The terms poverty industry or poverty business refer to a wide range of money-making activities that attract a large portion of their business from the
poor
Poverty is the state of having few material possessions or little
. Businesses in the poverty industry often include
payday loan
A payday loan (also called a payday advance, salary loan, payroll loan, small dollar loan, short term, or cash advance loan) is a short-term unsecured loan, often characterized by high interest rates.
The term "payday" in payday loan refers to ...
rent-to-own
Rent-to-own, also known as rental purchase or rent-to-buy, is a type of legally documented transaction under which tangible property, such as furniture, consumer electronics, motor vehicles, home appliances, real property, and engagement rin ...
centers, casinos, liquor stores, lotteries, tobacco stores, credit card companies, and bail-bond services. Illegal ventures such as
loansharking
A loan shark is a person who offers loans at extremely high interest rates, has strict terms of collection upon failure, and generally operates outside the law.
Description
Because loan sharks operate mostly illegally, they cannot reasonably ...
might also be included. The poverty industry makes roughly US$33 billion a year in the United States. In 2010, elected American federal officials received more than $1.5 million in campaign contributions from poverty-industry donors.
In poorer countries, the poverty industry exploits the
bottom of the pyramid
The bottom of the pyramid, bottom of the wealth pyramid or the bottom of the income pyramid is the largest, but poorest socio-economic group. In global terms, this is the 2.7 billion people who live on less than $2.50 a day.
Management schol ...
and its extent can at times be used as a litmus test to assess the effectiveness of poverty-alleviation initiatives. In some cases, the poverty industry directly takes advantage of poverty-alleviation initiatives (e.g. formal, government-supported
microfinance
Microfinance is a category of financial services targeting individuals and small businesses who lack access to conventional banking and related services. Microfinance includes microcredit, the provision of small loans to poor clients; savings ...
). For example, some moneylenders misrepresent themselves as formal microfinance initiatives or obtain loans from formal microfinance initiatives through deception. They on-lend these loans to micro-entrepreneurs (informal
intermediation
Intermediation involves the "matching" of lenders with savings to borrowers who need money by an agent or third party, such as a bank.
).
See also
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Economic inequality
There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of we ...
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Ghetto tax
A cost of poverty, also known as a ghetto tax, a cost of being poor, or the poor pay more, is the phenomenon of people with lower incomes, particularly those living in low-income areas, incurring higher expenses, paying more not only in terms of mo ...
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Misery index (economics)
The misery index is an economic indicator, created by economist Arthur Okun. The index helps determining how the average citizen is doing economically and it is calculated by adding the seasonally adjusted unemployment rate to the annual inflatio ...
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Pay-to-stay (imprisonment) In the United States, pay-to-stay is the practice of charging prisoners for their accommodation in jails. The practice is controversial, because it can result in large debts being accumulated by prisoners who are then unable to repay the debt follo ...
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Predatory lending Predatory lending refers to unethical practices conducted by lending organizations during a loan origination process that are unfair, deceptive, or fraudulent. While there are no internationally agreed legal definitions for predatory lending, a 2006 ...
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Working poor
The working poor are working people whose incomes fall below a given poverty line due to low-income jobs and low familial household income. These are people who spend at least 27 weeks in a year working or looking for employment, but remain und ...
Wage slavery
Wage slavery or slave wages refers to a person's dependence on wages (or a salary) for their livelihood, especially when wages are low, treatment and conditions are poor, and there are few chances of upward mobility.
The term is often used ...
Industry
Industry may refer to:
Economics
* Industry (economics), a generally categorized branch of economic activity
* Industry (manufacturing), a specific branch of economic activity, typically in factories with machinery
* The wider industrial sector ...