It Costs More To Be Poor

It's true: living costs poor people more than the not poor. I bring this up because I read this headline and the supporting report today:

"Study finds median wealth for single black women at $5"

(here's the report upon which the article is based)

Here's a report from the Washington Post that discusses this counter-intuitive truth "The High Cost of Poverty"

Also, here's a report from the Brookings Institutes, almost exactly a year before the WaPo article, discussing the financial costs of being poor, "Public Policies to Alter the Use of Alternative Financial Services among Low-Income Households"

The poor pay more to have access to their income:

• for example -- if you cannot pass a Chex Systems report, then you likely cannot get a bank account, which means you will pay someone to cash your check. If you're not familiar with this concept, the poor will pay somebody money to give them access to the money they earned.

The poor have to pay in terms of housing:

• if you are poor, you likely have a poor credit history, based on this you will not qualify for standard financing for your mortgage. You might be offered a subprime loan, and since about 2006 we've seen what that leads to: massive financial hemorrhaging that can only be stopped by giving the ultra wealthy of the world all the money they want.
• Some might say, "don't buy a house if you can't get good financing." But, of course, paying rent (as everyone who tries to sell housing initiatives to the public typically brings up), means not building wealth and again, loosing that money.

The poor have to pay more for transportation:

• Not unlike financing a home, if you are poor you will likely pay a more punitive interest rate for that car loan...
• ...Unless, of course, you don't buy a car and instead use public transportation. As a regular user of the bus and train services in Atlanta, I can assure you that although our system is very efficient (despite what most white people in the metro area suspect) - public transit's real cost must also include the time spent waiting for transfers and connecting service. This is really a drag now since it seems likely that half the bus routes in the city will be cut soon.

The poor have to pay more for health care:

• The poor tend to work in industries that do not provide things like health care, but they may qualify for limited assistance from programs like Medicaid (maybe)
• The leading reason people (62% of those who filed) filed bankruptcy in 2007 because of medical debts. 92% of those who listed this as their primary reason for filing had $5000 of medical debt or more, this representing more than 10% of their gross income (from the American Journal of Medicine)

But the real cost of being poor vis-a-vis health care is more subtle - because the Federal Poverty Rate as it is, being poor is likely also going to cause a life time of health problems such as diabetes and heart disease.

The Federal poverty rate is not determined by your income, the cost of your housing, the cost of transportation; it doesn't consider medical debt, nor student loan debt, and certainly not consumer debt (credit cards or pay day loans). The Federal poverty rate is a measure of how much it costs to get a certain number of calories (not nutrients, just calories). I've talked about this before, here.

To refresh you: the Federal poverty rate seeks to find the cheapest cost for the individual to get calories. This means that the individual is encouraged to consume the foods that would have the richest calorie pay-off - since you're only given a limited amount of money to spend, you'd better buy the most food at the cheapest cost.

This is why you will see in really poor neighborhoods signs at the (freaking) convenience stores and gas stations that state "Food Stamps Accepted Here."

What foods have the best pay-off? Foods that have been heavily-processed and contain high-fructose corn syrup. They are typically foods that also have really large amounts of fat and calories from fat.

Of course, poverty doesn't fall out of the sky and like lightning strike you: you're typically born into poverty or at the threshold of being lower-middle class. This likely means also that your recipe book (as it were) is filled with foods that made sense to eat two generations ago when your forebears were working the fields and mines - more likely to die from work injuries than live long enough to develop diabetes or heart disease.

More on this later....