MB Civic

he High Cost of Being Poor
By Barbara Ehrenreich,

AlterNet Posted on July 21, 2006,
Printed on July 24,2006
http://www.alternet.org/story/39273/

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.
(c) 2006 Independent Media Institute. All rights
reserved. View this story online at:
http://www.alternet.org/story/3927

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