Michael Barr in WaPo on proliferation of rent-to-own retailers and their impact on the working poor
Michael Barr was quoted in a Washington Post news feature about the boom of the rent-to-own retail industry since the Great Recession. The article, “Rental America: Why the poor pay $4,150 for a $1,500 sofa,” examines the impact these retailers have on the poor working class, whose economic recovery continues to lag.
With little cash and increasingly limited access to credit and bank accounts, low-income Americans “have few other places to turn for their retail needs,” writes reporter Chico Harlan. As a result, says Harlan, they can find themselves paying effective annual interest rates of more than 100 percent at rental centers.
Barr, author of “No Slack: The Financial Lives of Low-Income Americans,” hones in on the lack of access the poor have to loans and credit, pointing to the fact that banks have largely eschewed low-income borrowers in the wake of the subprime mortgage crisis. “Basically, the market pulled back from all low-income borrowers instead of trying to figure out how to serve them,” he says.
Michael S. Barr is professor of law at the University of Michigan Law School, professor of public policy at the Gerald R. Ford School of Public Policy, and a senior fellow at the Center for American Progress and at the Brookings Institution. He is the author “No Slack: The Financial Lives of Low-Income Americans" (Brookings Institution, 2012).