If You’re Poor, You Pay More Proportionally to Survive
|January 31, 2014||Posted by Staff under Inequality / Concentration|
If you don’t have money you end up spending more to survive.
This 2014 excerpt of Alternet, Jan 29, by Dave Johnson.
It takes money to make money, they say, but if you don’t have money you lose money. Half of us Americans are poor or almost poor now. It’s actually more expensive not having enough money to get by.
Here are nine examples of why it is expensive to be poor.
1. Getting around. When you don’t have the money to get a reliable car you are stuck with time-consuming and not-inexpensive public transportation or an old beater. Old cars break down and this costs money. It costs time. It can cost you a job. Lower-priced older cars will often be the ones that use a lot of gas, sometimes getting less than 20mpg. At today’s gas prices and today’s wages you’re eating up an hour or more’s pay every day just to get back and forth.
2. A place to live. You might be in a week-to-week situation in a budget motel, requiring you to pay with a money order. Money orders cost money so you’re even paying a fee to pay for your place to sleep.
3. Eating. If you don’t have fridge or a stove you might depend on cheap fast food. You depend on what is nearby and local stores in bad neighborhoods are expensive.
4. Banking. 28.3% of Americans conduct at least some of their financial transactions “outside of the mainstream banking system,” meaning they have to rely on expensive alternatives like money orders, check-cashing services, prepaid debit cards, and payday loans. Payday loans cost an average of more than 138 percent in interest and fees.
If you have a bank account that means high fees. You don’t have enough to meet the minimum balance requirements so you pay a monthly fee that eats away at any money you have. You will pay a fee averaging $6 to cash your paycheck. You will be hit by terrible fees if the money runs out before the month does. Overdraft fees are incredible. A Pew graphic illustrates how the median overdraft for a $36 transaction racks up a median $35 in fees. “If an overdraft was treated like a short-term loan with a repayment period of seven days, then the annual percentage rate for a typical incidence would be over 5,000 percent.”
5. Getting scammed. The poor are vulnerable to, and frequent targets of financial scams: high-interest credit cards, mortgage-fraud, insurance scams, supposed-savings scams, etc.
More Illegality: Not getting paid. Wage theft is restaurants stealing tips, employers demanding free time or not even paying the minimum wage, refusing to pay overtime pay when it is due, calling an employee a contractor or a temp, making various deductions from wages, and other ways that workers end up not getting paid for their work. Poor people are vulnerable, and have to take what they can get.
More than 60 percent of low-wage workers have some pay illegally withheld by their employer each week. Low-paid workers lose $2,634 per year, on average, in unpaid wages, or 15 percent of their income.
Meanwhile, the average McDonald’s employee takes seven months to earn what McDonald’s CEO makes in an hour. Ninety percent of Americans are continuing to go further into debt.
Being poor is a trap. It becomes one thing after another that keeps you poor. Plus you pay a high price of guilt and blame.
Ed. Notes: Money is prestige. People with money feel good about themselves, no matter how the money came about. People without money feel bad about themselves, no matter if they struggle against their poverty or not. True, money from work can make one feel proud. But the work part is not essential. Most rich don’t work for the money they get (“thank you very much.”) CEO salaries tell only a small part of the story. There’s still passive income from merely owning stocks, bonds, and real estate.
The money that corporations get is not from selling their goods and services so much as it is from lobbying government: sweetheart deals, lenient enforcement, and tax loopholes. The money that landlords and flippers and lenders get is not for their building — something they might have created — so much as it is for the location, and the value of a location is due to the advantages around it. Good views, nearness to downtown, low crime rates, etc give a site its price (or rent), and such features are created by nature and society, not by owners.
The author wants to raise the minimum wage, but what if you can’t work? Worse, that call reinforces the false view that all income must come from jobs (never mind starting one’s own business) and that the poor are incapable, must stay stuck in lousy work their entire lives, so at least pay them more. A far greater justice than paying one enough to stay stuck in dumb jobs is to pay everyone an income apart from their labor (or capital), an income from the value of land and resources and privileges such as corporate charters in one’s region. Call it a Citizen’s Dividend. It’s a more honest way to enable people to feel good about themselves.