A bill that opponents say would kill thousands of jobs in Colorado would also exacerbate the financial crisis of the state unemployment insurance fund, which has already borrowed over $200 million from the federal government to meet its obligations this year.Already bankrupt, and forced to apply surcharges on employers, the state UI insurance fund would suffer an additional $11 million dollar drain based on the loss of 1,600 jobs in the payday lending industry that House Bill 1351 is expected to cause.
"If the legislature rams through this punitive, mean-spirited, job-killing legislation, ironically, it is the state of Colorado that will need a loan," said Senate Minority Leader Josh Penry, R-Grand Junction. "Now is not the time for government to make what is bad in the economy worse."
Henry Sobanet, principal of Colorado Strategies, a leading economic and policy analysis firm, confirmed the debilitating impact of HB 1351 on the UI system: "We estimate that a fully eligible worker earning $26,650 for a representative (payday advance) company could draw a maximum of $8,000 in UI benefits. Thus, we estimate that the loss of the industry could have a maximum impact ranging from $11.1 to $13.3 million in UI benefit payments."
If passed, HB 1351 would make it untenable for the payday advance industry to operate in the state and force over 500 storefronts to shut their doors. In turn, industry employees--nearly all of whom are full time, full benefit--would seek unemployment compensation benefits. The end result would be a serious additional burden on the bankrupt UI system which will be borne by other employers in the state.
"The public policy implications of HB1351 pose an immediate threat to Colorado's already weakened economy," said Tony Gagliardi, Colorado director for the National Federation of Independent Business. "We do not need to add an additional 1,600 hard-working individuals to the ranks of the unemployed by closing down legitimate businesses in our state."
HB 1351 singles out the payday advance industry in Colorado for elimination through untenable and financially devastating regulation of one-time fees charged by the industry.
The payday advance industry serves 300,000 Coloradans each year, with one of the most stringently regulated and transparent personal credit products available.
As 1 of the 1,600, if this bill passes I will indeed file for unemployment. I will also lose my health insurance (which I am actively using) and will not be able to afford the heart pills I am presently taking.
ReplyDeleteMy customers will be the biggest losers. Overdraw your checking account and are paying a daily fee ($7 to $10) until you can come up with money, TOO BAD. Your car breaks down and payday is a while away, TOO BAD. Got sick, missed a little work, paycheck falls a little short of bills,TOO BAD.
The reason these loans are so expensive is because they are VERY high risk. The payday industry would not survive a 45% annual fee ($3.75 for $100 per month). It would not come close to covering: rent, water, electricity, salaries, health insuance, computer systems,etc.
MEL