Poverty and Payday Lending in Mississippi

On January 26, the Wall Street Journal posted a video “Portrait of Poverty in America” with a tangled message and a misplaced emphasis on payday loans.

The video centers on poor economic conditions in Tchula, Mississippi, in Holmes County. Residents of Holmes County have, and have had for some time, an extremely low median household income. A video graphic reads: “Holmes County has the lowest median income in the country.” Census Bureau Data shows that Holmes County had the ninth-lowest median household income back in 1969—a decade before payday loans emerged.

One Vice President from BankPlus, Tchula’s only bank, states in the video: “One of the reasons that a lot of the people in Holmes County are still unbanked or underbanked is the lack of jobs.” A senior VP adds, “Holmes County has some of the highest rates of unbanked and underbanked households in the country.”

Well, without money, who needs a bank?

Other speakers in the video, however, blame the existence of payday lenders for Tchula’s financial malaise—not the lack of steady incomes. To my knowledge, there are no payday lenders in Tchula. Residents must drive to nearby towns to obtain a payday loan.

Payday loan customers are also not unbanked. They must have a bank account. As the senior VP opines, “They need a small dollar loan to makes ends meet. There are not a lot of alternatives to payday lenders.” In other words, they don’t have enough credit to secure loans, even at their own bank. Why?

Are people who urgently need money and who are without other legal credit options truly better off without payday loans? Solving the financial woes of the Delta necessitates creative thinking. Closing access to credit, including payday loans, is unimaginative.