn to payday lending because they are struggling to pay other bills. 

 This week, we will be in the Statehouse to express our concerns. We urge you to do the same. 
Monday, January 20, 2020
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Guest Blog Post: Diaper Need – an Overlooked Issue in our State

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by: Rachael Suskovich
Founder & Executive Director
Indiana Diaper Bank

Unless you wear or routinely change one, you probably do not spend much time thinking about diapers. Yet, for infants and toddlers, diapers are a basic necessity for happiness, health, and early learning.

We all know diapers are expensive. However, we don’t always hear about the unspoken issue of diaper need. One in three families cannot provide enough clean diapers for their child(ren). In fact, 32% of food bank clients report reusing a disposable diaper and 48% delayed changing a dirty diaper to make their supply last longer. This puts babies at risk for adverse health conditions like dermatitis and urinary tract infections. Plus, not having the funds to purchase diapers can limit a parent’s ability to go to work because most childcare centers require parents to provide diapers for their child.


This is where Indiana Diaper Bank steps in to help. We believe that every baby deserves a clean diaper. The diaper bank has already made a difference in the lives of hundreds of Hoosier families but needs your help to grow.  Since November 2016, Indiana Diaper Bank has distributed nearly 250,000 diapers to families through a growing network of 20 nonprofit partners.  The need in Indiana is SO great—that we have several agencies on our waiting list. We need your support to continue to expand our reach and ensure that all babies and toddlers stay clean and healthy.  It is hard for many of us to imagine that families struggle with something as basic as diapers, but they do.  Every day local families go without. 

The diaper wearing ages (birth-3 years) are a critical time in a child's development. Young children must have basic needs like diapers in order to thrive. I took on the role as CEO of Indiana Diaper Bank, because as a parent I understand that when basic needs are met, people are able to focus on the most important thing in a parent’s life – loving and nurturing their children.

This year, Gov. Holcomb has once again signed a proclamation recognizing Diaper Need Awareness Week in the state of Indiana. By acting together — individuals, diaper banks, faith-based institutions, service providers, businesses, organizations, and elected officials — we can get diapers to all babies in need.

Diaper Need Awareness Week is September 23rd-29th and it is the perfect time to take action!

 Support Indiana Diaper Banks by:

Hosting a Diaper or Fund Drive -Whether you do it at work, church, school, your neighborhood or among friends and family--nothing builds awareness of diaper need like a diaper drive! It's easy, rewarding, people LOVE to participate.  Your efforts WILL make an impact for local families. Sizes 4, 5, 6 and pullups are most needed.

Donating Funds -The Indiana Diaper Bank can buy diapers less than half the price in a store.  You can donate by mailing a check, through Paypal, or on our website

Donating Diapers at a drop-off location in Indianapolis. Open and new packages of diapers are appreciated.

Support public policies that allow- low-income families to better afford diapers by calling your legislators and asking them to:

Support a diaper sales tax exemption, and

Support the expansion of TANF eligibility and benefits. TANF provides limited, temporary cash assistance to Hoosier families in deep poverty and the average per child diaper need accounts for more 40% of the average amount of TANF benefits that families receive.

You can find how to contact your lawmakers here: http://iga.in.gov/legislative/find-legislators/

To learn more about the Indiana Diaper Bank visit: www.indianadiaperbank.org

Monday, September 23, 2019
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Our Message to the Interim Study Committee: Strong Rate Caps Would Stop Predatory Lending

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On August 15th, Indiana Institute for Working Families presented reflections on key provisions in the Uniform Consumer Credit Code to the Interim Study Committee on Financial Institutions & Insurance. You can view video of the hearing here.

 This blog post is an adaptation of our testimony, and you can also download a copy of the Powerpoint we presented. You can also read the testimony presented by Logan Charlesworth, Network and Resources Manager at Indiana Assets & Opportunity Network, testimony here.

We're grateful that the General Assembly is taking the time to study its consumer credit laws in greater depth, and are eager to share the resources we have found useful in thinking about the marketplace for consumer credit.

Credit is an important tool that enables families to achieve financial well-being. Home ownership is the most common way for families to build wealth. Education, often funded through student loans, can lead to higher wage jobs. Small businesses founded through access to capital can also be a route to financial well-being. And credit can facilitate and smooth day-to-day transactions. However, what can be a blessing can also be a curse - debt that families cannot repay has a lot of negative ramifications, including stress, damaged credit, bankruptcy, poor health, decreased workplace productivity, and ripple effects on the entire economy.

So we’re paying attention to, and concerned about, the amount of debt people are carrying and their lack of savings. Nationally, we’ve exceeded the 2008 peak of household debt and more of that debt is now non-housing related. If you want a more detailed look at what’s going on in your backyard, Urban Institute has an interactive map that provides detailed estimates of types of debt and debt in collections. Alarmingly, 34% of Hoosiers with a credit file has a debt in collections. This tells us that many people are struggling to keep up with the bills they have.


Payday and other types of high-cost lending are often marketed as a quick fix for those who are underwater financially. However, what appears to be a life preserver ends up being an anchor. As one payday borrower from Southern Indiana described it, these loans are a "ball and chain" that will "drag a person into a worse financial situation." She, like many others, relied on other resources to dig out from this debt. You've heard from many of those community resources - churches, township trustees, social services agencies, friends and family - who have described how problematic these loans are. Unfortunately, falling behind on bills is what drives a lot of the payday loan volume – not necessarily one-off emergencies. Borrowers describe a feeling of desperation or despair that leads them to take loans on any terms, and often end up turning to other sources to get out. I don’t think this is what you intended when you added this chapter to the UCCC, and it’s not what borrowers want, either.


While we don’t have many great statistics on this industry specifically for the state of Indiana, we do know that 60% of Hoosier borrowers take a new loan the same day they pay off an old one - and by one month out, 82% have reborrowed. This is a cycle. And data from Florida – which is a decent proxy for Indiana because it's law is similar, even perhaps a little tighter than Indiana's in terms of how many loans a borrower can have at one time and when you can take a new one – shows that the bulk of the payday lending industry’s revenues are from people repeating these loans over and over and over. Again, I don’t think this was your intention, but it’s where we are.

It’s not just payday lending we’re worried about. High interest rates in general create a dysfunctional dynamic in which lenders can experience success even when many of their borrows default. Here, in this great publication from National Consumer Law Center, you can see an example of a $2600, 42-month loan at 96% - by 20 months, the borrower has paid $4331 in payments, so a decent return for the lender. Even if the borrower declared bankruptcy at this point, the lender has had a successful experience. From the same publication, you can that this lender was able to sustain higher and higher default rates as interest rates rose from 59 to 96% - at 96%, nearly half of borrowers defaulted.

Source: National Consumer Law Center, Misaligned Incentives: Why High-Rate Lenders Want Borrowers Who Will Default


We’re also worried about loan flipping. This is a different model where lenders may package up-front fees and precomputed interest, and then encourage borrowers to refinance over and over, driving up the effective cost of the loan in a way that’s not at all obvious or transparent.

We know that competition isn’t the cure for high-cost lending. Pew Charitable Trusts compared the rates offered by the same lenders in different states, finding that they charge different rates in different states, usually at the state rate cap. Here in Indiana, we have 263 payday loan stores, and yet competition hasn’t driven down prices. It's also worth noting that a handful of banks made similar products available about 5-10 years ago, and the same pattern emerged with significant overlap between people taking bank deposit advances and payday loans, and no evidence that these loans made a dent in payday volume.

So a number of states have capped rates. We’ve been encouraged by what they’ve found: 1. That payday lending isn’t missed, and 2. That former borrowers engage in options like handling the debt they have with creditors or turning to those other options first. We’ve heard doom and gloom stories about a lack of payday lending driving people to take out worse online loans, but the data just doesn’t bear that out. There’s not a significant difference in states with payday lending and without, and states that take strong enforcement action against illegal online lenders see even lower rates of online borrowing.

Finally, it's certainly worthwhile to engage in conversation about how to help more people move into banking relationships and to prime credit. But recall that payday lenders require borrowers to turn over access to their checking account. They are banked. And in fact, one of the reasons people become unbanked is a snowball of high-cost debt payments and overdraft fees that ultimately result in an account being closed.

The real challenge with respect to lending is how to create greater access to prime or high-quality credit. There are a lot of people thinking and writing about to do this, and I have yet to seen one of them recommend taking out loans with triple digit interest rates as a good strategy for building credit.  Rather, they recommend things like “Don’t open new loans or lines of credit” and “Pay off debt rather than move it around.” So in fact, some of the strategies we see people employ in states with strong rate caps ARE the strategies that help people build prime credit.

There’s a lot more we could talk about with respect to consumer credit, but strong, effective interest rate caps are really the central consumer protection. They are overwhelmingly supported by members of the coalition and by Hoosiers in general. As you consider reforms to the code, we urge you to implement strong rate caps to provide a marketplace that encourages responsible lending and borrowing.
Tuesday, August 20, 2019
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