Many teachers find themselves in the low- to middle-income part of the economy, and companies like MyPaycheckDirect aim to take advantage of that

If you’ve been to a Target, a Walmart or any other superstore in the last few weeks, you’ve almost certainly seen them – parents with frazzled expressions, clutching lengthy shopping lists and pushing carts heaped high with school supplies ranging from backpacks and binders to scissors, crayons and an apparently infinite supply of composition notebooks.



Perhaps you even count yourself among their number, and you’re adding up the damage this back-to-school shopping binge has done to your family’s budget.

To provide better childcare, the US will have to raise caregivers' pay Read more

If you are feeling the pain, though, you can be fairly sure that your child’s teacher is reeling. Cutbacks to school funding mean that budgets for items like markers, staplers and construction paper have been slashed to the bone. One Connecticut teacher reported that her funding per child for the entire school year is now $1.60, down from $15 about a dozen years ago.

While teachers beg parents for help, and make pitches for support for specific projects from the general public on DonorsChoose.org, they inevitably end up dipping into their own pockets to fill in the gaps. The average teacher forks over $500 of his or her own money every year, with 10% spending more than $1,000 on their students, for a total of $1.6bn nationwide.

Meanwhile, there’s new evidence that teachers are making an ever greater financial sacrifice in other ways. We’re still prone to argue that while teachers tend to collect relatively small paychecks, relative to their levels of education and experience, their benefits help to compensate for that. That long summer holiday? The healthcare and other benefits? The pension?

Well, a new report from the Economic Policy Institute tells us that it’s time to re-evaluate our assumptions. In 1996, in absolute terms, teachers earned 4% less than workers with the same kinds of education and credentials. Today, that wage penalty is 17.3%. Adjusted for benefits, they are still 11% underpaid, compared to a 2% wage gap back in 1996.

The report notes that this is most dramatic for women, for whom teaching was once a way to earn better wages than they could anywhere else. In 1960, the EPI notes, women teachers had a 14.7% wage gap in their favor. Today, they earn 13.9% less than they could, on average, by taking their skills elsewhere.

Some teachers have done the math and are leaving the profession. One Florida woman wrote about what she described as the heart-breaking decision to do just that in the Palm Beach Post. She calculated that, at the age of 32, if she wanted to stop living with her parents and keep her teaching job, her current salary would leave her with about $200 a month for food, gas, cell phone, and any entertainment expenses.

“Could I count my pennies and scrape by? Barely,” she wrote. “But what kind of life is that? And should I have to, with a college degree, after ten years of service, in a career that impacts the lives of our future leaders?”

It’s a reasonable question.

Sadly enough, the cash-strapped position in which many teachers find themselves leaves them in the low- to middle-income part of the economy that is targeted by the same kind of lenders that seek to do business with people with poor or no credit, the underemployed, those without bank accounts or those with spotty work histories.

Last month, the 600,000 or so members of New York State United Teachers, which includes classroom teachers as well as college and university faculty, staff and support staff, received a catalog from MyPaycheckDirect. Endorsed by the union’s benefits department, the company – a division of Bluestem Brands, whose other businesses include the better-known Fingerhut – offers recipients the opportunity to buy a whole array of consumer goods and pay for it in a series of installments. The company minimizes its own risk by capping the amount that someone can buy based on salary and years of experience (if you’re a teacher with only two years of experience, earning only $20,000, you can buy only $500 worth of goods; if you’re making more than $34,000 a year and have been a member of the union for more than 20 years, you’re eligible to spend up to $2,500). And of course, it also will have access to your paycheck, as its moniker implies.

The company trumpets the ease and convenience of the plan. No credit check is required; you can make 26 biweekly payments or 12 monthly payments; best of all, it announces, there are no interest fees!

The problem? Instead of paying interest, a teacher who opts for these installment purchase plan will end up paying a higher price for their new consumer item – often significantly higher – than they would if they had chosen to shop around and been in a position to pay conventionally, whether by using a credit card (even if it took a few months to pay off the full bill, meaning that they would end up paying a few dollars in interest as well as the principal).

I conducted a completely random test of some 30 items, and discovered that every one of them carried a hefty premium price tag. The worst was an Ameriwood Cosco Leni Crib, priced at $659.99 (or $55 a month). For less than four monthly payments, a teacher could have purchased precisely the same crib from Amazon and several other sites; MyPaycheckDirect charged a 266.15% premium for the “convenience” of the 12 monthly payments and no credit check.

Anyone wanting to buy the Rockland three-piece metallic luggage set also faced an outsize premium (183%); they could have paid only $169.49 to Amazon for items for which MyPaycheckDirect are asking $479.99 (or $40 a month).

Most of the other premiums are less extraordinary, but still hefty, especially when put in the context of a teacher’s already limited budget. A 16-cup rice cooker, $40 at Kohl’s, is $60.99 in the catalog; a Hoover cordless handheld vacuum that can be bought for $84.20 at Amazon is $159.99 here. An 80” cat tree for your resident felines, $142.99 at Target, is $199.99 at MyPaycheckDirect. Interested in a LeapFrog LeapPad3 WiFi Learning Tablet? (It is back to school season, after all…) Toys R Us and Walmart will both sell you one for about $90, but MyPaycheckDirect wants $129.99, 44.4% more.

The icing on the cake: while many of those retailers also offer free shipping for big-ticket items, MyPaycheckDirect doesn’t seem to do so.

This online retail campaign isn’t targeting the classic subprime consumer: people who have made poor financial choices and are suffering as a result. Instead MyPaycheckDirect appears to be directing its catalogs at civil servants and other individuals who earn less than other members of society simply because they’ve chosen to put their personal wealth behind other considerations – like educating our children. The company clearly hopes that they’ll throw financial caution to the wind, and overpay simply in exchange for the ability to pay a manageable amount each month.

Carl Korn, a spokesman for NYSUT, says that inside every catalog there’s a letter from the union’s Member Benefits Department advising the recipient “to shop and compare before making a purchase with PayCheckDirect and consider this program as an alternative to using their credit cards”. The union also offers members an array of voluntary financial programs, including financial planning and credit counseling.

“In a perfect world, consumers would always budget carefully, carry no credit card debt and save until they have enough money to purchase what they want,” Korn adds. “In the real world, PayCheck Direct is an appealing option for some of our more than 600,000 members, especially those who might not have the means to purchase products like computers or refrigerators.”

Still, it’s hard to imagine a case, based on the 30 or so items I looked at – other than an emergency replacement of a broken fridge or a dead laptop – where making a purchase from these catalogs is a better option than using a conventional credit card or simply saving a little bit from a paycheck each week or each month until they could purchase it outright.

In the aftermath of the 2008 financial crisis, we’re all alert to the risks associated with predatory lenders. But what about a different kind of profiteer? Firms like Paycheck Direct are all too aware that teachers and others have fallen behind financially; that creates a great new market for them. The only way to fix that is to pay teachers what they’re worth.

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