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The combination of predatory lending and predatory-employment practices has a historical precedent in the sharecropping system that kept formerly enslaved black families in the South trapped in a cycle of debt. Since most sharecroppers did not have a steady cash flow, they used their prospective crops as collateral to finance loans from the country store, a merchant who faced little competition and could therefore set interest rates as high as 50 or 60 percent. White store merchants and landlords built their own wealth on a system that left predominantly black sharecroppers in perpetual debt.
Like that system, Marriott’s employment instability and its credit union’s high-fee loans are fueling growing racial inequality. Indeed, Marriott’s mostly black and Latino front-line workforce may be particularly vulnerable to high-cost lending at MEFCU because of the long history of families of color being excluded from the wealth-building opportunities that have benefited white families. As a result, people of color remain less likely to have savings to fall back on when work hours are cut. They become more exposed to predatory lending, which in turn strips additional resources from families and communities, further increasing their reliance on borrowing in the future.
Research
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