The Brookings Institute, a pretty centrist think-tank, has published a report outlining one more way that the poor are kept poor—by being nickeled and dimed to death and by paying much more for services and products than those who can actually afford to pay more for services and products. What better system for perpetuating the status quo?

These additional charges are, ostensibly, a way for profit making enterprises to absorb the additional risk and higher cost of transacting business in poor neighborhoods and/or with those with low incomes and credit ratings (I always thought that a certain amount of loss was part of the “cost of doing business”). But, as the report very wisely points out:

“. . . the existence of these higher costs will also drive perceptions of higher costs, even when there may not be data available to support those perceptions. This also drives up prices.”

Many businesses, “unscrupulous” as they’re called in the report, prey upon the poor and charge them a premium for services that they can’t get elsewhere—they maximize their profit and put food on their own tables by taking food off the tables of others—and this is exactly what it comes down to. They need to be regulated or outlawed, but that won’t happen any time soon.

The poor are robbed by:

1. Check-cashing services
2. Payday and short-term loan services
3. Pawnshops
4. High-interest, high fee, high penalty credit cards
5. High interest, high fee, high penalty loans
6. High interest auto loans
7. High interest mortgages
8. Used car dealers who are more likely to sell them “lemons”
9. High-priced convenience stores, which also offer some of the above services, used because there are no neighborhood supermarkets.
10. Rent-to-own furniture and appliance stores, which proliferate in poor neighborhoods, as do pawnshops and check-cashing outlets

Add to this, higher auto insurance rates, regardless of driving record, and higher medical expenses because of poor or no health plan and you really have a self-perpetuating condition.

The high cost of being poor was also written about in the book Nickel and Dimed by Barbara Ehrenreich.

The Brookings report argues that outlawing and regulating such businesses will actually help the economy because it will allow the poor to acquire ”income-growing assets” [surprise conclusion!].


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