Poverty Is Expensive
Everyone should go check out the new TalkingPoints Cafe site, grown from the blog Talkingpointsmemo.com.
It went live today, and looks like a great resource... A guest blogger kicking things off is former Senator John Edwards. He writes a section called "Poverty is Expensive..." Here are exceprts from Edward's post:
"David Shipler, who recently joined me on a panel at UNC, tells a striking story about a single mother he met while researching his book, The Working Poor. She had no savings and low earnings, so she had to live in a drafty wooden house. This exacerbated her son's asthma. That led to two ambulance rides to the hospital. Those trips led to ambulance charges she couldn't pay. Those charges damaged her credit report. And so then she was denied a loan to buy a mobile home.
That meant she had to stay in that drafty house—the house that contributed to her son's asthma attacks. And she had to buy a car from a sleazy dealership that charged her 15 percent interest. As one little boy David met told his mother, “Being poor is expensive.”That boy was right on.
The Brookings Institution recently released a fascinating study demonstrating how low-income families pay more for all sorts of things. They pay more for groceries and gasoline. They pay more for furniture and appliances. They pay higher prices for insurance and for utilities. And—something that has troubled me for a long time—they pay more for financial services, whether it’s cashing a check or getting a loan.
Here are a couple of examples: In Philadelphia, where the study was conducted, the annual cost of insuring the exact same car and driver, with a perfect driving record, is over $400 more in a neighborhood where the average income is less than $30,000 than it is in a neighborhood with a average income over $70,000. And even in Pennsylvania, a state with a payday lending ban, providers of short-term loans exploit loopholes to charge annual percentage rates over 450 percent.Why is this so important?
To quote the authors of the Brookings study:
“When low-income working families have to pay higher prices for everyday goods and services they have less money to invest in savings, education, homes and home improvements, their retirement, and their children. This holds these families back.”
The good news is there are steps we can take to close the unfair price gap and put money back in the pockets of hard-working families. In my upcoming posts, I’ll talk about some of these steps. For now, the Brookings report is filled with stunning statistics and promising ideas for reform. I encourage you to check it out."