Last week’s Washington Post has an article that confirms what a lot of people already know: it’s expensive to be poor.
The poorer you are, the more things cost. More in money, time, hassle, exhaustion, menace… "The poor pay more for a gallon of milk; they pay more on a capital basis for inferior housing… [they] actually end up paying more for transportation, for housing, for health care, for mortgages. . . . The poor pay more for things middle-class America takes for granted."
The article mostly focuses on the poor’s relative higher cost of living – caused by things like limited mobility and the predatory practices of many businesses that target them, for example – as a reason people remain poor. One thing the article doesn’t explicitly address, though, is asset poverty: another huge hurdle to overcoming the cycle of poverty.
The fact that asset accumulation is critical to moving people out of deep-rooted and persistent poverty makes these higher prices seem even more frustrating: the more money people spend on higher-cost goods, the less money they have to allocate to savings and investments that will benefit them in the long run. Moreover, few asset-building products are marketed to the poor (instead, you have horrifying ads like this), which makes asset accumulation even more difficult.
In sum, the article is a good reminder that the causes and perpetuation of poverty are often multifaceted and interrelated – approaches to addressing it should be too.
Rimmy, I agree: this is a vexing problem. In financial services, where I work, the poor often subsidize the rich. Your and my (genuinely) free checking accounts are made possible by the tens of billions of dollars of overdraft and returned-check charges collected on poor people's "free" checking accounts. Hardly seems right.
Posted by: James Haworth | August 26, 2009 at 01:52 PM