Alan Jennings:
Executive Director of the
Community Action Committee
of the Lehigh Valley,
actively pursuing
our mission since 1984.
From the minimum wage (and it sure is minimal!) to smart growth, CACLV is actively speaking out with and for low-income people and their communities. CACLV has earned its reputation as an outspoken advocate, one that is driven by a clear set of values (I hope you will read our Values Statement that you can access from the Home Page).
Here are some recent developments:
Let's celebrate our big recent victory in the fight to increase the minimum wage! OK, that's enough. Let's put the whole thing in perspective. Most low-wage workers will get a raise as a result of the overwhelming passage of Senate Bill 1092. The new law requires these workers to earn at least $6.25 per hour starting January 1, 2007, then $7.15 per hour on July 1, 2007. (There is an exemption for companies with fewer than ten employees, delaying this timetable by one year.) This $4,000 raise for minimum wage workers is probably the best thing advocates could do for low-income families this year. I'm guessing the ripple benefit will affect workers right up the pay scale, too.
But let's put this in perspective. Housing advocates use the "housing wage" to gauge affordability of rental housing. The housing wage is the hourly earnings a household needs to "afford" (defined as 30% of gross household income) the Fair Market Rent in a metropolitan statistical area, or MSA. Well, the housing wage in the Lehigh Valley rose from $12.90 an hour to $14.40 an hour in 2005 alone. There goes the increase in the minimum wage, which hadn't been raised in ten years. Add on the skyrocketing cost of getting to work, then the skyrocketing cost of heating your home, then the increased cost of paying for the health insurance some lucky enough workers are provided, and workers are far behind.
Now put that cork back in the bottle and let's get back to work.
Speaking of effective advocacy, one of the most disheartening aspects of the minimum wage campaign was the noticeable absence of non-profit agencies speaking up for this effort. CACLV worked hard to generate phone calls, e-mails, letters and activists at press conferences and Harrisburg rallies. The response from folks who get paid to care about low-income people was pathetic. Small wonder we can't do better for the people we serve.
Payday lending is one of the more outrageous loan products on the market today. Briefly, payday loans are short-term loans (less than two weeks) that are available at a fee of typically $17 per $100 borrowed. Yes, you read that right. If you do the math, that is a legal annual percentage rate of over 800%! And the Pennsylvania House of Representatives actually passed a bill (HB 1478) last summer weakening restrictions on this product!
Thanks to aggressive work at the federal level, federal banking regulators have forced banks out of the business of partnering with companies like Advance America and United Cash Advance. As a result, if we block HB 1478 from passing in the Senate, we will effectively render illegal payday lending in the Commonwealth of Pennsylvania. CACLV has joined advocates from around the state to keep the Senate from acting on HB 1478. We’re close to a big win on predatory lending.
Unfortunately, we have had much less success on predatory mortgage lending. CACLV was hailed by United States Attorney Patrick Meehan for our work in bringing the Real Estate Center’s fraudulent practices to their attention. As a result the Real Estate Center and its affiliated mortgage brokerage, the Mortgage Access Center, have been shut down and two perpetrators sent to jail for their blatantly fraudulent practices.
However, nothing has been done at the federal or state level to end the legality of some of the outrageous loan practices that victimize approximately 200 victims (of which barely a dozen still have their homes). Victims received perfectly legal loans with adjustable rates that only went up, sometimes with a floor as high as 11.9%! The loans carried five-year pre-payment penalties and, often, 15-year balloons. Taxes and insurance were not escrowed so, when the unexpected tax bill came, the owner was incapable of keeping their homes. All legal.
So, we have joined advocates at the federal and state level to stop such abuses. As a member of the Board of Directors of the National Community Reinvestment Coalition and a member of the Pennsylvania Coalition for Responsible Lending, we have been in a leadership role in this fight. Frustratingly, the industry folks that make billions off these practices and pay the bills for legislators’ reelection have thwarted our best efforts. Next time you see a legislator at the state or federal level, ask them whose side they’re on.