The additional cost of poverty...

Factual Questions
1

I live in a mixed neighborhood, economically speaking. I can pass through more and less affluent neighborhoods with ease as I go about my day.

It seems that gas prices in the poorer neighborhoods are higher.

It also seems clearer that while buying in bulk is cheaper in the long run, it’s more expensive in the short run. In other words, if you have only $10 to spend, you’re going to buy the 4-roll pack of toilet paper rather than the 24-roll even if the 24-roll is a much better price per roll. So in the end, the poorer person is spending more to live than the person with more money.

The poorer person is more likely going to live in a house with less efficient windows and appliances. Their power bill should be higher. Etc, etc, etc…

Is there any way to quantify the daily living costs per dollar of income and prove/disprove my theory that it costs more to be poor?

I have a corollary theory. I have some friends that are always living paycheck-to-paycheck. They’ve been evicted twice for non-payment of rent, have pawned vehicles to get daily living money.

They also seem to be poor shoppers. They smoke 20 packs of Marlboro cigarettes between the two of them per week. They don’t buy store-brand soda, they buy national brand. They were praising their recent switch away from pop while pulling the gallon of Arizona brand iced tea from the fridge. Me? I make iced tea using tea bags and my coffee maker.

My corollary theory, albeit based on a limited sample, is that the less income you have, the more likely you are to be spending, well, stupidly. It seems they’re more likely to be successful victims of brand marketing.

Any verifications?

2

I don’t have any stats for you, but I know it’s common that poor people don’t have bank accounts and instead use a check cashing center and take a 2% bath on every paycheck.

3

It’s been awhile since I read it, but I believe Barbara Ehrenreich, in her book “Nickel and Dimed” touched upon this. In particular, inability to pay for first and last months rent and security deposit kept people living in motels that cost more than apartments.

4

Ahh, the “Boots” theory of socioeconomic unfairness. :smiley:

I myself got into the usual cycle:

$10/hour, 40 hours/week, ends up being approximately $350/week for a single female living alone.

Assuming a 4-week month, total monthly income: $1400

$549 for rent.
$120 for summer electricity
$15 for summer water.
$10 for summer natural gas. (Prices are generally higher for gas, lower for electricity in the wintertime, ending up being cheaper overall)
$200 for monthly car and renter’s insurance.
$150 for monthly food (give or take).
We’ll be cheap and say $75 for gas.

Total: $1044

Total surplus: $281

Sounds like plenty, doesn’t it? Assuming you never eat McDonald’s, buy clothes, buy gas, make car payments, use the internet, upgrade your computer, repair your car, watch a movie, go dancing, buy a beer, take care of a pet, or go on a trip, life is fine. This is also assuming you have no kids, no credit cards, and no student loans.

I got into the Terrible Cycle.

Suddenly, your (car part) goes out – air conditioning, or you need new tires. Some emergency happens. You break an arm. You get caught in a hit and run. Suddenly your entire paycheck is thrown into flux. Let’s say it happens two weeks after you pay your rent. Let’s say the repair is $400.

Well you blow off the gas bill and the electric bill this month and you eat ramen, but you can’t buy less gasoline because you need to get to work to get that $350 a week. So you get late fees on the electric and the gas and maybe even your rent, too, but that’s okay because you can pay them off next month, right?

Wrong. One emergency is usually followed by another emergency is followed by a bounced check and bounced check fees, followed by…

You can’t buy $100 shoes that last you five years; you have to buy $30 shoes that last barely a season. You can’t buy a nice car that doesn’t break down because you can’t save the money. You can cut costs by getting crappy insurance and cheaper rent but you’ll pay the remainder in living in a shitty neighborhood. You’re married with children? Sucks to be you, since any job your spouse gets is going to pay you less than decent child care unless you have a mother or brother or cousin you REALLY REALLY TRUST who can help out. Blow off your insurance? Your registration? Your inspection? Get pulled over and pay $400+ in fines for the whole thing.

Because of all this, you have poor credit. You bounced a paycheck and you don’t have a bank account anymore, so you get your checks cashed at a check cashing shop – and pay a premium.

And then the whole thing stresses you out so much you get sick and can’t go to work and then it REALLY starts getting bad. Oh, and you don’t have health insurance.

Add to this the fact that most people in this situation never really learned how to budget, to balance a checkbook, to save money, to bargain shop. They’re not stupid any more than a city slicker lost in the desert is stupid not to know how to get water out of a cactus.

5

One might try and make oneself worth more than $10.00 an hour through more training or education.

6

And if everybody made more than $10.00 an hour through training or education…

7

If you can afford training and education on $10/hour

8

Poorer people indeed spend more to live on a day to day basis than more affluent people. If all that’s within walking/bus distance of your city apartment is Joe’s Quik-stop because all the supermarkets are in the suburbs, then you shop at Joe’s and get ripped off on every meal.

Quality items usually cost more, because they’re worth more sure but if you just don’t have that initial extra money then you buy the inferior product over and over again.

In addition to the victims of brand marketing theory is the possibility that brand status is more important in poorer cultures. The middle class folks I know love to brag about their good bargain finds, commonly buying off brand merchandise because they’re not out to prove to anyone that they can afford better.

9

Jeez. How? Quit work to go to school? Go to school part-time? On loans?

I make more than $14,000 a year and I am single and have no kids so I am not eligible for a **drop **of financial aid. I can take loans out…about $4500 worth. OK, but college costs more than that. Not to mention I somehow have to find time to go to college on a 40 hour work week.

Yes, I am considering working two jobs. But what a naive, horribly ignorant comment to make.

ETA: And I actually make more than $10 an hour…not a lot more, but some more.

10

Yes, and get this training and education while working full time…because you don’t want to be homeless.

Working full time and going to school full time is possible (I do it) but, if the person is sick (possibly due to lack of preventative care because of a lack of health insurance) I doubt it is possible at all.

Remember too, that in many cases the less money someone makes, the more physically demanding their job is. How is this person going to get over their illness? How is this person going to get all their schoolwork/studying done? What if they have kids? How are they going to do a good job at work, and not get fired? Not to mention the harm this situation does to one’s mental health(something I have seen firsthand) etc. etc. etc…

11

Yea, pull yourself up by your bootstraps. Go to work at someplace like Circuit City. Learn, be loyal, stick around, get a few raises then BOOM, get fired for no other reason than that you were considered a highly paid employee. Meanwhile, the CEO is getting paid 3,000 times the wage of the average employee.

That’s the American way these days.

12

It’s a nice thought, but I know double-doctorates with degrees in Physics who work at bookstores.

And it ain’t just because they like books.

Education and hard work help, there’s no doubt about it, but they guarantee absolutely nothing. Not even luck is a guarantee. If you make contacts before you get out of college, you can get a non-temp, non-intern job with a decent company making a decent wage. If you don’t run into problems of venal, nepotistic superiors, if you know how to play corporate politics, if you manage to make yourself utterly unexpendable, you might just have a job until you’re forty. That’s assuming the market you’re in doesn’t collapse, the company accountants are either very good liars or impressively honest…

My father has a truism: nobody ever made a million dollars by being a nice guy.

13

So what you are saying is that a person in this position is hopelessly “stuck”.

Their life is basically over. They have no future. They shouldn’t even try to improve their situation.

What an great attitude!

After graduating from college with a worthless degree (poli sci), I started working at a crappy job making little money. I moved into a questionable neighborhood with 3 other roommates to save money. My car was a piece of junk that one of the roommates worked on for me. In exchange I helped him figure out his textbooks. He was studying auto mechanics to get out of his moneyless situation. I started taking business classes at night at a junior college. The units at these schools are still very inexpensive. Check them out! WE NEVER went out. TV was our entertainment. Three years later I “bought” a business. Actually, I worked for nothing at the business for 3 months to pay for it and lived on savings. That was almost 20 years ago and the business makes $150,000. a year.

I know, I know. Some people’s situation is “different” and A LOT worse than mine was. I got" lucky".

14

Yeah, it would be much better if Circuit City had kept all those extra employees, been outcompeted in the marketplace, gone out of business, and had everyone lose their jobs. That’s the way to go!

15

This principle is, to some extent, present when shopping for durable goods, say at Walmart. Here’s the pattern I’ve seen: You can buy a $100 air conditioner that will last you one summer, or you can buy the quality $400 air conditioner that will last for 10 years. If you only have $100, and it’s 95 degrees out, you’ll buy the cheap one, even though you’ll have to buy the cheap one again next summer, and the summer after that, and so on… It may be stupid to keep spending that way, but if you can’t get together the $400, what other choice do you have?

16

Or even more horrifying, the CEO might have had his salary reduced to only 2950 times the wage of the average employee.

17

Well, bully for you! (seriously. :slight_smile: ) I don’t think anyone is saying that a person in this situation is totally screwed, but defenses are automatically put up when confronted with a simple “Well, just go to school then” or “Look for a better job”(as if it were that simple), mostly because these phrases are used when cutting aid/programs that may help someone. For a healthy young(er) person, there can be reasonable solutions. But, again, kids and illness often exist in this situation (often they are the main cause) which obviously makes it harder to dig out of.

18

Wow, is this number really the threshold for receiving financial aid? Is that for federal aid specificially, or what? That seems incredibly low.

19

Extra employees? No, they only fired the experienced, competant ones who had been loyal to their jobs and the company.

If they go out of business it is because, as bad as their service was before, it is people like me that know that the remaining employees are the lowest paid scratches on the totem pole. I’ll never buy anything from them again and I don’t just shop price.

Again, look at what they pay the empty suits. If those stiffs actually got paid what they earned the company would not only have enough to retain their loyal employees but they could give them another raise.

Not only that, but it’s your kind of thinking that justifies child labor and sweatshops.

20

IIRC California (I noticed your location) tuition at community colleges is around $15/unit. So a three-unit class would be $45 and a four-unit class would be $60 for a California resident. Sixty units at $15/unit is $900. Here in Washington the local community college I looked at before posting costs $76.60/unit for a WA resident. So a three-unit class would cost $229.80 and a four-unit class would cost $306.40. Sixty units would cost $4,596. In either case the student must also buy books and supplies.

Full disclosure: Tuition rates go down if the student takes more than ten credits, so a full-time student will pay less than what I posted above.

Still, it’s more expensive to go to school here than in California. California has excellent community colleges with very good tuition rates for residents. Not all states are so inexpensive.