In short, if you’re poor in America, the economy works in a fundamentally different way than if you have means: rather than giving you opportunities to build up savings and capital, it treats you as an unending source of regular small-bore profit, bleeding you for what little you have. The thread — essentially a chronicle of stories from impoverished Americans — included experiences like buying a cheap $15 pair of shoes at Walmart, and then having to repair them again and again, because poor people are rarely, if ever, able to afford the one-time $60 expense for good shoes. Or buying paper towels one roll at a time, rather than in bulk, because the poor can’t afford the latter — ultimately leading them to “actually pay more than others for common staple goods.” Then there’s the proliferation of rent-to-own stores: the American poor cant afford to drop a one-time payment of $1,500 on a sofa, but they can afford monthly installments of $110 that ultimately add up to over $4,500 for a sofa over time. At a presentation to the conservative American Enterprise Institute (AEI) a few months back, journalist Megan McArdle provided similar examples: if you’re poor, you can’t afford the deposit on an apartment, so you rent out a hotel or motel room per week for less, which winds up costing way more over the long haul. Or you buy a $500 car that needs repairs every few months, because you can’t afford the more reliable $8,000 car. Perhaps most perversely, poorer Americans are so cash-constrained and have so few opportunities to save, that many banks don’t even see the point in opening in their area. A combined 68 million Americans have either no access to traditional banking services, or limited access. Instead, to cash checks or take out loans, they rely on a mishmash of pawn shops, payday lenders, and other unsavory firms, who cumulatively suck up an enormous portion of poor Americans’ incomes through user fees and exorbitant interest rates.
Posted on: Thu, 22 Jan 2015 00:39:43 +0000
Trending Topics
Recently Viewed Topics
© 2015