Philadelphia pawnshops saw brisk business during pandemic
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The pandemic has been good for business at pawnshops in Philly and across the state.
State of play: Local and state pawnbrokers saw their sales and loan redemptions spike over the last year and a half, Stanton Myerson, owner of Lou's Jewelry & Pawn in Upper Darby, told Axios.
Yes, but: Inventory dropped as fewer people needed loans by pawning items, defaulted on loans or sold their belongings.
- "The pandemic, all said and done, increased business — it just came in differently," said Myerson, who's also president of the state's Pawnbrokers Association.
Meanwhile, pawnbroker licenses in the city have fallen in recent years, from 40 in 2015 to 32 this year, according to city spokesperson Karen Guss.
How it works: Pawnbrokers lend money on collateral, which is based on the value of an item. These loans don't affect a customer's credit score.
- Pawnshops typically provide loans to the unbanked and those without credit or with bad credit.
Between the lines: As a general rule, bad times are not typically good for pawnshops or banks, Swarthmore College economist John Caskey said.
- But Caskey noted, "This was not a typical downturn due to the substantial increase in unemployment support and the stimulus checks."
- While some borrow from pawnshops due to desperation, Caskey said many borrow because "they are optimistic about their economic situation and are spending more than they are making at the moment."
Zoom out: The National Pawnbrokers Association (NPA) reported late last year that most of its members had seen their customers redeem their existing loans during the pandemic.
- While the majority of NPA members saw sales rise, the volume of loan transactions dropped, according to the association's website.
What they're saying: Myerson and Tod Gordon, owner of the long-time Center City pawnshop Carver W. Reed & Co., credited federal stimulus payments, enhanced unemployment benefits and the closure of casinos for pushing up sales and depressing loans, among other things.
- "Sales were brisk because people had nothing to do but spend money. … Out of boredom, they bought," Myerson said.
- "They were purchasing like crazy," Gordon said. "I couldn't keep a Rolex watch in here for more than five minutes, which is crazy."
What to watch: Loan requests began ticking up in late September, Gordon and Myerson said.
- Myerson questioned whether the end of federal enhanced unemployment benefits pushed more people to request loans.