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Fact of life for poor: All that they buy costs more
Below poverty line, prices of goods, services and time are higher
AP Photo
A check-cashing operation charges Harrison Blakeney 10 percent extra to send in his phone-bill payment.
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Published: May 24, 2009
WASHINGTON
You have to be rich to be poor.
That's what some people who have never lived below the poverty line don't understand.
The poorer you are, the more things cost. More in money, time, hassle, exhaustion, menace. This is a fact of life that reality television and magazines don't often explain.
So consider this a primer on the economics of poverty.
"The poor pay more for a gallon of milk; they pay more on a capital basis for inferior housing," says Rep. Earl Blumenauer, D-Ore.
"The poor and 100 million who are struggling for the middle class actually end up paying more for transportation, for housing, for health care, for mortgages. They get steered to subprime lending.... The poor pay more for things middle-class America takes for granted."
Like food: You don't have a car to get to a supermarket, much less to Costco, where the middle class goes to save money. You don't have three hours to take the bus. So you buy groceries at the corner store, where a gallon of milk costs an extra dollar.
A loaf of bread there costs you $2.99 for white, $3.79 for wheat. The clerk tells you the gallon of leaking milk in the bottom of the back cooler is $4.99. The milk is beneath the shelf that holds beef bologna for $3.79. A pound of butter sells for $4.49. In the back are fruits and vegetables. The green peppers are shriveled, the bananas are more brown than yellow, the oranges are picked over.
(At a Safeway in suburban Bethesda, Md., the wheat bread costs $1.19, and white bread is on sale for $1. A gallon of milk costs $3.49 -- $2.99 if you buy two gallons. A pound of butter is $2.49. Beef bologna is on sale, two packages for $5.)
Prices in urban corner stores are almost always higher, economists say. And sometimes, prices in supermarkets in poorer neighborhoods are higher. Many of these stores charge more because the cost of doing business in some neighborhoods is higher.
"First, they are probably paying more on goods because they don't get the low wholesale price that bigger stores get," says Bradley Schiller, a professor emeritus at American University and the author of The Economics of Poverty and Discrimination.
"The real estate is higher. The fact that volume is low means fewer sales per worker. They make fewer dollars of revenue per square foot of space. They don't end up making more money. Every corner grocery store wishes they had profits their customers think they have."
According to the U.S. Census Bureau, more than 37 million people live below the poverty line. The poor know these facts of life. These facts become their lives.
Time is money, they say, and the poor pay more in time, too.
When you are poor, you don't have the luxury of throwing a load into the washing machine and then taking your morning jog while it cycles. You wait until Monday afternoon, when the laundromat is most likely to be empty, and you load a cart with all that laundry from four kids and drag it to the corner.
The rich have direct deposit for their paychecks. The poor have check-cashing and payday- loan joints, which cost time and money. Payday-advance companies say they are providing an essential service to people who most need them. Their critics say that they are preying on people who are the most "economically vulnerable."
"As you've seen with the financial-services industry, if people can cut a profit, they do it," Blumenauer says. "The poor pay more for financial services. A lot of people who are ‘unbanked' pay $3 for a money order to pay their electric bill. They pay a 2 percent check-cashing fee because they don't have bank services.
"The reasons? Part of it is lack of education. But part of it is because people target them. There is evidence that credit-card mills have recently started trolling for the poor. They are targeting the recently bankrupt."
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