The High Price of Poverty

I think it's absolutely true that the poor pay more for a lot of things than the wealthy, and that this is a rotten shame.  Nonetheless, this article in the Washington Post, which Ezra links favorably, seems just a tad bit . . . off.  It's not just the writing style, which reads like a polished high school essay.  It's that some of the things the author says don't make a whole lot of sense to me.  Like this passage:



Just then, Lenwood Brooks walks out of the check-cashing place. He is angry about how much it just cost him to cash a check. "They charged me $15 to cash a $300 check," he says.

You ask him why he didn't just go to a bank. But his story is as complicated as the various reasons people find themselves in poverty and in need of a check-cashing joint. He says he lost his driver's license and now his regular bank "won't recognize me as a human. That's why I had to come here. It's a rip-off, but it's like a convenience store. You pay for the convenience."

First, banks have other ways to tell who you are, like signature files.  And second, I've used check cashing places.  None of them ever cashed my check without at least as good an ID as my bank would require, for obvious reasons.

Then there's this:

On a hot spring afternoon, Jacob Carter finds himself standing in a checkout line at the Giant on Alabama Avenue SE. Before the cashier finishes ringing up his items, he puts $43 on the conveyor belt. But his bill comes to $52.07. He has no more money, so he tells the clerk to start removing items.

The clerk suggests that he use his "bonus card" for savings.

Carter tells the clerk he has no such card.

Bonus cards don't cost money.  They're free for filling out a form.  This is annoying, but it's not some perk he missed out on because he's poor.

Or this assertion:

"You pay rent that might be more than a mortgage," Reed says. "But you don't have the credit or the down payment to buy a house. Apartments are not going down. They are going up. They say houses are better, cheaper. But how are you going to get in a house if you don't have any money for a down payment?"

Probably the person who said it believes it--but in Washington DC proper, prices have not fallen so low on housing that it's cheaper to pay a mortgage than to rent.  A mortgage alone would almost certainly run you more than an equivalent rental payment, and of course, there are taxes and repairs to consider.

This is all mixed in with very sensible and true observations.  So why did the writer either garble the words, or unquestioningly parrot people saying fairly crazy things?

Passages like this challenge the credibility of a very good point:  access to even small amounts of capital can be the difference between getting by and sinking.  Car downpayments, housing deposits, enough storage to buy in bulk, make it possible to get by on a lower wage.  And those endowments are persistent--if you have to live in a motel room because you don't have enough cash for an apartment deposit, you won't be able to save any money for a car downpayment, or for that matter, an apartment deposit.

There are a fair number of charities that focus on providing this sort of seed capital--interview clothes, apartment hunting assistance--but not enough.  And American political culture is particularly weak at filling those sorts of gaps.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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