Jonathon Nix: The high cost of not having money | Columnists
“Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.” —James Baldwin
How much might it cost to be poor in 21st century America? Isn’t poverty the ultimate cost saver? In fact, this is not the case, far from it.
A few years ago, my wife and I chose to move from a middle-class suburb of Boston to a poorer, post-industrial satellite town. Our new apartment was comfortable and modern, we liked our neighbors and nothing I observed made me think the neighborhood was unsafe.
So it was a shock when, during the change of address process, I learned that our annual car insurance premium had increased by a thousand dollars. Our agent told me the reason was our new address. The rate of car thefts and accidents involving uninsured drivers was higher than in our former city. A thousand dollars for a zip code!
I believed auto insurance was a statewide shared risk pool, like it was when Massachusetts became the first state to have mandatory auto insurance. But the Commonwealth is now one of many states that allow insurers to discriminate geographically.
Drivers who live in more criminal, i.e., poorer ZIP codes, or who have a low credit score (also a mark of poverty), are considered to be at higher risk. Insurers are therefore increasing their premiums and reducing their coverage. The people who live there, who may never be either the victim or the cause of an insurance claim, must include that extra thousand in their annual expenses. This is equivalent, for many of my neighbors, to a 13th month’s rent. Annual premiums have been cited as up to 500% higher in poor towns than in rich towns.
Since that disturbing discovery about higher car insurance premiums, I often notice other high costs imposed on the poor – poverty taxes, as I think of them. Examples include food prices in small urban grocery stores without nearby supermarkets; rent-to-own accommodation or furnishings; higher apartment rents per square foot; and, in less affluent coastal towns in Massachusetts, higher flood insurance rates.
Those who have lost their cars have to pay for taxis to get groceries, doctor visits and even job interviews. (Taxis, which can be a minor luxury or tax deduction for businesses in Manhattan or Boston, are the means of transportation for the poor in low-income areas.) Pedestrian-unfriendly urban redesigns often lead to injuries and quotes. Employment opportunities are limited as it is much more difficult to get to work.
For those in low-paying jobs, family and medical leave benefits are significantly reduced. Part-time or contract jobs often offer no benefits. The working poor with children pay as much for childcare as middle-class parents, which can represent a much higher proportion of their income.
Even government assistance comes with higher costs for the poor: stricter pharmaceutical reporting requirements and Medicaid prescription exclusions in areas with high drug crime rates; housing subsidies that actually increase base rental rates; income eligibility limits, which penalize employment.
Simply having access to banking and credit systems is often a barrier for the poor, with few bank branches located in their neighborhood and overdraft fees eating up a disproportionate percentage of a small balance. For those without access to a bank account, the alternatives are notoriously usurious payday loans and check cashing fees.
Then there are the punitive costs of the legal system, in which a higher proportion of the poor find themselves trapped: cash bail, compound fines for late payment of court costs, the outrageous profit of phone calls to and from jails and prisons.
All of these costs and more are not just inconveniences or discomforts of being poor in America; these are direct monetary costs to be paid. Considered as the percentage of income spent on basic necessities, they can swell to enormous proportions. (That thousand dollar increase in car insurance is 3.3% of income of $30,000, but only 0.7% of $130,000.) Added to the growing difficulty of going from under- class to middle class, they collectively represent a huge obstacle to the pursuit of happiness for millions of poor Americans.
The theme of the rich deserving more than the poor runs through American history. But this is more than a political issue; it is a moral. America subsidizes the affluent and their neighborhoods in many ways: better public schools, superior infrastructure, lower interest rates, corporate entertainment tax deductions, to name a few.
When did we abandon equity? Why have we added the burden of a higher cost of living to the many inconveniences of poverty? What exactly is the moral code that commands us to punish the poor for their poverty and disadvantage the less fortunate for the unintentional crime of having the wrong zip code?
Jonathon Nix is a multimedia freelancer living in Becket and Lawrence. He would like to thank FranAllen Acosta, co-founder of the housing association Lawrence Mi Casita, for his help and support.