Poverty Costs Poor People a Lot

Results of a fairly recent Pew Research survey provoked a fair amount of comment. Seems that 54% of the most financially secure Americans believe that “poor people today have it easy because they can get government benefits without doing anything in return.”

My heart sank when I saw this. Those politicians who call the safety net a hammock have really made an impact, I thought. Or maybe they’ve just expressed what their donors believe.

Analysts and advocates have shown over and over again how major safety net benefits are too low to do what they’re supposed to. We’ve highlighted the work requirements parents must comply with to receive their measly TANF benefits — and other work requirements in SNAP (the food stamp program).

We apparently haven’t made much of a dent where it would count most — in the minds, hearts and pocketbooks of people our policymakers feel they must listen to. Seems pointless to roll out the facts again — at least with the aim of injecting a dose of reality into those minds.

New York Times columnist Charles Blow took a different approach. Look, he said, at how expensive it is to be poor. This is hardly a new observation.

James Baldwin made it nearly 55 years ago. Barbara Ehrenreich supplied first-hand details in Nickel and Dimed — her account of her experiences in several low-wage jobs she took to find out how waitresses, nursing home aides and the like get by.

Costs of poverty are still a worthy topic — for two reasons. The first is that poor people often incur costs that many of us don’t think of because we don’t incur them. The second is that there are things that both the public and private sector can do to reduce or altogether eliminate some of those costs.

Consider one the the examples Blow dwells on — the costs of not having a bank account. Without one, people have to cash their payroll and/or benefits checks — and often pay fees for the service. They’ve got to buy money orders to pay their bills.

Putting these together, the Federal Reserve Bank of St. Louis estimated that households with a net income of $20,000 might pay $1,200 for “alternative service fees.”

Some banks have reached out to such households with low-fee accounts or debit cards that have some of the same features. Well, I have a no-fee account, unless I overdraw. No minimum balance required. And I get free checks too. Which tells me that more banks could offer such accounts to poor customers if they chose to.

Poor people also incur mind-blowing costs when they need a loan to tide them over. Payday loans — so called because they’ll supposedly get paid off when borrowers get their next paychecks — come with annual interest rates as high as 682%, plus charges for taking out the loan to begin with.

Understandably, the loans often don’t get paid off in two week’s time. The lender rolls them over into a new loan, with a new set of fees. Then comes another due date, with considerably more to pay. So … well, you know what happens then.

There’s a whole other cost these payday loans can involve. Some lenders demand post-dated checks or access to a borrower’s bank account so they can collect if the borrower doesn’t show up when the loan is due. And they do try to collect. So the borrower may get hit with an overdraft or bounced check fee.

The Consumer Financial Protection Bureau — that relatively new federal agency Republicans love to hate — recently issued a set of proposals it’s considering to prevent “debt traps” like payday loans. Borrowers would also gain protection against surprise taps on their bank accounts.

So one extraordinary poverty cost may be less in the future. The underlying problem, however would remain the same — paychecks that don’t cover living expenses, even when supplemented by public benefits.

Blow flags transportation costs — about 42% of income for people in the bottom fifth, according to the Leadership Conference. He also notes the costs of traffic tickets promiscuously issued to raise money for local court systems.

Some courts not only charge high fees and fines — more than poor and near-poor drivers can come up with. They charge fees to establish a payment plan and sometimes interest on the unpaid balance. Fall behind and you find yourself in jail — like as not then jobless.

And you’ve got a criminal record, which will make finding another job awfully hard, even if you’ve got some protection from a “ban the box” law, as most job seekers still don’t.

Of course, many poor people don’t have the traffic-stop problem because they can’t afford cars. They’ve got other poverty costs instead. For example, supermarket chains generally don’t locate stores in their neighborhoods because they can’t buy the higher-priced stuff that boosts the bottom line.

So they’re likely to have to rely on corner stores, which not only have nothing like the variety of foods and households products they need, but charge more for what they can buy.

Free transportation directly to a supermarket could alleviate this poverty cost, especially for those able to fix meals at home. It would also give them and their families a better opportunity to eat healthfully — and thus save medical costs in the long run.

Here again, we have both public and private sector solutions. For example, my mother-in-law gets weekly shuttle service to a nearby mall from the agency that operates the public housing she lives in. Some supermarket chains offer shuttle services too — doing well by doing good, as they say.

A Reddit thread contributor points out a wholly separate problem, however. “When you are broke, you can’t plan ahead or buy in bulk…. If ten-packs of paper towels are on sale for half price, that’s great, but you can only afford one roll anyway.”

These are far from the only costs of living in poverty. There’s laundry, for example, when you don’t have your own washer and dryer. There’s having to replace shoes frequently because you can’t afford a pair that will hold up (another Reddit example).

I doubt the most financially secure folks think of these things. Wonder if they’d have a different view if they did. Wonder if they’d use some of that clout they have to help make those government benefits go further.