FAIR MONEY

Face to Face with Inequality

Poverty Apps and What’s Wrong with Them

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The New York Times magazine for May 3 has an article Want a Steady Income? There’s an App for That, about the app Even, which means to tackle extreme income volatility and the attendant risk of having to resort to short-term loans like payday loans and title loans and similar forms of subprime exploitation. As Even explains their (currently non-existent) service:

With Even, you can stop worrying about low paychecks. Because you’ll get the same consistent money, every payday. For $3/week. No interest. Zero fees. Less stress.

In essence, Even looks at the history of your income, calculates the monthly average, and pays out that amount to you regardless of how much you make. When make more, it holds back money to build a cushion. When you make less than the average, it makes up the difference out of your savings–and there’s a suggestion it might even kick in some money if you haven’t built up your cushion yet. In other words, it’s a short-term savings account that costs you money: $3/week. (I’m not sure how “zero fees” manages to add up to $3/week.)

The article’s author, Anand Girigharadas, is appropriately skeptical and point out that if you don’t have enough money, smoothing it out won’t help you.  He  quotes Heather, one of the people he portrays: Thinking about money gives her a jolt, “like you’re about to get into a car accident.” And she feels this way, not because she foolishly spent money she needed to save up, but because she’s got a crappy job and a boatload of debt, incurred in part to receive the training that would qualify her to do that crappy job.

Income volatility is bad, of course, but only if you live near the edge or are already way off the cliff. The real problem is the disappearance of good jobs that pay a predictable living wage. As Girigharadas puts it:

People in Silicon Valley may believe there’s an app for everything. That’s their hammer. But improving the lot of the poor will require other tools, including an old one the valley often wants to wish away: politics.

Efforts to tackle some of the negative consequences of inequality (such as income volatility) without trying to tackle the underlying causes (stagnating wages, shifting more and more risk from the corporation to workers, shifting more and more profits from the workers to the corporation), just end up papering over the ugly truths of unregulated capitalism.

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