YouTube: https://youtube.com/watch?v=9MJNQQ0hIAQ
Previous: Minimalism, The Aesthetics Of Wealth, & The Limits Of Buying Less
Next: the scam of designer brands

Categories

Statistics

View count:55,409
Likes:2,935
Dislikes:0
Comments:518
Duration:19:09
Uploaded:2022-12-13
Last sync:2023-01-18 04:45
Thanks to SoFi for sponsoring this video. Go to https://sofi.com/million to enter SoFi’s Forget Your Student Debt Sweepstakes and view official rules. Void where prohibited.

In this video, Chelsea illustrates just some of the many ways our society criminalizes and punishes people simply for being poor — which continues the cycle of poverty.

Source links:

Lotteries: https://www.liveabout.com/where-does-lottery-money-go-4159831
http://www.naspl.org/wherethemoneygoes/
https://www.bloomberg.com/opinion/articles/2022-11-04/-1-5-billion-powerball-jackpot-a-failure-of-state-governments?leadSource=uverify%20wall

Fines on misdemeanors:
https://www.americanbar.org/groups/government_public/publications/public_lawyer_articles/fees-fines/

Predatory bank fees:
https://www.bankrate.com/banking/checking/checking-account-survey/#interest-checking
https://www.cbsnews.com/news/atm-fee-cfpb-fdic-checking-account-low-income-overdraft-fee/

Unequal education:
https://hechingerreport.org/new-data-even-within-the-same-district-some-wealthy-schools-get-millions-more-than-poor-ones/

Job application gatekeeping:
https://www.marketplace.org/2022/02/17/hiring-based-on-skills-instead-of-college-degrees-opens-up-opportunities-for-millions/
https://www.usnews.com/education/best-colleges/paying-for-college/articles/see-how-student-loan-borrowing-has-change

Join this channel to get access to perks:
https://www.youtube.com/channel/UCSPYNpQ2fHv9HJ-q6MIMaPw/join

The Financial Diet site:
http://www.thefinancialdiet.com

Facebook: https://www.facebook.com/thefinancialdiet
Twitter: https://twitter.com/TFDiet
Instagram: https://www.instagram.com/thefinancialdiet/?hl=en
Hey, guys.

It's Chelsea from The Financial Diet. And thanks to SoFi for supporting TFD.

With the pause on student loan repayments ending on June 30, refinancing your loans could help you save thousands and get back on track. When you refinance with SoFi you can focus on achieving financial goals in other aspects of your life, rather than worrying about how you're going to be managing your student loans. TFD believes that having a good understanding of your student loans is essential.

Having to repay student loans is a source of anxiety for many people, which is why SoFi has committed to paying off $100,000 of student debt for 10 people-- up to $1 million in total. If you refinance with SoFi before the end of the year, you're automatically entered for a chance to have your student loans paid off. SoFi's Forget Your Debt sweepstakes is a special opportunity to remember to refinance if it's the right option for you.

And even if you don't win, you'll potentially save thousands in the long run. With SoFi, you will save thousands of dollars thanks to flexible terms and exclusively low interest rates for federal borrowers. Besides financial advice, SoFi members can take advantage of career coaching and more.

Enter by Sunday, December 31, 2022, for a chance to win. Click the link at SoFi.com/million in our description box to enter the Forget Your Student Debt sweepstakes and you could win up to $100,000 towards your loans to help you forget about student debt if you refi today. No purchase or refi necessary.

Void where prohibited. And today we are going to be talking about one of I think the most important topics that we address here on the channel, which is the ways in which our society taxes and punishes and just sort of relentlessly oppresses the poor. We have a very, very toxic belief system in the United States that if you are poor, it is because of some kind of flaw in your character or inherent lack of discipline, or just because you're dumb and deserve it.

But it is so important to remember that the majority of the poor in America are the working poor. And not that you need to prove that you're deserving of having a basic standard of living in the wealthiest country in the world-- everyone should have access to basic services and a safety net-- but it is worth noting that the stereotype of the poor as being lazy is just literally inaccurate on its face. But that wealth inequality is by far the bigger and more relevant threat to our society than, let's say, a poor person walking around with an iPhone.

We should be a lot more angry at how the ultra rich are able to accumulate massive amounts of wealth and do things like control the very channels of our speech on a whim than by the fact that a single mother working two jobs might be able to access public services. But we simply don't conceive of the ultra rich in the same way we do the poor, and part of the problem has to do with how little we often realize, if we're not personally caught in that cycle ourselves, how much being born into poverty or falling into poverty becomes a cycle from which it is nearly impossible to escape. So today I want to talk about five specific ways that we, as a society in America, punish the poor and all but guarantee that they stay that way, and then blame them for having done so.

Number one is state-funded lotteries. Now, I've spoken in previous videos about how much we can tend to judge people under a certain income level for being drawn to things like the lottery when things like gambling and other financially frivolous behavior is actually pretty well distributed throughout the population. But a lot of people don't realize that in the US, lotteries aren't even private organizations.

They're run by state governments as a means to increase state revenue and they exist in all but a few states in the US. There are individual state-run lotteries as well as multi-state lottery systems like the Powerball or Mega Millions. And states who participate in lotteries are incentivized to encourage their citizens to buy lottery tickets.

This is because, after paying out winnings and retailer commissions and accounting for administrative costs, the rest of the lottery revenue goes to the states, and the more revenue states generate, the higher the payout they get. In 2015, the US Census board estimated that state-administered lotteries put over $21 million into state coffers, and that's not even considering the revenue from larger multi-state lotteries like the Powerball or Mega Millions. And some of the lottery funds states receive go toward good causes, like programs for the elderly in Pennsylvania, preserving historic buildings in Indiana, and funding the Hope Scholarship program in Georgia.

But this way of generating revenue is in itself a form of exploitation because people who are already disenfranchised are far more likely to be the ones buying the lottery tickets. The revenue from the lottery ticket purchases may often-- but not always-- go towards social programs, but why should those who are already economically disadvantaged shoulder the burden of paying for these programs, especially ones that don't even benefit them? Now, this is not to say that a private lottery system would inherently be better.

As I mentioned earlier, there are plenty of ways to fritter away your money-- things like drugs and casinos-- but there is something particularly insidious about having the state itself be the one underwriting a particular kind of frivolous spending that disproportionately targets the poor. Just look at how much is spent on lottery advertisements and what they're actually advertising. Each year, states spend more than $600 million marketing their lotto offerings, often through award-winning ad campaigns like "A Dollar and a Dream." And one oddity of these ads is that they need not be honest about what they're selling.

In fact, Section 1307 of Title 18 of the US Code quite specifically excludes state lotteries from truth-in-advertising laws. And do not kid yourself into thinking that most lottery participation is harmless. State lotteries amount to a regressive tax.

Research has shown that poor people play the lottery more often, spend a higher percentage of their income on it, and are about 25% more likely to gamble for money rather than fun. One national survey found that players making less than $10,000 annually spent $597 on average on lotto tickets, or almost 6% of their income. And worse, these expenditures tend to crowd out spending on necessities such as buying food or paying rent.

Basically, we heavily and deceptively advertise these games as one of the only meaningful ways out of abject poverty, and then punish and stigmatize the poor for engaging in what they're being explicitly sold as a viable dream, and justify it all by using this revenue to pay for social services that we should really be taxing the wealthy to provide anyway. Basically, lotteries are [BLEEP].. And so is the second punishment we put on the poor-- fines for misdemeanors.

So it is not going to come as a shock to anyone who has watched this channel that a lot of our criminal justice system to begin with functions as a tax on the poor. And we also see how, time and time again, similar behaviors in different groups are heavily criminalized and targeted among certain subgroups. For example, white and Black Americans tend to use drugs at similar rates, but Blacks are heavily and disproportionately criminalized for that drug use.

And of course, a lot of this heavy criminalization maps directly onto the poor. And when you look at the breakdown of incarceration by economic class, you see just how much the poor are being incarcerated compared to other parts of society who, again, are often breaking the law at similar levels. A recent study was conducted by Cornell University and FWD.us which found that, in America, approximately one in two adults has had an immediate family member incarcerated for at least one night.

This is approximately 113 million people. Admissions to local jails have exceeded 10 million each year for the past 20 years. And people earning less than $25,000 per year are 61% more likely than people earning more than $100,000 to have had a family member incarcerated, and three times more likely to have had a family member incarcerated for one year or longer.

And it's easy to see how a person being incarcerated even briefly can completely upend their life and push them into a cycle of poverty if they weren't there already. Things like not being able to get to your job, not being able to make things like rent payments or car payments, not having access to child care. Even if you're, let's say, pulled into a jail on false charges, these same disruptions can quickly snowball, especially if you don't have the cash on-hand to do things like post bail, which is how incredibly predatory industries like bail bonds are able to make such a killing in the communities who can least afford to pay it.

But even for people who don't end up literally incarcerated, there are all kinds of fines and then fees on top of those fines for people who commit minor infractions, which push them into a similar cycle of poverty, often for infinitesimally small initial amounts. While punitive fines have always existed, fees have never been as extreme as they are today. In fact, fees are often in excess of the fines.

And many states also impose collection fees, which are payable to private debt collection firms for the cost of collecting the fees. With nearly half of American adults reporting that they couldn't cover a $400 emergency expense, even minimal fees can contribute to an endless cycle of debt. Lisa Foster, director of the Fees and Fines Justice Center, gave the startling example that if an individual in California runs a red light and a camera has evidence of this, that individual incurs $100 fine, but the fees imposed are $390.

The total penalty, therefore, is $490, which is more than a minimum wage worker in California earns in a week. And just a few small examples of how this actually works in practice and puts someone on the hamster wheel of isolation from society and remove the ability to live normally are these extremely indicative anecdotes from recent years. In April of 2016, a 30-year-old woman from Saint Louis was accused of stealing a tube of mascara from a Walmart and was arrested for shoplifting.

She said that she threw away the package and forgot to pay the $8.74 for the mascara. She served jail time, received a fine, and was put on probation. When she didn't appear at a probation hearing, she was sent back to jail, where she fell behind on payments and was sent to jail again.

Her board jail bill is now more than $10,000. While another Missouri woman was arrested for stealing nail polish from a Walmart. She pleaded guilty to a misdemeanor and was sentenced to 30 days in jail.

The nail polish cost $24.29, and after her jail time, she received a bill for $1,400 for room and board. She couldn't afford the board bill and was put in jail again, and this time the bill totaled $2,160. And even outside of things like petty theft for technically unnecessary items like makeup, think about how much of these same crimes are being committed for necessities like food or diapers.

As I've said before on the channel, I was arrested when I was 21 years old, and the initial cause of that arrest was similar to what we're discussing here. I had racked up some moving violations and didn't pay them, which led to my license being suspended, which meant that when I was driving on that license, I was committing a crime. Now, I was able to not have that particular misdemeanor derail my life.

I was able to get what's called a probation before judgment-- basically meaning if you don't do anything bad again, it's wiped from your record-- in large part because I had family members who were able to help me pay all of the associated fines and fees and get myself out of this cycle. I didn't have to miss work, I had people who could help drive me places, and I didn't have a family to support. If I were in a slightly different situation when that happened, that one small infraction could have ended up completely derailing my adult life, possibly rendering me homeless or incarcerated for long periods of time.

Or, in the case of having children who I didn't have anyone could have helped me with, could have led to my children being taken from me, as often happens. I'm very aware of how much even these relatively quote unquote "small privileges" can be life changing because for many people the amount that it takes to send their life spiraling in this negative direction is a few hundred dollars. Number three is a minimum account balance and other bank fees.

So one thing that's important to remember is that the poor in America are quite literally penalized for not having enough money. One of the most harmful types of fees is bank minimum balance fees, which charge bank users for not having enough money in their account. The average monthly fee for interest checking accounts is $16.19, which is the second highest it's ever tallied.

The most common monthly fee for these accounts is $25 for the ninth straight year. And avoiding that fee requires an average minimum balance of $9,658, which is down 2.4% from last year's record of $9,897. The averages for both 2021 and '22 have been up sharply from 2020 when it was $7,550, which was itself a record high at the time.

This means that you could lose $25 a month or $400 a year simply by not keeping an arbitrary amount of money in your account. Which, if we remember that $400 amount, is the cost of an unexpected emergency that many Americans could not afford to pay. And overdraft fees are also costly, as they charge you even more than what you owe if you don't have enough in your account to cover a transaction.

The average overdraft fee is down over the past few years, but still quite a lot higher than it used to be-- $29.80 in 2022 versus $21.57 in 1998. And hefty banking fees are hurting low income households, especially families of color, according to consumer advocates. Hispanic and Black households paid a total of $3.1 billion and $1.4 billion respectively in overdraft fees alone last year.

And while there are now a number of low-fee banking and savings account options and we encourage you to use them, many of them are online-only and thus require access to a computer or smartphone and the internet in order to take advantage of them, which we need to remind ourselves not everyone has ongoing access to. And speaking of not everyone having access to something, number four is access to quality education. So it's pretty common knowledge that the quality of public school education varies widely depending on where you live, and parents will often talk about moving to certain areas, quote, "because of the schools." So even though we know that property taxes do go to fund these school systems-- and that in and of itself leads to huge discrepancy between districts-- even within the same districts, you see enormous disparities based on social class.

But this doesn't mean that, state to state, there are universal standards of performance. We're talking about microgeographies, where even within the same school district, there will be wildly differing qualities at two different schools. At Ronald O'Neal Elementary School in Elgin, Illinois, none of the third graders could read and write at grade level according to state tests in 2019.

Nearly 90% of the school population is considered low-income, and nearly 3/4 are labeled English learners, meaning that the state language arts test assesses their reading and writing ability in a language they're still trying to learn. But just nine miles away sits Centennial Elementary School, where 73% of third graders met grade-level standards on that same test. A fifth of Centennial's student body is considered low-income, and 17% gets extra support as they learn English.

The state has celebrated Centennial for exemplary academic performance and it designates O'Neal as a school in need of targeted assistance. But despite its low performance and its students' needs, O'Neal received $9,094 per student in 2019 in state and local funding, compared to Centennial's $10,559. If O'Neal had received Centennial's per-pupil funding, it would have meant an extra $789,905 in its budget-- money that could have covered more or more experienced teachers, social workers, home-school liaisons, or paid for programs to address students' academic and non-academic needs.

Now, this is just one example of the huge discrepancies that you can see between two public schools in the same district, but it speaks to a larger issue about some schools just simply receiving way more resources, even when you could argue that they are less in need of them. A Hechinger Report analysis found that a lot of factors affect school level spending, but a handful of district practices routinely drive these disparities. Schools with the wealthiest students tend to draw the most experienced teachers, who cost more.

And because small schools cost more to operate without economies of scale, districts that happen to have more of these schools in higher-income areas may end up spending more on wealthier kids. Magnet programs that often serve wealthier student populations drive up spending, both because they're generally small schools and because they frequently get extra funding to support specialized programming. One anecdote from my colleague Holly points to how this trend has existed long before we started looking at spending per school rather than per district.

As she said, I was in my high school's International Baccalaureate program, which was basically an alternative system to AP classes. In order to get in the program, I had to take "pre-IB" classes in middle school. And it wasn't until I was in IB/AP combined arts class in 11th grade, when a girl said she would have loved to do IB if she had been given the option, that I found out that pre-IB was only offered at my middle school-- not the other middle school that fed into our same high school, which was in a poorer part of town.

The kids weren't given the same opportunities, even at a public school, simply because of their socioeconomic status and where they lived. And lastly on the topic of education, we have the hyper-inflated degree requirements for entry-level jobs. So it won't come as a shock to basically anyone who has applied for a job ever that we have increasingly snowballed the extent to which you need higher education in order to be even considered as an applicant for the most entry level jobs, which often do not require said education.

And this leads to a selection bias in which only even a certain class of citizen can be considered to apply for jobs. "Too many people are missing out on opportunities," said Papia Debroy, who leads research at the non-profit Opportunity@Work. There are more than 70 million workers in our US labor force today who are skilled through alternative routes, things like community college or military service. And most often they're learning on the job.

But these people skilled through alternative routes-- or STARs, as she calls them-- have been increasingly excluded from upwardly mobile jobs. Key roles in fields like computer support, health care, and sales used to be filled by a greater share of workers without college degrees, but over the last 20 years those numbers have shrunk. And, "that decline actually translated to STARs being displaced from almost 7.5 million jobs," Debroy has said.

With the advent of online hiring, companies often get hundreds of applications for each job and usually interview fewer than 10 candidates. And in the name of efficiency, employers use a college degree as a proxy to filter applications for the multitude of technical and "soft" social skills that have become increasingly important to jobs over the last decade. And even leaving aside the fact that many of these jobs literally don't require these degrees in order to perform the actual task of the job, and it used to be much more normalized and expected that people learn on the job in these entry level positions, the simultaneous snowballing of the actual cost of getting these degrees means that it's an increasingly elite class of people who can even afford to walk into these job interviews with said degrees.

And for those who can't afford to just have that tuition paid for them, they're increasingly having to put themselves into debt for jobs which have-- you guessed it-- increasingly stagnating wages over that same period of time. Average student loan debt has been on the rise as families try to keep up with soaring college costs. And though 2021 graduates who borrowed to pay for school took out, on average, $208 less in loans compared with the prior year, the average total student debt still continues to hover around $30,000, according to US News data.

We're talking now about normalizing putting yourself into tens of thousands of debt in order to apply for a job which doesn't require that degree in order to get paid minimum wage. It is not surprising that more and more young people are finding themselves burned out and depressed and overall just completely exhausted with the job market that they're entering into because it is, by all definitions, totally unfair and arbitrary. And if there's one thing we can do to help reverse this trend when we're hiring, it is to-- unless in absolutely necessary cases-- get rid of these superfluous degree requirements to apply, as well as the unpaid internships that only a certain class of person can even afford to perform.

Because with those two things still in place and the horribly low wages for entry level jobs, you've just found a slightly more socially acceptable way to only really offer your job to the wealthy. As always, guys, thank you for watching. And don't forget to hit the Subscribe button and to come back every Monday, Tuesday, and Thursday for new and awesome videos.

Bye.