Summary of America’s poor subsidize wealthier consumers in a vicious income inequality cycle
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Most explanations of income inequality focus on wages or tax law. But the different ways in which the poor and the rich pay for goods and services conceal a form of wealth redistribution that widens the divide. Affluent consumers use credit cards stuffed with rewards, while those at the other end of the income spectrum pay in cash that might come from payday loans or incur overdraft fees. In this thought-provoking article, researcher Aaron Klein offers insights on how skewed US payment systems bankroll benefits to the wealthy at the expense of the less well-off. getAbstract recommends it to financial professionals and those interested in a level financial playing field.
In this summary, you will learn
- How high bank fees, poor credit terms and other payment issues challenge the poor and working class in the United States;
- How the less affluent subsidize wealthier consumers through income-based payment system rewards and costs; and
- How policy makers could help make payment systems more equitable.
About the Author
Aaron Klein is a fellow in economic studies at the Brookings Institution.