ECONOMICS - LOOKING GLASS NEWS | |
The High Cost of Being Poor |
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by Barbara Ehrenreich AlterNet Entered into the database on Monday, July 24th, 2006 @ 19:01:19 MST |
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From food prices to auto insurance, when did poverty get so expensive?
There are people, concentrated in the Hamptons and Beverly Hills, who still
confuse poverty with the simple life. No cable TV, no altercations with the
maid, no summer home maintenance issues -- just the basics like family, sunsets
and walks in the park. What they don't know is that it's expensive to be poor. In fact, you, the reader of middling income, could probably not afford it.
A new study from the Brookings Institute documents the "ghetto tax,"
or higher cost of living in low-income urban neighborhoods. It comes at you
from every direction, from food prices to auto insurance. A few examples from
this study, by Matt Fellowes, that covered 12 American cities: Poor people are less likely to have bank accounts, which can be expensive
for those with low balances, and so they tend to cash their pay checks at
check-cashing businesses, which in the cities surveyed, charged $5 to $50
for a $500 check. Nationwide, low-income car buyers, defined as people earning less than $30,000
a year, pay two percentage points more for a car loan than more affluent buyers. Low-income drivers pay more for car insurance. In New York, Baltimore and
Hartford, they pay an average $400 more a year to insure the exact same car
and driver risk than wealthier drivers. Poorer people pay an average of one percentage point more in mortgage interest. They are more likely to buy their furniture and appliances through pricey
rent-to-own businesses. In Wisconsin, the study reports, a $200 rent-to-own
TV set can cost $700 with the interest included. They are less likely to have access to large supermarkets and hence to rely
on the far more expensive, and lower quality offerings, of small grocery and
convenience stores. I didn't live in any ghettoes when I worked on Nickle and Dimed --a trailer
park, yes, but no ghetto -- and on my average wage of $7 an hour, or about $14,400
a year, I wasn't in the market for furniture, a house or a car. But the high
cost of poverty was brought home to me within a few days of my entry into the
low-wage life, when, slipping into social-worker mode, I chastised a co-worker
for living in a motel room when it would be so much cheaper to rent an apartment.
Her response: Where would she get the first month's rent and security deposit
it takes to pin down an apartment? The lack of that amount of capital -- probably
well over $1,000 -- condemned her to paying $40 a night at the Day's Inn. Then there was the problem of sustenance. I had gone into the project imagining
myself preparing vast quantities of cheap, nutritious soups and stews, which
I would freeze and heat for dinner each day. But surprise: I didn't have the
proverbial pot to pee in, not to mention spices or Tupperware. A scouting trip
to K-Mart established that it would take about a $40 capital investment to get
my kitchenette up to speed for the low-wage way of life. The food situation got only more challenging when I, too, found myself living
in a motel. Lacking a fridge and microwave, all my food had to come from the
nearest convenience store (hardboiled eggs and banana for breakfast) or, for
the big meal of the day, Wendy's or KFC. I have no nutritional complaints; after
all, there is a veggie, or flecks of one, in Wendy's broccoli and cheese baked
potato. The problem was financial. A double cheeseburger and fries is lot more
expensive than that hypothetical homemade lentil stew. There are other tolls along the road well-traveled by the working poor. If
your credit is lousy, which it is likely to be, you'll pay a higher deposit
for a phone. If you don't have health insurance, you may end taking that feverish
child to an emergency room, and please don't think of ER's as socialized medicine
for the poor. The average cost of a visit is over $1,000, which is over ten
times more than what a clinic pediatrician would charge. Or you neglect that
hypertension, diabetes or mystery lump until you end up with a $100,000 problem
on your hands. So let's have a little less talk about how the poor should learn to manage
their money, and a little more attention to all the ways that money is being
systematically siphoned off. Yes, certain kinds of advice would be helpful:
skip the pay-day loans and rent-to-pay furniture, for example. But we need laws
in more states to stop predatory practices like $50 charges for check cashing.
Also, think what some microcredit could do to move families from motels and
shelters to apartments. And did I mention a living wage? If you're rich, you might want to stay that way. It's a whole lot cheaper than
being poor. Barbara Ehrenreich is the author of 13 books, most recently
"Bait and Switch: The (Futile) Pursuit of the American Dream." This
piece first appeared on her blog. __________________________ Read from Looking Glass News Gated
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