36% in All the Wrong Places

"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

2020 Legislative & Communications Assistant

A program of.JPG

2020 Legislative & Communications Assistant
Indiana Institute for Working Families is seeking to hire an intern for the 2020 legislative session of the Indiana General Assembly. The ideal candidate will be detail-oriented, organized, a critical thinker, and motivated to make positive change for working families in Indiana. The wage is $13/hour and an applicant can expect 25-29 hours per week. Our preferred availability is full availability on Wednesdays with minimal conflicts other days.

About Indiana Institute for Working Families
When families are financially stable, they can achieve their full potential and better contribute to their communities. Policy plays an important role in building families' economic well-being.

The Indiana Institute for Working Families – a program of the Indiana Community Action Association (INCAA) – promotes public policies to help Hoosier families achieve financial well-being. We value, gather, and translate quantitative and qualitative data to communicate the opportunities and challenges that Hoosiers experience. We advance well-being by promoting evidence-based solutions and building coalitions to engage in direct and strategic conversations with policymakers and the public.

Job Responsibilities
- Take detailed notes at committee hearings

- Help keep staff calendars, updating staff with daily legislative calendar
- Engage in specific research tasks as assigned by Institute staff
- Summarize policies for public consumption
- Draft action alerts and other written materials
- Administrative tasks to support Institute efficiency 

- Ability to identify areas of potential support or conflict in legislation

- Flexible schedule including availability on Wednesdays
- Detail-oriented
- Organized with regards to time management, project completion, and communication
- Motivated to make positive change for working families in Indiana

How to Apply
Please send resume, cover letter, and writing sample to Amy Carter, Policy Analyst at acarter@incap.org. Applications will be accepted on a rolling basis until November 15, 2019 or the position is filled.

The Indiana Institute for Working Families is committed to building a diverse, inclusive staff. We encourage applications from individuals whose lived experiences can help to shape our priorities and our advocacy.

For more information about the Institute, please visit:

Friday, November 8, 2019

Guest Blog Post: Diaper Need – an Overlooked Issue in our State

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

Our Message to the Interim Study Committee: Strong Rate Caps Would Stop Predatory Lending

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.

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

Jessica Fraser: A Crisis of Our Own Making

The Indiana Institute for Working Families has been studying the conditions of poverty and what it takes to be economically self-sufficient for longer than my 11-year tenure here.  In fact, we have been commissioning the Self-Sufficiency Standard for Indiana from the Center for Women's Welfare since 1999.  We spend a lot of time thinking about wage adequacy and how far off the mark our current poverty thresholds (and guidelines) are for giving an accurate account of the number of families struggling to get by in this country. 

So it goes without saying, we are distressed by a recent OMB proposal to change the current inflation measure for the poverty thresholds from the Consumer Price Index (CPI-U) to the Chained Consumer Price Index (C-CPI-U).  Slowing down the growth of an already inadequate measure makes no sense and does not show concern for the lived experience of struggling American families. In other words, we’re changing the yardstick by which we measure poverty so that fewer people get counted.

Why the poverty thresholds we have are already inadequate
The thought that the poverty threshold may grow more slowly over time is concerning when you consider that it is already woefully inadequate in determining who in America is struggling to get by.

The poverty thresholds as they are currently calculated are inadequate in a few very important ways.  First, they are based on the cost of a single category of basic needs: food.  When our definition of poverty was created in the 1960's, food costs were the only data that was really available. We knew that families spent about 1/3 of their budget on food, so it was a simple matter of multiplying by 3 to get a total household budget. However, this methodology has remained stuck in the 1960s.  It is no longer the case that families spend 1/3 of their budget on food. In fact, the Bureau of Labor Statistic's Consumer Expenditure survey finds that Americans spend only about 13% of their income on food. As a result of this antiquated methodology, the poverty thresholds do not take into account the rising costs of necessities such as housing or health care (rising more rapidly than food, it should be noted) or to the introduction of new categories of necessities, namely the high cost of child care. Child care is not a luxury, but a necessity for working parents in today's world. 

Another complaint about the current poverty threshold is that, aside from Alaska and Hawaii, it does not take into account differences in geographic locations. It is the same whether you live in New York City, New York or Tell City, Indiana. This is a major shortcoming when you think about the cost of living differences from state to state. Even WITHIN Indiana, there is a wide variance of cost differences leading to some fairly big differences in self-sufficiency standards throughout the state (holding family type constant). 

Given the inadequacies of the current measure coupled with the fact that changes do not address the real challenges of the measure and actually put it further out of touch with reality, using Chained CPI to determine the poverty threshold is the wrong policy direction!  Defining people out of poverty by methodology alone, and not because situations have improved for American families, is ill-informed and irresponsible. 

What's wrong with Chained CPI?
The problem with using the Chained CPI specifically with the poverty thresholds is that it grows more slowly than the regular consumer price index. The Bureau of Labor Statistics has a great explanation in this video. This may make some sense in the aggregate when you are speaking about the whole economy, but even in the BLS video linked above, the narrator is careful to point out that this is a measure averaged across all consumers and may not reflect the actual inflation rate for individual families or certain specific groups of people.  In its statement on this proposal, the Center on Budget and Policy Proposals links to a recent study indicating that "inflation tends to rise faster for low-income households than for the population as a whole."  Our own research bears out this concept. In our most recent edition of the Self-Sufficiency Standard for Indiana 2016, we found that our self-sufficiency standard for basic needs only (we took the tax credits out) grew considerably more than the Midwest CPI over the same time period, indicating that current inflation measures already underestimate the costs of basic needs. This is particularly concerning since for low-income families, nearly all of their spending falls into this basic needs category.  Our analysis also suggests that "assuming that the CPI reflects the experience of households equally across the income spectrum hides the lived experience of those at the lower end." (pg. 15). 

So to reiterate, the changes we need to make to the poverty measure go well beyond what inflation adjuster we use to adjust the measure each year.  AND we should be looking at data to show us what the actual inflation rates might be for this specific family and not assume that low-income families can make the same choices that the average consumer in the Chained CPI can make. As Talk Poverty put it in their recent blog "for many families who are already choosing between paying the rent and buying food, they are already living as frugally as possible."

Why does this definition matter so much?
This is not just a question of semantics!  The poverty threshold is used to determine the Department of Health and Human Service's "Federal Poverty Guidelines (FPG)."  These guidelines are enormously important as they determine eligibility for nearly every program that helps low-income families nationwide.  And while many of our poverty-fighting programs use a multiplier of the poverty guidelines (e.g. eligibility for SNAP is 130% of FPG, eligibility for WIC is 185% of FPG), the proposed change will have the effect of making some families who would have been eligible under the previous system of adjusting inflation, no longer eligible, cutting them off from the support they need to get back on their feet.  Changing the inflation adjustment method will not only result in failing to count vulnerable Americans, but worse, it will result in failing to give them a hand up when times are tough. 

Choosing to not count these folks in our federal poverty measure and to not serve them doesn't make them cease to exist. They will still be there in our communities, struggling more, with fewer resources to put back into their local economy.  And while in the near term, the effects seem very small, this type of change compounds over time, meaning that down the road it will have larger and more far-reaching consequences that will continue to ripple through our economy. And worst of all, it will be a crisis of our own making.

IIWF will be submitting public comments in response to the OMB proposal and we will be encouraging all of our partners and followers to do the same.  The Coalition for Human Needs has created a portal to make submitting a comment letter very easy. Click here to submit yours!
Tuesday, May 28, 2019

The House Ways & Means Committee Agrees Paid Leave Matters. Now What?

              The Hoosier mom who returned to a cubicle while her infant struggled for survival in the NICU, the dad whose son lay sick in a hospital bed while he worked overtime, and the exhausted caregiver who drove daily from work to her aging father’s home and back again might take comfort in the fact that members of the U.S. House Ways and Means Committee seem to agree on one thing: Congress should be working to expand access to paid family and medical leave. The committee met on Wednesday, May 8th to hear from a panel of experts on the issue. But the committee members’ questions revealed a divergence of opinions on solutions, raising concerns about the likelihood that Congress can find a path to achieve the shared goal of ensuring that more families could find relief from the inhumane situations they currently experience.

Panelists at the hearing spoke to the lessons learned from both the status quo and from existing state-level solutions:

Marisa Howard-Karp shared her personal story of struggling to care for her aging parents, including her father who had suffered from a stroke. “We were terrified about their health and our financial security,” she told the committee, noting that paid family leave would have alleviated at least some of the burden during that stressful time.

Anthony Sandkamp, a small business owner from New Jersey, spoke about the hiring disadvantage he faced prior to New Jersey’s implementation of a state-level paid leave program, and discussed the turnover cost associated with losing a key employee when the employee’s mother was battling cancer. “Replacing employees is expensive, with turnover costs estimated to average one-fifth of an employee’s annual salary,” Sandkamp stated. New Jersey’s paid leave program made offering the benefit “simple and affordable,” he told the committee.

Pronita Gupta, Director of Job Quality at the Center for Law and Social Policy, shared lessons learned from state-based programs, including that we would likely see reduced costs to our social safety net as more families remain economically stable and caregivers are able to reduce the need for nursing home placements. “Evidence also shows that effective access to paid family and medical leave can improve the health of mothers and children; reduce racial disparities in wage loss between workers of color and white workers; improve employer experience by improving employee retention and reducing turnover costs; and increase women’s labor force participation, which can lead to greater economic security for a family and strengthen the overall economy,” she shared.

Suzan LeVine, Commissioner at the Washington State Employment Security Department, discussed the bipartisan program developed in Washington State, where small businesses may also take advantage of grants to help with training costs and higher wage replacement will be offered to lower-wage workers.

Rachel Greszler, Research Fellow at The Heritage Foundation raised concerns about tapping Social Security to fund leave and about accessibility for low-income workers.

        When her turn came to question the panel, Representative Jackie Walorski (IN-2), the only member of the Indiana delegation to serve on the committee, expressed a desire to see broader access to paid family leave, but seemed to dismiss the idea of a national program. She instead raised the idea of using savings accounts, presumably similar to a Health Savings Account or 529s. However, this concept has been criticized for offering little meaningful help to low- and middle-income earners. As Abby McCloskey, economist and member of the AEI-Brookings Joint Working Group on Paid Leave has pointed out, tax-advantaged savings accounts are widely underutilized and skewed to the well-off.  Only a third of workers save for retirement in 401(k)s, according to Census data, and an even smaller percentage invest in HSAs. One reason is that these accounts are designed to benefit those with a federal income tax liability. Additionally, low-wage workers tend to have less disposable income to set aside for weeks without pay, even if the tax shield were applicable say to payroll taxes. Some have proposed that charities or employers could seed the accounts of low-wage workers. But this is not widespread practice today and it’s hard to see how existing incentives would change with this proposal.”

      As the conversation on how to meaningfully expand access to paid leave continues, the Indiana Institute for Working Families will continue to host community conversations throughout the state to understand the needs of Hoosier families and businesses, as well as to highlight the potential benefits of expanded access and the costs of doing nothing. We will also continue to monitor policy proposals for the following key features:
·       Is it inclusive? A paid leave program that only serves new parents will leave out three out of four individuals who currently take leave under the Family and Medical Leave Act. A car accident or cancer diagnosis should not drive a family into poverty. At the same time, family caregivers, the backbone of our eldercare system, should receive sufficient support to continue their important work serving our nation’s aging population. An optional program or tax incentive will leave many out – or, as Rep Larson stated, “Our concern when you say flexibility is it means flexibility to do nothing.” We are looking for a paid leave solution that covers all workers for all of the major reasons people take family and medical leave.
·       Is it portable? In today’s economy, workers will likely change jobs many times. In fact, according to the Bureau of Labor Statistics, individuals born between 1957-1964 held an average of 11.9 jobs from age 18 to age 50, with nearly half held before age 24. When offered by a particular employer, a paid leave benefit generally requires a worker to achieve a certain tenure. But when state run, paid leave benefits can be portable from job to job, or workers can layer hours from multiple jobs to qualify for leave. We are looking for a paid leave program that allows workers to carry their earned benefit from job to job.   
·       Is it accessible to low-wage workers? Early iterations of state paid leave programs offered flat wage replacement levels that made it difficult for low-wage earners to meet their basic needs while on leave. As Suzan LeVine noted in the hearing last week, “A minimum wage worker with family responsibilities often struggles to get by on their full salary. Therefore, a benefit that offers significantly less is often inaccessible.” Accordingly, Washington State will offer up to 90% of a workers average weekly wage when its program is fully implemented. We are looking for a paid leave program with robust wage replacement at lower levels of income.   
·       Is it sustainable? A long-term policy solution that proposes to provide paid leave to workers will be self-sustaining and will not create budget deficits that must be filled through cuts to other programs or impossible choices for families. As Rachel Greszler pointed out in her testimony, “a mere 21 percent of Americans [are] willing to trade lower funding for education, Social Security, and Medicare in order to implement a national paid family leave program.” Tapping Social Security or Unemployment Insurance funds, for example, should not be considered unless new funding streams will result in programs that are adequate to both their original and new purposes. We are looking for a paid leave program with an affordable and sustainable funding mechanism.

What can Hoosiers who support paid leave do to push the conversation forward? Hoosiers can contact their federal representative and let him or her know that you are eager to see action on this issue. Sharing a personal story can be a powerful way to connect (you can also share your story with the Institute here). Would you like to be more involved? Contact us for advocacy opportunities!  

Monday, May 13, 2019


Blog Archive

Calculate the living wage for 70 different family types in all 92 counties

Powered by Blogger.

- Copyright © Indiana Institute for Working Families -Metrominimalist- Powered by Blogger - Designed by Johanes Djogan -