If you have disaster insurance on a mortgaged home, chances are, any payout for storm damage will go through your mortgage-servicing company, rather than to you. As David Dayen reports, many tornado survivors in Oklahoma who were counting on insurance to cover repairs are being told they must use the money to pay down their mortgages instead. 

[Photo credit: Tornado damage in Louisiana, by _Wick, Creative Commons.]

Investigative journalist Ken Bensinger of the LA Times exposes yet another abuse of poor people in a car-dependent society. Well aware that their customers need tires to get to work, tire rental companies like Rent-a-Wheel and Rimco are setting up usurious rent-to-own plans for customers who are too poor to buy upfront: 

When the tires on their Dodge Caravan had worn so thin that the steel belts were showing through, Don and Florence Cherry couldn’t afford to buy a new set.

So they decided to rent instead.

The Rich Square, N.C., couple last September agreed to pay Rent-N-Roll $54.60 a month for 18 months in exchange for four basic Hankook tires. Over the life of the deal, that works out to $982, almost triple what the radials would have cost at Wal-Mart.

“I know you have to pay a lot more this way,” said Florence Cherry, a 57-year-old nurse who drives the 15-year-old van when her husband, a Vietnam veteran, isn’t using it to get to his job as a prison guard. “But we didn’t really have a choice.” [LAT]

The price of tires rose by more than half between 2006 and 2012, as the median household income declined. Companies that used to sell custom rims to auto enthusiasts realized they could make more money gouging ordinary people who needed to get to work.

Tires account for just a tiny slice of the $8.5-billion rent-to-own market. But they stand out from the industry’s traditional fare because — unlike with a dinette set — giving back tires means not being able to drive to work. 

“Tires are a necessity,” said Jim Hawkins, a University of Houston law professor who studies the alternative finance industry. “These customers are vulnerable because they have no choice.” [LAT]

Tire financing combines the worst aspects of borrowing and renting. The real interest rate on a rent-to-own tire plan can be up to 120% per annum, or three times the interest rate of the highest-interest credit cards. However, since you are renting the tires rather than borrowing the money to buy tires, you may get a visit from the police if you miss even one payment. Since the tire company owns the tires until the final payment, some police departments treat non-payment as a species of theft. To make matters worse, tire contracts can’t be discharged in bankruptcy because they are rentals rather than loans.

Bensinger has provided yet another example of how greedy companies make poverty ruinously expensive. 

[Photo credit: pecooper98362, Creative Commons.]

[Photo credit: 

Janitors who clean multiple Target stores in the Twin Cities area began a 48-hour strike, Monday. The work stoppage is the latest in a spate of walkouts by low-wage workers in the discount retail and fast food industries. The janitors are demanding parity in pay and benefits with the cleaners who look after Target’s local corporate headquarters. The cleaners at corporate HQ are Target employees represented by SEIU; and they earn over $13 an hour, plus benefits. Whereas their subcontractor counterparts earn just $8.50 with no benefits.

As past Sidney Award-winner Dave Jamieson explains, the workers are also striking over unfair labor practices, namely, management’s alleged interference with their right to organize and bargain collectively. The janitors say that two of their co-workers were fired for attempting to organize. It is all too common for large retailers like Target and Walmart to subcontract the cleaning of their stores to smaller companies that keep their prices low by scrimping on pay, benefits, and job security for their employees. 

[Photo credit: Mr. T. in DC, Creative Commons.]

Past Sidney winner Dave Jamieson tweeted this heartbreaking story about how driving a bus in Guatemala became one of the world’s most dangerous occupations:

There, in the crowded office, the phone lit up. A man’s voice came on the line. It was calm, almost pleasant. You’re going to pay us taxes now, the voice said: 8,000 quetzales a week—about $1,000. If you don’t, we’re going to start killing your bus drivers.

Palo and the rest of the owners looked at the phone, then at each other. Anyone could get a cell phone, drop it off, and make demands. “We thought someone was just trying to take advantage of us,” Palo said. [TNR]

Saul Elbein, the author, explains how the seemingly bizarre killing spree is one of the far-reaching consequences of a U.S.-backed coup in 1954, the ensuing 40-year civil war in Guatemala, the U.S.’s chilly immigration policy towards refugees displaced by the U.S.-fuelled conflict, gang warfare in Los Angeles, and the deportation of gang-affiliated Guatemalan teenagers from the U.S. to a “home” they had scarcely known. All of these factors, plus extreme inequality, created a fertile breeding ground for organized crime. Post-war reconstruction has been all but overshadowed by crime and corruption, and the U.S. bears much of the blame.