The cost of poverty

Stop here please %283232237447%29 - The cost of poverty

Photo by Emmanuel Huybrechts

It’s quite expensive to be poor in the United States.

I was driving along a minor arterial in a poor part of town. I could tell it was poor because it was grimy and the buildings were old and poorly used. People used the sidewalks there, the sort of people who can’t afford different outfits for work and home and are therefore dressed in oil-stained denim, the sort of people whose fast-food jobs give them uniforms to wear.

There was a motel, named Motor Court or something else with a fancy 50’s flare. It was old, run-down. The sign outside had a daily rate and a weekly rate.

I happened to know one my psychotherapy clients had lived there a few years ago. He was very poor: over 50, he had been made redundant at work ahead of the recession/depression and was having a hell of a time getting good work. The economy ate us all, but it ate him first. The thing is, the weekly rate there was $200 a week, or $800-$1000 a month.

Now Colorado Springs is not Manhattan. A body can get an apartment for a little less than that. So, given that this place serves as semi-permanent housing for poor people, why is the rent so high that these folks have roommates (a deep indignity for my 50+ client who had not needed a roommate since college, 30 years ago)?

Poor people have bad credit and unstable incomes. They pay a tax on housing, a poverty tax based on risk. Spending time collecting rent, being paid late, sometimes getting stiffed, all cost money. Owners of such low-income “housing” need to recoup those losses with higher individual rates per person. And these days, I’m cynical enough to believe that there is a certain amount of profiteering going on here, too: poor folks can’t afford to go anywhere else, need somewhere to live, don’t have lawyers to fight back.

These sorts of poverty taxes are all over our society. Take micro-loans, or payday loans. Without collateral and with dodgy or no credit, poor folk cannot secure typical financing from reputable agencies. Instead, when the money runs out before the next paycheck, people turn to pawnshops, check cashers, and other forms of short-term loans. The interest on these loans can be extravagantly extortionate. They contribute to poverty: when the next check comes in, one has to pay back the loan plus a substantial amount of interest. Final accounting with interest in the hundreds of percents are not at all unheard-of. If you are poor, you get taxed on money. And if you are too poor for a bank account, you get taxed again when you access your money: check cashing fees.

What happens when you get sick? If you are between Medicaid and health insurance or can’t get Medicaid due to a criminal record or non-resident status, then a visit to the doctor is another case of poor-taxes. Insurance and Medicaid set limits on what doctors and hospitals can charge you. Without this limited protection, they can and do charge you whatever you want—with a gun to your head. This is extortion at its worst. To get life-saving or disability-preventing treatment, you have to sign release forms promising payment no matter what.

The most common cause of bankruptcy in the United States in spite of the opening of the Affordable Care Act exchanges and Medicaid expansions is health care costs. A healthcare system for-profit is ruining Americans faster than credit cards and predatory mortgages. These are not remotely the only things poor folk pay more for, but they might be the most important.

Want to get out of poverty to stop paying these poor taxes? You’ll have to pay one more.

Education is the best equalizer we have—if you can afford it. Getting educated is not a sure way out of poverty but it is the surest among the bad options out there. Social mobility is at an all-time low here in the United States, and education has been over-sold as the fix for this problem. If you opt for it, you face predation by for-profit schools: they will accept you to get your loan money when traditional schools don’t like your education record, because you were too poor for a good school. It costs more to buy education when you were denied it earlier in life based on your neighborhood.

You maybe accept all that as a cost of doing business, or maybe you don’t know community colleges and smaller regional colleges can do everything for you that University of Phoenix can but with better support and better graduation rates. What you do not expect is that the government takes part in the exploitation through the Federal student loan program.

If your parents can afford to pay for your education up front, they only pay the cost of tuition and fees. If you are poor, though, you pay compounding interest on your student loans, to the tune of billions of dollars a year in profits to the Federal government.

That’s right: a literal poor tax.

And we are too poor to fight back. We can’t afford lawyers or lobbyists. We are taxed without representation and there is nothing poor students can do about it.

— Jason Dias

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