Things That Cost More If You’re Working
Class
There are approximately 77.2
million workers in the United States that are paid at hourly rates.
That represents 58.7 percent of all wage and salary workers.
Among those paid by the hour, 1.3 million earned exactly the prevailing
federal minimum wage of $7.25 per hour. About 1.7 million
had wages below the federal minimum.
Lawmakers in Congress, the ones responsible for determining the
minimum wage, make significantly more. One estimate, based on the hours they
actually worked, has lawmakers walking out with nearly $608 per hour.
If you want to take it one step further, the CEOs (who pretty
much tell Congress what to do) can make between $7000 and $9000 an hour. That
said, it’s no surprise that any of these people aren’t sympathetic to the
plight of the regular working stiff.
They can hem and haw all they want about irresponsible spending,
four dollar lattes, and the morality of hard work and getting ahead, but the
fact remains that they do nothing to improve the lives of the working poor.
In theory it’s pretty simple, right? Spend less than you earn,
save your money, and—voila — your financial problems are solved. If only it
were this easy.
Being broke sucks as it is, but added obstacles make it harder
for poor people to fight their way to financial security. For example, here are
a few expenses that actually cost more for low-income workers.
A study from the University of Michigan, titled
“Frugality is Hard to Afford”, tracked the toilet paper purchases of over
100,000 U.S. households over a seven-year period.
Researchers found that high income households bought toilet
paper on sale 39% of the time, compared to 28% for low income households. They
also bought more rolls on average compared to low income households.
Overall, the study found that low income households pay about 6%
extra per sheet, and the researchers found:
…the inability to buy in bulk inhibits the ability to time purchases to take advantage of sales, and the inability to accelerate purchase timing to buy on sale inhibits the ability to buy in bulk. We find that the financial losses low income households incur due to underutilization of these strategies can be as large as half of the savings they accrue by purchasing cheaper brands.
And it’s not just toilet paper.
When you’re poor, it’s not easy to buy stuff in bulk or buy
high-quality items that will last.
There are a lot of hidden, systematic ways poor people pay more
for stuff, and there are some expenses that aren’t so subtle.
Oddly enough, the three biggest contributors to Republican
campaigns are businesses that unfairly target the poor: Banks, insurance
companies, and higher education.
If you rent your home or you didn’t go to college, for example,
you’re going to pay more for car insurance and there are some surprising
reasons you might pay more.
The Consumer Federation
of America (CFA) found that lower income drivers pay more
for their insurance, and it’s not because poor people are bad drivers. The study
discovered that good drivers pay $681 more each year on average “due to
personal characteristics associated with lower economic status.”
The CFA requested quotes from five of the largest insurance
carriers in the country. They compared policies for two fictional men and two
women. They used the same car model, address, and driving record.
The only thing that was different was socio-economic traits, and
they found that insurers charged between 40 and 90 percent more for the would-be customers
that were making less money.
Education has been on the radar of politicians recently with the
left wanting to offer affordable higher education and conservatives whining, as
usual, that poor people just want everything for free, but the simple fact is
that the poor already pay more for education.
You would assume that more grants and scholarships are available
to the poor. You’d assume that, but you’d be wrong.
Many colleges, especially private ones, use a method called
“gapping” to squeeze more money out of poorer students and even discourage them
from attending altogether.
The schools basically offer prospective low income students
tuition packages that don’t really meet their financial needs. They underfund
those students, and save the aid for wealthier students who can afford to pay
full tuition rates.
A recent report from the New American Foundation lays it out:
…colleges are increasingly using their own institutional aid dollars as a “recruiting tool,” rather than as a means of meeting a student’s financial need…In practice, this means that the highest-achieving students, who often come from affluent families, receive the most generous financial aid packages from their schools.
Wealthier students get more aid than they actually need, and
poorer students take out bigger loans to make up for the difference — and then
graduate with larger debt loads.
Banks are a main contributor to screwing the poor. For
example, Bank of America’s regular checking account comes with a $14 monthly maintenance fee.
It’s waived if you have a minimum daily balance of $1,500 or
more, which is unreasonable, if not impossible, if you’re poor.
Sure you can avoid that if you sign up for their credit
card and qualify for a certain tier. This might be a decent option, if you have
solid credit. Some banks let you get around it if you have a direct deposit
over a certain amount. That’s great if you have a job that earns enough
and also allows you to sign up for direct deposit.
A study from the National Poverty Center found that
17% of unbanked (people with no bank accounts at all) said their application to
open a bank account was denied.
Others had their existing bank accounts closed because the
minimum balance dropped to an “unacceptable amount.”
Whatever the reason, not having access to these accounts makes
it harder to save, have financial security, or put anything away.
Services that are available to most of us, and taken for granted,
aren’t as easily accessible to low-income households, which means they pay
a lot more for alternatives.
So, while conservatives in Congress continue to rake in their
$174,000 per year, they will continue to lash out at the poor.
They will also, through various pieces of legislation, continue
to make it more difficult for those people in poverty or even just above the
poverty line to improve their situation.
Granted, it is difficult to imagine what others are going
through when you’re surrounded by wealth and are not faced with hard choices,
but it’s their job to know what their constituents are going through.
Maybe they should make even the smallest effort to find out.
Richard Zombeck
is a freelance writer & featured blogger at Huffington Post. He’s much
older and angrier than he looks.
