13 ways it costs more to be poor

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Money Talks News / YouTube Why People Retire Poor...
Money Talks News / YouTube

In July 1960, James Baldwin wrote the following in an article in Esquire, “Fifth Avenue, Uptown: a Letter from Harlem”: “Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.”

This week @girlziplocked asked a wonderful question on Twitter.

It’s a great question, and the full Twitter thread is well worth the read. Below, I use some of the responses to the question to talk about 13 ways living in poverty is more expensive than being middle-class.

1. Poverty charges interest 

Does this author ever get it.

A few of the ways the poor pay more in interest:

  • Higher interest because of lower credit scores
  • Loan-shark levels of interest if you have to use payday lending
  • Acquired interest because you’re making minimum payments
  • Overdraft fees
  • Late fees
  • Reconnection fees

2. Break/fix mode 

“Keeping the lights on” is a phrase used in the corporate world to describe a group or organization that is so stressed or strapped that it can’t do anything else. This is the situation poor people often find themselves in.

How can you better yourself and your family if you have to spend all of your time on existing?

3. Inability to take advantage of bulk pricing or competition

When you have to buy small quantities because you can’t afford the larger ones, it ends up costing more.

In addition, as you make more money and your circumstances become better, you’re able to take better advantage of competition. If your transportation is better, you can drive to more places. The poor often do their shopping at neighborhood convenience stores that charge higher prices.

4. Fines and fees

Not being able to pay a fine on time often doubles the fine. If you can’t afford insurance or to register your car, you can be fined.

Often, fines also involve other fees like court fees or convenience charges. Some states will suspend your driver’s license, and then you need to pay reinstatement fees.

Court fees can also be significant and can compound. The people most likely to face arrest and go to jail are poor.

5. Transportation is more expensive

If you take public transportation, the biggest cost is often in time. In Cincinnati, for example, bus service is routed through downtown. If you need to get across town, you may have to connect through a route downtown that adds extra time to each trip you make.

If you’re lucky enough to have a car, it may be at the point of needing constant repair. But it’s unlikely you can afford to get a loan for a newer one.

6. Housing is more expensive

Renting often costs more than a low-interest mortgage on a home. And renting for the short term tends to cost even more.

7. It affects your physical health

Food is often different where poor people tend to shop. The produce is bad and/or they don’t have all the same options. The poor don’t have as much time to cook so they often eat canned, boxed, or other prepackaged foods. All of this can lead to health issues.

8. And your mental health

The overhead, stress, and worry of having to deal with poverty can directly impact how you think. Researchers have found that poverty can reduce your IQ by 10 points.

Sadly, this can result in people being more likely to make mistakes that contribute to extending their poverty.

9. Food insecurity 

Not being able to afford enough food may be an issue as well. Feeding America estimates that one in eight Americans is food insecure. This equates to 40 million Americans, 12 million of whom are children.

10. Losing out on job opportunities

When you’re first starting out, sometimes the only way you can get job experience is through unpaid internships. If you’re poor, this is not a route you can take. Other situations that affect opportunity in the workplace include not being able to move for a job, not being able to get experience for better jobs, not being able to pay for needed training or education, or not being able to interview.

11. You may have to take care of parents or other family members

If you’re poor, you can’t afford day care or elder care for family members. You may also have other relatives who are also poor and who need a place to stay and/or other help.

Several people mentioned that a question they sometimes hear is, “Why don’t you borrow from your parents?” This assumes that parents are available and willing and have money, a very middle-class assumption.

12. Social costs 

People who make it into the middle class often do so because of networking. Many jobs often come through your contacts, whether it’s family, professional relationships, or friends.

Poverty is often very isolating.

13. Higher taxes

This is a critical comment, given all we hear in the media about how the wealthy pay so much in taxes. As a percentage of income, the poor tend to pay more in state and local taxes, even if they don’t pay much income tax. This is because state and local taxes are typically regressive and cost those in the bottom fifth of income earners 11 percent of their income. In addition, they pay payroll taxes for Social Security and Medicare. All told, those in the bottom fifth pay an estimated 20 percent of their income in taxes.

Middle and upper classes may pay less as a percentage of income because they tend to have more loopholes.

Summary

This list isn’t all-encompassing. I’m sure there are other ways it costs more to be poor. What I often encounter, though, are people who talk about how easy it is to overcome poverty. In my experience, these are mostly people who come from a middle- or upper-class background who, if they have ever been poor, have been so temporarily, while in school, for instance.

There is also a strong media narrative in our culture that all that’s needed is to simply work harder. The assumption is that if you just work harder, eventually you will break into the middle class. While that’s still possible, statistically it’s becoming less and less likely in America today.

Sharing personal stories like the ones in this Twitter thread brings these statistics to life.

 

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