It Really Sucks to be Poor

It costs a lot to be poor. Just a few examples:

A recent report released by the Office of the Inspector General (OIG) of the U.S. Postal Service reports that 68 million Americans — more than a quarter of all U.S. households – have no checking or savings accounts.

How do people get along in a society where payments are made by check, or increasingly, electronic transfer? How do the (growing numbers of) people scraping along paycheck to paycheck access short-term loans when they hit a rough spot?

Evidently, by spending a lot more than the rest of us.

According to the report, these households collectively spent about $89 billion in 2012 on interest and fees for non-bank financial services like payday loans and check cashing. That works out to an average of $2,412 per household. The average underserved household spends an astonishing 10 percent of its annual income on interest and fees — about the same amount they spend on food.

As Senator Elizabeth Warren wrote in a column commenting on the report, “The poor pay more, and that’s one of the reasons people get trapped at the bottom of the economic ladder.” Poor people disproportionately rely on the check-cashing stores, pawnshops, payday lenders, and other predatory financial services that took customers for $89 billion in interest and fees in 2012.

But poor people have to contend with more than just predatory lending; they have fewer options across the board.

A few days ago, I wrote about the connection between poverty and marriage; it appears that despite the undeniable correlation between the two, we had the cause and effect backward. Poverty prevents many poor single moms from marrying in the first place. Subsequently, I found research (from professors of psychology and and organizational management) demonstrating that poverty also makes it harder for poor couples who are married to stay that way.

The problem is not that poor people fail to appreciate the importance of marriage, nor is it that poor and wealthy Americans differ in which factors they believe are important in a good marriage. The problem is that the same trends that have exacerbated inequality since 1980 — unemployment, juggling multiple jobs and so on — have also made it increasingly difficult for less wealthy Americans to invest the time and other resources needed to sustain a strong marital bond.

Poor people divorce at a rate that is thirty percent higher than their wealthier peers, with all of the emotional and financial distress that divorce brings in its wake.

Back in 2001, Barbara Ehrenreich wrote Nickeled and Dimed: On (Not) Getting Along in America, in which she documented the difficulties faced by low wage workers–  the added costs for shelter (the poor often have to spend much more on “rent by the week” fleabags than they would pay to rent a decent apartment because they can’t afford the security deposit and first-and-last month rent payments) and food (the poor often live in “food deserts” and have to buy food that is both more expensive and less healthy).

Let’s not even get into medical and dental care. That’s a subject for an entirely separate diatribe. (Folks who can’t afford regular, preventive care end up very sick in the ER, costing everyone more money.)

If we really expect poor people to “pull themselves up by their bootstraps,” maybe we should help them afford the bootstraps.



  1. Nickled and Dimed as a great book. I was a waitress back when I was 21 college student and that book brought back memories I had long forgotten about. I had a tooth abscess and had to ask my Mother for the 300 dollars for the root canal because there was no way I could pay for it. I had 200 dollars for rent, 120 dollars for my car payment and thankfully, got 50% off food when I worked so I could eat a meal that day. I checked my social security slips that showed what I made back then and I brought home a whopping 5,000 that year. I have no idea how I lived on that.

  2. And how about the people at the other end of the stick, the 1%? How likely are they to have empathy for these folks? Paul Piff is a psychologist at the U. of Cal., Berkeley, who has done a lot of research on people who have lots of money, and its effect on them. He says, “specifically, I have been finding that increased wealth and status in society lead to increased self-focus and, in turn, decreased compassion, altruism, and ethical behavior.” In case you were feeling sanguine about the attitudes of the top 1%, this 16 minutes should disabuse you:

  3. So true Sheila! I wish I could get this across to my conservative friends.

    Dental is the worst. I’m a grad student now, and my teeth are terrible. But, the last dentist I visited told me that I could even afford to start fixing them and referred me to a low-cost clinic. The low-cost clinic’s first appointment was 6 months out. So, finally, I’m getting a dentist appointment next month. I’m not “poor” but, I have the feeling I’m going to wind up in that special donut hole where I make too much for the low-cost place and not enough for a private dentist.

  4. The issue is IMHO is Living Wage Jobs. The Government has tried various traditional methods: deficit spending, tax cuts and low interest rates. This worked somewhat in the dim past of the 1950’s and 1960’s. However, one huge change was the re-industrialization of Europe in particular Germany, and Japan after WW 2. These countries caught up with us. Not only this but we had no meaningful energy policy, big gas guzzlers were produced. Conservation became an obsolete word. Production and drill baby drill was the mantra.

    Then we have all the Trade Deals that shipped our Industrial Base over seas or to Mexico. We lost the ability to manufacture athletic shoes via outsourcing. Now we have “call centers” outsourced. It used be said we were making the world safe for democracy, but what we made the world safe for was multi-national corporations.

    We have on a local level billions of dollars in taxes levied on the people to build and maintain stadiums for the Billionaire Owners of Sports Stadiums. If we look back in history we have quite obviously an enormous amount of energy and wealth were dedicated huge castles, palaces and cathedrals. Perhaps some future Archeologist might wonder what happened to our culture to shift the energy and wealth of the society into building stadiums.

    Neither political party has a good track record of keeping the playing field level for the whole. I fear we are in the process of step back to the Medieval Period.

  5. I believe that wealthy couples stay together primarily because they have more money/assets to share/lose and neither wants to give up a nickel. Poor people can psychologically more easily “afford” to divorce; they consider the quality of their lives with this decision, not how much money or how many things they can hang onto or screw their partner out of. Follow the money.

  6. @Chris M, I just now read about your dental situation, and because a member of my immediate family is a Clinic Director at the IU School of Dentistry (located here in Indianapolis on the IUPUI Campus), I figured I’d share with you their website for Patient Services. Here’s the link:

    Although IUSD’s patient services are not free, unless you qualify for Medicaid, they are greatly reduced from what you’d pay for dental services at a private practice. Plus, patients requiring extensive care in excess of $1000 will be given an opportunity to meet with a financial consultant to discuss payment options. In other words, they WILL work with you and whatever your financial situation is.

    Also, I’ve attached a link to a listing of free and reduced cost dental services here in our area.

    Good luck and best wishes. And, by the way, stay away from the ‘corporate’ dental practices. They promise brand new dentists a flat salary of $150K annually, but they work the young dentists to death, micro-manage them, and indirectly (or, intentionally) cause their dentists to prescribe treatment plans that are, frankly, unnecessary but lucrative for the ‘corporate’ dental office. Stay away from Aspen Dental, if you’re an adult. Also, Gental Dental…the list goes on and on.

    Stay away from Kool Smiles for your children’s dental care.

    Aw, what the heck…just read the articles listed on the below link. You’ll get the idea.

    The immediate family member I spoke about is also on the IDA’s Ethics Committee and has been in a leadership position on the IDA’s Peer Review Committee for years. After 25 years of owning a successful private dental practice and now as an IUSD Clinic Director, many private dentists and IUSD professors vouch for the person’s trustworthiness.

    Again, best wishes in your quest for dental care and health!

  7. The current work that needs to be done to my mouth for teeth is reaching $2,300 per tooth for 10 of my teeth. Unfortunately, the 10 are spread out around my mouth so I’m seriously thinking about getting them pulled and have dentures made instead. I’m much too young for this but frankly, the sorry dentists that have worked on my mouth in the past are partly responsible for the awful shape of my teeth. Thanks for those links Eric. I don’t live in Indy anymore but I still appreciate your comment very much. Very helpful.

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