Tag Archives: poverty

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.

 

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Cause and Effect

One of the first rules of academic research is: don’t confuse correlation with causation. In other words, just because two things are related doesn’t mean that one of them caused the other.

Of course, sometimes there is correlation and causation; one thing did cause the other. In those cases, the trick is figuring out which is cause and which is effect.

In Sunday’s New York Times Magazine, economics reporter Annie Lowery took a closer look at the conventional wisdom that marriage “lifts children and families out of poverty.” As she notes, no one disputes the fact that “where marriage is, poverty tends not to be.” There is a definite correlation between marriage and a whole host of positive outcomes for children and families.

That, however, doesn’t tell us that marriage cures poverty. Indeed, recent research suggests we’ve gotten the equation backwards. Living in poverty is a barrier to getting and staying married.  W. Bradford Wilcox, director of the National Marriage Project, puts the issue rather starkly: “Unless we improve the fortunes of poor working people, particularly poor working men, we aren’t going to see marriage coming back.”

The research strongly suggests that the biggest problem facing impoverished people isn’t the fact that they’re single. It’s–wait for it–not enough money. And until that problem is addressed, all the millions of dollars spent on programs offering “relationship counseling” and marriage promotion might just as well be flushed down the commode.

Maybe the millions of dollars going to the various providers of “faith-based” marital advice and middle-class “values” counseling might better be spent on ameliorating poverty. Love is grand, but food comes first.

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And You Thought HJR 3 Was Dumb….

Am I the only resident of the Hoosier state who cannot comprehend the priorities and prejudices–let alone the analytical abilities–of Indiana lawmakers?

It’s bad enough that the most high-profile battle of this session–HJR 3–has given the rest of the country the impression that Hoosiers are 19th Century yahoos determined to buck the headwinds of change. What’s worse is that all the high-profile jockeying to keep GLBT folks in second-class citizenship status has sucked the wind out of everything else going on–obscuring all the other stupid decisions being made at the Statehouse.

One example: HB 1351 which requires the drug testing of TANF recipients. This measure, which will cost taxpayers nearly 1.5 million in fiscal 2016-17 alone — is moving steadily through the General Assembly, despite the fact that in states that have passed such laws , like Florida, courts have held it unconstitutional–and despite the fact that very few abusers were found. (If I had to guess, I’d bet the percentage of drug abusers in the General Assembly is substantially higher than the percentage on welfare. Drugs cost money, and TANF pays $288 per month for a family of three. You try living and buying drugs on that.)

As of March 2013, there were just 26,364 individual Hoosiers receiving TANF.  Of that number, 23,128 were children. So Indiana is proposing to spend a million and a half dollars to test three thousand adults for drug abuse.

Dumb or not, this costly measure of dubious constitutionality and demonstrated ineffectiveness is speeding merrily through the process.  Meanwhile, SB 413, a bill that  would encourage TANF families to accumulate the assets they need to transition off of public assistance [and save taxpayer money], is not expected to go anywhere–despite the fact that other states that have implemented that measure have saved money and helped poor people move toward self-sufficiency.

It’s hard to escape the suspicion that our legislators not only don’t want to help poor folks–they want to punish them for being poor. One reason there are so few adults receiving TANF is that we have already made the process so difficult and demeaning that only 2.9% of impoverished Hoosiers participate.

I guess GLBT folks aren’t the only people Indiana doesn’t want.

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Not Exactly Bragging Rights

A recent analysis by the Bloomberg Administration found that New York’s poverty rate held steady since 2000. That makes the Big Apple the only large U.S. city not to see a spike in that rate.

New York’s Center for Economic Opportunity released the survey last Thursday. It used U.S. Census Bureau data from 2000 and 2012, and determined that the nation’s largest city had maintained a 21.2 percent poverty rate during the intervening 12 years.

It also found that poverty rates in the country’s 19 other largest cities increased, on average, by 36 percent. That’s just an average, however. Rates of increase ranged from 3 percent in El Paso, Tex., to 88 percent in Indianapolis.

That’s right: while we’ve been focusing on bright shiny objects like cricket fields and Super Bowls, we’ve had an 88 percent increase in poverty.

If Mayor Ballard has addressed this issue, I haven’t heard about it.

As a friend of mine recently pointed out, Ballard rarely bothers to visit the Statehouse. He was willing to lobby  for elimination of the at-large council seats, a partisan move that increased his political power, but he’s been conspicuously absent on a whole range of issues having a direct impact on the economic well-being of Marion County residents. His support for public transportation was both tepid and a long time coming, despite the fact that–among other things–transportation is desperately needed to improve poor folks’  access to employment opportunities. He’s said nothing about the importance of expanding Medicaid. Yet lack of access to medical insurance is a major cause of poverty, and the recent hospital layoffs that increase local unemployment are a direct result of Pence’s unconscionable  refusal to expand Indiana’s Medicaid program.

Ballard has also said nothing about the recent, draconian cuts to the Food Stamp program despite the fact that the economic impact of Food Stamp dollars flowing to Marion County is equivalent to holding a Super Bowl every four months.

I guess we know where his priorities lie.

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It’s All Connected….

One of the difficulties in crafting reasonable public policies is that the world isn’t nice and neat, so perfectly logical approaches to problem A often fail because the chosen solution doesn’t  take cause B into account.

This is especially true of efforts to improve public education. Those efforts are already fraught, because a substantial number of those arguing over reforms are acting on the basis of analyses based on political ideology rather than on evidence, and because there is no real agreement on either the nature of the education we’re trying to improve or the accuracy of efforts to measure it.

A persistent bone of contention in these debates has been the effect of poverty. Educators have insisted that poor children bring substantial barriers to learning into the classroom with them; their argument has been dismissed by reformers who respond that the “barriers” are just excuses for poor teaching.

If poverty makes it more difficult for children to learn, reform becomes considerably more difficult–so it is understandable that well-meaning people who want to do something now about low performance would be reluctant to consider how it fits into the mix. (One huge social problem at a time, folks!)

As long as this discussion was largely theoretical, reformers could focus on what happened in the classroom to the exclusion of the rest of poor kids’ lives. Aside from occasional acknowledgments of the role played by urban asthma and lead poisoning, there has been little recognition of the effects of poverty on IQ.

That may change.

Last month, the journal Science published a major study by researchers at Princeton, Harvard and the University of Warwick. (Science is a pre-eminent peer-reviewed journal.) The researchers concluded that “the condition of poverty imposed a mental burden akin to losing 13 IQ points.”

It’s important to clarify what that meant. Poor people don’t really “lose” those IQ points–mental capacities return when the stresses and preoccupations attendant to being poor lessen. The research compared human cognition to bandwidth–there’s only a finite amount of it, and poverty imposes a “mental load” that is the equivalent of losing a night’s sleep, or being a chronic alcoholic. As Princeton’s Eldar Shafir explained,

“When your bandwidth is loaded, in the case of the poor, you’re just more likely to not notice things, you’re more likely to not resist things you ought to resist, you’re more likely to forget things, you’re going to have less patience, less attention to devote to your children when they come back from school.”

This researchers studied adults, but obviously, the deficits they identified would affect the children of poor families in a number of ways.

The question is: what do we do to ameliorate the problem? Can we ever hope to “fix” public education without addressing poverty?

And why are our lawmakers so intent on shredding–rather than mending–the social safety net?

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