Hidden Costs of Being Poor

[Telefrog]

I haven't pooped up P&R for a few days, so let's talk economics! No, not the general bad economy, or the state of Chrysler. Let's talk about the cost of being poor (http://cdcu.coop/files/public/AECasey_Report_Double_Jeopardy_2-05.pdf).

Now, be warned that this is a lengthy .pdf, so it may take a while to read through it, but it's a pretty engaging read. Basically, it's all about how businesses gouge folks in lower income brackets.

These trends spell double jeopardy for low- and moderate-income workers and their families. Not only must they make do on a limited budget, they also pay higher prices than middle- and upper-income Americans for many of life’s necessities.

Think about it. How many middle-class families face costs like . . .

• $12 to cash a paycheck every two weeks?
• $5 at the corner grocery for a gallon of milk that would cost $3.50 at any supermarket?
• $200 for a rapid refund loan at tax time?
• Thousands in hidden fees for a predatory mortgage?
• $35 “bounce protection” charge for overdrawing a bank debit card?
• $500 in extra finance charges to buy a television set through a rent-to-own operator?
• An ongoing spiral of debt from a $350 “no hassle” payday loan?

Together, these and other costs mire millions of hardpressed families in economic quicksand. No matter how hard they work to get ahead, many find themselves falling farther and farther into debt—less able to provide for their children, less likely to climb up the economic ladder and taste the fruits of middle-class comfort.

Yes, I was poor (minimum wage, scraping by daily, sleeping on other people's couches) but got out of it thanks to a nice, long stint in the military. On the flipside, I've worked as a manager of (mostly) very poor workers in a Target and watched them struggle with minimum wages, payday loans, and spiraling debt.

Edit: And let's not get bogged down in debates about how "poor in the US doesn't really mean poor like in third world countries."

[Johan]

I would have thought by now most people would realize our current system, politically, economically, educationally, and otherwise, is rigged to enrich the powerful and provide a ready supply of docile laborers. After all, that's what the public school system was created for in the nineteenth century, that's why we're bailing out the wealthy, and that's why schools are supported by local property taxes, to enable the wealthy to enrich their own community's school at the expense of poorer areas.

The system is corrupt and I have no faith in it any longer.

As to the article itself, it's right on the money. Homeownership? It's hard to get out of poverty when you live in a run-down shanty with roaches, your kids get asthma as a result, you spend the bulk of your measly salary on child care and medical care, and your kids attend lousy schools funded by miniscule local tax revenues. Credit? When you don't have much capital, you get raped on fees and interest to obtain access to things taken for granted by those in the middle class and up.

The American dream...to get raped by capitalism and its practitioners, to be chewed up and spit out to rot in debt, illness, and illiteracy. Yay.

[rifter]

You know, things ebb and flow.

With the abysmal economy, you change how you do things. With a decent economy my GF and I make a decent wage. With this downturn, she has been in work for 2 months out of the past about 7. Because her last long-term employment place are asses, she hasn't been able to get unemployment. I have hit a rough spot having to do some emergency repairs on my house.

So, today, I am in that pit of fees from hell, that hurt more and more. It sucks. But, I am working to get a second job. We have a room mate at my house now, and I am working on helping my GF get her web development business up and going. When you are in this hell, you have to work harder, to get out.

I know friends that are in this situation that are worse off than I am, but they honestly don't have as much drive as I do. They don't work harder to make it out. They just live with it. I am not as fatalistic as Johan, but I do believe that those on the bottom are shit on pretty hard at times. As for Johan's comment about being raped... I think he overstates it quite a bit. There is still a chance to get out. It is just harder...

[ShivaX]

As for Johan's comment about being raped... I think he overstates it quite a bit. There is still a chance to get out. It is just harder...

I don't know, hes pretty accurate in his assesment I think. "Getting out" in your words equates to getting to a place where you aren't about to live on the street. For most Americans they're one bad day away from losing everything and having little to no chance to recover from it. If you start out in shit, its nearly impossible to get out of it without getting extremely lucky (and typically getting some sort of outside help from someone be it a private group or the government).

The whole system is fairly weighted in favor of the rich. If you've got money you can more easily get money, which gives you easy access to just about everything. If you don't have money, its hard to get it and just about anything can cripple you financially.

Which is not so say there aren't a bunch of fucking idiots out there. Odds are you don't need that big projection television and the rest of it if you can't afford to dress your kids, but theres plenty of people out there in that type of situation that will have one (though not as many as some would have you believe).

[Ox]

Basically, it's all about how businesses gouge folks in lower income brackets.
I'm not going to say that businesses necessarily selflessly seek to help the poor, but "gouge" is a little strong. There are actually good reasons for all these differences... although I doubt it makes any poor person feel better when he's forking out all this cash he doesn't have.

Let's go through them one at a time:
• $12 to cash a paycheck every two weeks?
Cashing a check entails risk for the financial institution: there's a chance that the check is forged or has been cancelled. If you have a checking account with a bit of money in it and a history with the institution, it's willing to take that risk for you. If you are a complete stranger with no assets to seize, you're obviously a greater threat.

• $5 at the corner grocery for a gallon of milk that would cost $3.50 at any supermarket?
Poor neighborhoods tend to be dangerous. Supermarkets and bodegas are prime targets for robberies and thefts in any location. Together, these factors mean big supermarkets are very reluctant to open stores in poor neighborhoods, and only family-owned bodegas are willing to take the risk. However, food retailing is very much an economies-of-scale business: a small family bodega has to spend a lot more money on wages and rent for every gallon of milk it sells than a supermarket would. Higher costs for the business mean higher costs for customers... and that's not even taking into account the fact that workers generally want more money if there's a good chance a shotgun will be shoved in their faces.

I like how the article notes that supermarkets fled inner cities decades ago, but doesn't even begin to attempt to explain why. People usually have motivations. If you want to change their behavior (say, by getting supermarkets back into inner cities), it's worth looking at why they behave the way they do and seeing if you can change their incentives. Simply decrying anyone who doesn't act how you want to as evil doesn't really help.

• $200 for a rapid refund loan at tax time?
Trusting that you filled out your taxes correctly and honestly? Yeah, I wouldn't loan somebody the amount of his alleged refund for any amount of money.

• Thousands in hidden fees for a predatory mortgage?
"Predatory" is in the eye of the beholder. Most people, especially low-income people, never bother to read contracts. It's kind of hard for any fee to qualify as non-predatory then.

• $35 “bounce protection” charge for overdrawing a bank debit card?
As opposed to having your bounced check returned, getting a $50 bounced check fee from the retailer, and having the retailer destroy your credit?

• $500 in extra finance charges to buy a television set through a rent-to-own operator?
I lease my car; I imagine I'm paying finance charges on that, since I doubt the car company extended an interest-free loan to me. It's a bad deal if you can afford to buy outright, but paying in installment plans incurs additional costs no matter who you are.

• An ongoing spiral of debt from a $350 “no hassle” payday loan?
As far as I can tell, the article is calling for poor people to be denied credit. Maybe some of them would be better off if nobody trusted them. Maybe we all would. But 15 years ago, people who refused to lend to poor people were called racists. And it's awfully paternalistic to declare that poor people, as a class, are too irresponsible to be trusted with control over their own finances. True, but paternalistic. And given the racial makeup of the underclass in America, it's awfully tough to say that without sounding really incredibly racist.

Ultimately, most of these complaints are about the credit market. Since at least ancient Rome, the credit market has been about trust: I trust you will pay me back. In ancient times, you could only get credit from people who knew you and your family members and with whom you had a vast interconnectedness of multigenerational obligations, oaths of fealty, and favors owed. Fortunately, we don't rely upon that anymore, and strangers are willing to trust you under certain conditions. But if you have no track record of repaying your lenders, are judgment-proof because you have no assets to seize or much income to garnish, if there is little preventing you from fleeing town and living under an assumed name or declaring bankruptcy, then I'm probably not likely to trust you very much. That's a very sad situation, but I'm not sure how I wound up the bad guy in this tale.

Or you could go with Johan's theory that the entire system is specifically designed to keep the poor people down. I suppose that might be more emotionally satisfying.

[Ancalagon]

I would have thought by now most people would realize our current system, politically, economically, educationally, and otherwise, is rigged to enrich the powerful and provide a ready supply of docile laborers. After all, that's what the public school system was created for in the nineteenth century, that's why we're bailing out the wealthy, and that's why schools are supported by local property taxes, to enable the wealthy to enrich their own community's school at the expense of poorer areas.

The system is corrupt and I have no faith in it any longer.


Oh you ray of sunshine you.

Unfortunately, you may well be right. Sigh!

I guess in this case I have to ask, do the poor really need credit? I mean, barring things like a mortgage or a loan on a car, do they really need credit? Would using credit be living beyond their means, or would be a reality of the situation that sometimes you just dont have enough money to get the car fixed so that you can go to work?

We grew up in poverty actually, for a few years. I remember having to move because my dad ran out of money to run his smallholding. He went from being a very succesful commercial banker in Johannesburg to operating a smallholding in a rural village (it wasnt even a town), because that was his dream. He didnt want us to grow up in a city. Anyway, long story short, running a smallholding is harder than it looks, he had to take job selling insurance and we had to sell up and move, and were still in poverty and debt some years later. That being said, I know that the only reason we got out of it is because my dad put as much money as he could paying off his debt every month. I guess we probably technically werent in poverty, I mean according to economic definitions, but we were damn poor.

[Kelegacy]

Not to mention minimum wage. I always find it funny (darkly so) that each year congress votes on and approves their own pay raises while keeping the federal minimum wage the same or nearabouts.

I saw a special once (several have been done) showing someone trying to live on minimum wage. It's near impossible. And with the cost of living increases in the past couple years, it's hard enough to get by making a modest salary, let alone minimum wage.

We were on welfare when I was a young child, but my memories of those times are foggy. I went to Head Start with tons of other poor children (I also winded up going to high school with most of them, but very few, if any, ever made it out of the lower class--most are currently living the same lives their parents did). But my mother and father worked hard to secure us a better life...in the similarly plagued middle class. I don't make a lot of money, but it's enough to keep me comfortable enough. And I have a college education, which is a valuable commodity.

I feel for these people. It's a vicious cycle, and they are routinely preyed upon. Whether taking advantage of their class status or just the lack of education, financial or otherwise, they get the shaft.

Middle class America suffers their own issues, but I'm sure there's an overlap somewhere.

[Narradisall]

I didn't have an in depth read of the pdf as I don't have the time right now.

The system is set up to nickle and dime people to death, but a LOT of those costs can be easily avoided. Too much "I want it now" so people pay through the nose.

Some people are poor purely because they lack a great deal of fiscal sense to navigate the system, which, I grant, can be very complex in places.

[Johan]

I suppose that might be more emotionally satisfying.

It really is, too. Indeed, it is.

*cough* The data support me in my assertion regarding the system. (http://www.faculty.fairfield.edu/faculty/hodgson/Courses/so11/stratification/income&wealth.htm)

It's good to be rich. And to stay that way. The system as it is works really, really hard for you if you're unfortunate enough to be loaded. :D

do the poor really need credit?

You might be surprised at how important a credit score is, and you don't have a credit score if you never borrow money. In other words, paying cash for everything doesn't work too well in a society where you can actually have your credit score checked when applying for a job, for example.

We live in a culture that runs on credit and borrowing money.

[Ox]

I guess in this case I have to ask, do the poor really need credit? I mean, barring things like a mortgage or a loan on a car, do they really need credit? Would using credit be living beyond their means, or would be a reality of the situation that sometimes you just dont have enough money to get the car fixed so that you can go to work?
It's best to think of credit as the renting of money: just as people who do not own their own homes pay a monthly fee to borrow the use of a home owned by someone else, so too do people who do not own their own cash pay a monthly fee to borrow the use of money owned by someone else.

In that sense, it's easy to answer whether the poor need to rent money: it depends. The poor rarely have large reserves of cash, so your example of fixing the broken car is a good one: it's absurd to say that the worker should save money until he can afford to fix the car, since he can't get to work without it. Then again, lots of people rent money to make discretionary purchases that could wait until they had amassed sufficient saving. When the poor need credit, they need credit more desperately than any other group; but that doesn't mean they only use it as much as they need it.

The key issue, I think, is that any attempt to condemn or change the system because people sometimes do not use it wisely risks closing off the option for people who would use it wisely.


*cough* The data support me in my assertion regarding the system. (http://www.faculty.fairfield.edu/faculty/hodgson/Courses/so11/stratification/income&wealth.htm)

Don't make statements like that unless your link remotely supports you.

I agree that it's very difficult for the poor to move up in the world, partly because of the structure of the system and partly because of their own choices. My disagreement with you is simply that I don't think malevolence has much explanatory power in this scenario. Nobody sat down and said, "How do we fuck over the poor?" There are good, decent, honest reasons for almost every aspect of modern society, and the fact that all these good decent reasons resulted in a structure that is tough for the poor means it's very difficult to fix. Especially if people insist that every tale needs a villain because it's emotionally satisfying and easier than trying to understand how all this happened.

[Johan]

Don't make statements like that unless your link remotely supports you.

Aaaaaaaand...it does.

My disagreement with you is simply that I don't think malevolence has much explanatory power in this scenario. Nobody sat down and said, "How do we fuck over the poor?"

You need to broaden your interaction with the world around you, in that case.

Besides...malevolent or not, the "intent" does not matter. The bottom line is a stratified society.

[Telefrog]

I'm certainly not absolving folks of the unwise financial decisions that keep them poor. If you have the means to open a bank account, but continue to use a check cashing establishment every payday, then I'm not going to have much sympathy for you. That said, I've been in the situation where I was basically homeless and opening a checking account just wasn't going to happen even though I had a steady (minimum wage) job. If you don't have a permanent address or bank account, there's a lot of stuff that is going to be out of your reach.

I understand that poorer neighborhoods tend to have more business risk associated with them, hence higher prices, but that doesn't explain things like the preponderance of state lottery outlets in low income areas as opposed to the relative lack of them in nicer 'hoods. That seems pretty predatory.

[Kelegacy]

Some people do make terrible decisions that keep them in their current state. It seems stereotypical, but I know many people that stick to the booze and the cigs as entertainment devices since they are moderately cheap comforts and escape mechanisms. However, these costs add up quickly, and it's not uncommon to see a family struggle to feed themselves and thus get state assistance but mom and dad smoke like chimneys. I see people who can't pay copayments for health care assistance ($10 per office visit is all they are liable for) but as soon as they walk out they door they light up. It's an addiction, but it's frustrating to observe. And here in Maine, it's all too common.

However, the middle class is like this as well. I work with people that say they have no money and are living from paycheck to paycheck but the day they get paid they go out and buy the stupidest crap at the nearby junk store. Then they lament the system is keeping them down after their paycheck is gone. In some ways, it is, but they need to take some responsibility for their own actions as well.

I still believe in the American dream. Hard work can equal climbing up a notch. But you have to WANT it. That's why I think finance and economic classes should be mandatory in schools. Education is key to changing one's life.

[Ox]

Aaaaaaaand...it does.
Well, consider me rebuked. How can any man stand obstinate in the face of such crystalline logic?

Besides...malevolent or not, the "intent" does not matter. The bottom line is a stratified society.
Of course the intent (not sure why you use scare quotes) matters. It matters in terms of the moral culpability. Moreover, it matters in terms of fixing the problem. If I think my car is knocking because little devils have possessed the cylinders, and my mechanic thinks it's a timing problem, that difference is going to affect which solutions we prescribe... and which one of them is likely to work.

I understand that poorer neighborhoods tend to have more business risk associated with them, hence higher prices, but that doesn't explain things like the preponderance of state lottery outlets in low income areas as opposed to the relative lack of them in nicer 'hoods. That seems pretty predatory.
Certainly, I oppose state lotteries: they're a tax on being bad at math. But this raises an interesting problem: certain forms of entertainment (like lotteries) are both expensive and particularly popular among the poor. Alcohol is another. This was one of the rationales for Prohibition: excessive alcohol consumption tends to be most concentrated in, and most devastating for, the poor. Obviously, however, Prohibition had its own negative effects.

[Johan]

Well, consider me rebuked. How can any man stand obstinate in the face of such crystalline logic?

I had so much logic to respond to, after all:

Don't make statements like that unless your link remotely supports you.

Not even remotely, eh? Such crystalline logic is difficult to respond to...so I apologize profusely for my failure in meeting you halfway.


Of course the intent (not sure why you use scare quotes) matters. It matters in terms of the moral culpability. Moreover, it matters in terms of fixing the problem.

But you said that:

Nobody sat down and said, "How do we fuck over the poor?

You've apparently predetermined that nobody in our system intends to fuck over the poor. Such crystalline logic leaves me lost for words. After all, if nobody intends harm to the poor in our system, then intent no longer matters, since it is removed as a piece of the puzzle regarding the failures of our system, and the problem must therefore be elsewhere, outside of intent.

Unless the problem isn't harmful intent, but not enough positive intent, in which case, you sound truly progressive and liberal in your social outlook!

[Telefrog]

Certainly, I oppose state lotteries: they're a tax on being bad at math. But this raises an interesting problem: certain forms of entertainment (like lotteries) are both expensive and particularly popular among the poor. Alcohol is another. This was one of the rationales for Prohibition: excessive alcohol consumption tends to be most concentrated in, and most devastating for, the poor. Obviously, however, Prohibition had its own negative effects.

I think most of us can agree that Prohibition doesn't work as long as alcohol is cheap, easy to make, and greatly desired by a large majority of the population. I don't know if Prohibition is a good predictor for ending government-run lotteries. It's a tax on the poor, plain and simple. It's marketed to poor people, it's overwhelmingly made available in poorer neighborhoods, and what little educational funding (about 1%-5% in most states) that comes out of it is not kept in the neighborhoods that pay for it the most.

That's why I think finance and economic classes should be mandatory in schools. Education is key to changing one's life.

I could not agree more. It is unfortunate that the combination of being poor and having a subpar education is so common. It is that basic formula that allows payday loan sharks and scandulously high fee credit cards to exist and thrive.

As I said, the military helped me get on my feet. I came to a point in my life in which I weighed my options and realized that living from hand-to-mouth just could not last. I had to do something. Finishing college wasn't going to happen if I couldn't pay rent, buy food, or books, so I took a break and joined the Army. Of course, that option isn't really viable for many people. Criminal records, bad education, and other issues make enlistment difficult. (Despite the benefits, I'd argue that young people with family responsibilites who want to keep their marriage together are a bad match for enlistment in this day and age.) It's a tough row to hoe when you can't just join the Army for a few years and let Uncle Sam help out with schooling.

[Ox]

I don't know if Prohibition is a good predictor for ending government-run lotteries. It's a tax on the poor, plain and simple. It's marketed to poor people, it's overwhelmingly made available in poorer neighborhoods, and what little educational funding (about 1%-5% in most states) that comes out of it is not kept in the neighborhoods that pay for it the most.
Numbers rackets have existed for a long time. They're not always run by the government. Indeed, illegal gambling was a major problem in poorer communities until we provided legal avenues for it. I'm happy to bring back gambling laws, but prohibition is only one part of the solution and maybe not even the most effective part.

[ClannerDelta]

Having been dirt poor when I was younger. I see a lot of my poorer acquaintances making decisions with their money that my father would have gone ballistic over.

We had a single broken VCR that my dad got from a friend. It was a piece of shit. We had the screw driver right there because it couldn't eject the tape, so you had to open it up and take the tape out. The play and stop button didn't work either, so you had to put it in for it to autoplay. Which sometimes didn't work. :D

We had two cassettes : Cheech and Chong's Up in Smoke (which we weren't allowed to watch) and The Sound of Music. We must have watched The Sound of Music a thousand times. I seriously think I developed a complex because of it.

Then I see a chain smoking drunk decide he needs to rent a big-screen TV for his mobile home so he can watch the game and I just can't see how that's remotely productive.

I'm not saying every poor family is specifically at fault, just that quite a lot of people I've known make very stupid financial choices. Things like looking for the cheapest and most run down vehicle they can find without having any maintenance experience of their own. Too often I see people with shitty cars that might have cost $1000-2000 but then end up costing 4-5x that in parts and service down the road. When they could have had a reliable vehicle for $5000-6000.

Sometimes you simply aren't entitled to the finer things in life. That's what was instilled in me as a child. Everything has a price. You have to be willing to pay the price to get what you want. Sometimes that means going without the luxuries for a while so you can have them for the long term. So that your children can have them.

[Kelegacy]

When I lived in my last apartment I came home from work one day to see an HDTV box in the hallway. These people didn't work, but lived off the system. I was a bit angry. My paycheck had taxes taken out each week so these people could eat and have the state pay their rent, but I couldn't afford an HDTV, at least I couldn't rationalize it.

When I saw the beginning of Idiocracy a few years later, the satire was appreciated. A man and his wife put off having kids until they can afford to raise them, focusing on their careers instead. Meanwhile, another man in a trailer park knocks up his girlfriend and has the goverment pay for everything. Years later the first couple are still trying to balance career and afford a child. The second guy is on his umpteenth child with woman # who knows. Doesn't have to pay a cent, is even paid a stipend from the government. I was that first guy, trying to figure out if this is the time or not to have a child, am I ready, can I afford it, etc. Meanwhile the people around me didn't exhibit such foresight or responsibility. My friend had two children and still cannot afford them. While I was trying to rationalize kids, an HDTV, anything nice, others were indulging and living beyond their means. There are always going to irresponsible members of society, and the rest of us are just going to have to pick up the slack.

However, despite being a part of the burdened middle class, I still wouldn't want to trade places. I might not qualify for free health care or assistance (though my taxes pay for others to have them) and must avoid going to the doctor because of price while those on Medicaid go whenever they have a stomachache, I would not want to be in their shoes one bit.

[Narradisall]

snip.

Welcome to the benefits system.

I still personally believe child benefit should be capped at 2 children *for your whole lie*. After that, you pay for them. I'd be shocked if it didn't curb the people knocking out children.

The system is built so poorly though there is so much room for benefit exploitation.

Here's a recent example I can think of.

Recent development on the Isle of Dogs right near Canary Wharf (Londons Financial Heart), where due to government legislation developers have to give as certain amount of property built to social landlords. So they do. Now you have flats, built a little less well than the others but still what most people would consider decent homes, going to people on benefit. They don't pay a penny in rent for the place, in an area where flats sell for 600k-1.2mil easy.

I was there recently when they were showing around people ranging from lifetime benefit claimants to homeless people. The homeless people were being picky that they didn't like the area, the benefit people were complaining that they couldn't put their plasma tvs up due to the panaramic window view of the city.

I can be sure 100% that the majority of these people will accept these properties, never move in and rent them to yuppies working in the square mile for £1,200+ a mont *easy* while they pay (or dont if they claim housing benefit) £600 a month. Most of them will buy a house and use the social housing rent to pay for their mortgages, and most of them will get away with it.

The system, its so good if you know how to work it.

[Ink Asylum]

I still personally believe child benefit should be capped at 2 children *for your whole lie*. After that, you pay for them. I'd be shocked if it didn't curb the people knocking out children.

Not a bad idea, but that ends up punishing the children as much as, if not more than, the adults.

[Ox]

I still personally believe child benefit should be capped at 2 children *for your whole lie*. After that, you pay for them. I'd be shocked if it didn't curb the people knocking out children.
I'm sure it would. But I doubt that the number of third and additional children born to parents on public assistance would fall to zero. Some kids would then be left without assistance.

It's worth going back and reading the debates over the 1996 welfare reform in the US to see how these debates go. Remember that the '96 reform was far more generous than what people are talking about here. Frankly, if Newt Gingrich were to read this thread, he'd probably accuse you all of being heartless monsters. ;)

[Narradisall]

Not a bad idea, but that ends up punishing the children as much as, if not more than, the adults.

I have very rarely seen cases of the type of people who knock out 3+ children to be treated with much care.

As for Ox's point, I've never looked at it, but I can imagine it was probably very generous. The problem is the system is built for easy abuse at the cost of others. I imagine lots of people very close to the breadline that have no kids and work for a living are punished because they decided not to have children and end up paying for bringing up other peoples kids with less scruples.

Problem is some single person on a low wage will always lose out in taking the punishment over a child. I simple think the incentive to knock out children should be removed.

[alienmastermind]

I had so much logic to respond to, after all

http://i40.photobucket.com/albums/e238/supervillain75/ublvbg.jpg


Please, continue...this is entertaining. :D

[Johan]

Please, continue...this is entertaining. :D

Which one are you? Oh...got it. You're "on the left." :D

Such substantive exchanges are enlightening, are they not? Thank you for posting the extent of your thoughts on this issue.

[rifter]

Not to mention minimum wage. I always find it funny (darkly so) that each year congress votes on and approves their own pay raises while keeping the federal minimum wage the same or nearabouts.

I saw a special once (several have been done) showing someone trying to live on minimum wage. It's near impossible. And with the cost of living increases in the past couple years, it's hard enough to get by making a modest salary, let alone minimum wage.

Here is what I don't get about this aspect of the debate... how many work minimum wage, and live alone (i.e. not with roomates)... or most likely, with their parents? Yes, I know there was that special, where the guy sensationalized the experience.

I have a lot of friends, and the only ones that work for Minimum wage, are still living at home, with their parents. (i.e. they are kids). I have other friends that don't make a lot of money, but more than minimum. Minimum wage jobs are there to get a track record of employment, and just plain old experience. It doesn't take a lot of experience to move on to bigger and better things.

[alienmastermind]

Which one are you? Oh...got it. You're "on the left." :D

Such substantive exchanges are enlightening, are they not? Thank you for posting the extent of your thoughts on this issue.

Am I, Johan?

I haven't talked about this subject one way or the other yet on this forum, but if you go over to PiRi and look there, you'll find that I have only the barest sympathy for those who find themselves with bad credit. Of course, as someone who ran their own credit into the ground, and learned the hard lesson of working back from debt to surplus, I can speak from a place of experience.

First, I came from a poor family. In poor neighborhoods. With little to no money. My father was a soldier, and made good decisions about his money, and built and grew a business that makes him a fair amount of income. So, when I feel that the government can provide things for people, it's not because I'm a leftist, it's because my brother was born in a government hospital, we lived on government property, and when my family was at its poorest, we required help from the government. Which we got.

What we didn't have, however, was a lack of pride in ourselves as a family, and view that as the worst thing that could happen to a person. Going on the dole was a humiliation that my father said he would never go through again. And hasn't. Because he worked his ass off.

Me, I was put out of the house at 18, with a high school diploma. I was on the street for two years. And didn't need to be, by the way, as jobs, temporary residences and other things exist, provided both by the government and local charities that can help you get back on your feet. If you're willing to work, and know what your limits are, you will get to where you're supposed to be.

I posed a question at PiRi about the likelihood of being a millionaire in your lifetime. It's possible, if you can make wise investments and participate in secondary education to become a millionaire by retirement age.

The systemic addiction to lifestyle in this country causes much of the problems with poverty. People live far outside of their means, and are devastated when things fall apart. The lesson of 'stay within your means' is hard learned, but once gained, allows a person to succeed in our very unique economic system.

A guy in Bangalore will not have the same opportunity as someone in inner-city Detroit, though both could be considered poor. (Sorry, I know we weren't supposed to malign the term poor, here, but I think we're a little spoiled when we think of 'poor' in the US.

[Johan]

I posed a question at PiRi about the likelihood of being a millionaire in your lifetime. It's possible, if you can make wise investments and participate in secondary education to become a millionaire by retirement age.

Possible, yes. Statistical odds of it happening, even with continual investment in real estate, stocks, bonds, and the like? Less likely for someone starting today than at any point in several generations, because we are in for a few decades of depressed economic growth ahead of us.

It's always possible, however. It's a matter of odds...

The systemic addiction to lifestyle in this country causes much of the problems with poverty. People live far outside of their means, and are devastated when things fall apart.

So we have found one area where we agree.

We have an economy based upon easy credit. When that began to dry up, and when debt began to pile up, the party started winding down.

We're addicts, frankly.

[alienmastermind]

[QUOTE=Johan;264977]
So we have found one area where we agree.

We have an economy based upon easy credit. When that began to dry up, and when debt began to pile up, the party started winding down.[quote]

I don't think this is the problem...easy credit seems to be a good thing to me. The lack of 'cheap money' right now is one of the problems with the economy.

[Johan]

I don't think this is the problem

Woops. :o

Then we don't agree. That's okay. My fault.

[Telefrog]

Here is what I don't get about this aspect of the debate... how many work minimum wage, and live alone (i.e. not with roomates)... or most likely, with their parents? Yes, I know there was that special, where the guy sensationalized the experience.

I have a lot of friends, and the only ones that work for Minimum wage, are still living at home, with their parents. (i.e. they are kids). I have other friends that don't make a lot of money, but more than minimum. Minimum wage jobs are there to get a track record of employment, and just plain old experience. It doesn't take a lot of experience to move on to bigger and better things.

Speaking as someone that worked for a large retailer that employs a very high percentage of minimum wage workers, I'd say that the number is quite substantial. For example, almost all night shift/cashiers at Target are adults. Teens get hired, but they frankly don't have the discipline or work ethic to bust their ass for 8-10 hours overnight doing a crap job like backstocking product or stocking shelves.

At my store, many of the overnight crew were low income single mothers. It was the one of the few jobs that paid their rent (barely) and left them a schedule open enough during the day to get a second job or take care of their kids. Furthering their education to improve their lot was pretty much out of the question since that would require money, time, and childcare that they couldn't afford.

Every now and again, one of the stocking crew would brag about getting a position with the nearby GIS warehouse and leave to get a whole dollar over minimum. Bring on the green!

[Vulture]

i haven't read the pdf, but would like to add that other costs to the poor can include:

higher car insurance
higher likelihood of receiving a traffic citation (which also raises insurance)
car repairs (can't afford a loan for reliable car)
health risks associated with living poor (diet, location of residence and 'unhealthy' jobs)
childcare (2-4 minimum wage jobs just to get by = none to watch the kids)
predisposition to addictions


that last point is particularly important, and has been touched on already in the thread, but for many poor Americans substances are a way to escape the awful reality which is their situation. sometimes all you have in life to keep you going is your jim beam and coke. with no prospects and demeaning and generally shitty long hours at a nightmare job, there is no wonder people turn to the bottle.

that said, there are ways to "get above." student loans for better education is probably the best i can think of. it's just a matter of if your household can support the hours in the day it takes to be away from a job to do schooling.

[alienmastermind]

Woops. :o

Then we don't agree. That's okay. My fault.

We agree that people's addiction to credit is the problem. Unless you think that lending should be an arduous process, like the one Ox described from the old-en days.

I think that credit is a good thing, and lending should happen to provide people with the ability to take a risk and raise themselves up beyond their station (something uniquely American, there) if they so choose.

But I also think that taking your lumps is part of that risk taking. The problem is that people are taught lots of things in school, but effective budget management, the reality of paying your bills, etc. aren't taught.

Take it from someone who knows. Those guys who'll work with your creditors to get your bill lowered? They wouldn't be necessary if the person who owed money called their bank or credit card company when they were getting into trouble. Most times, late payments can be waived or not affect the credit rating of the person involved if someone is willing to pay.

A credit card company wants you to have revolving debt, not static debt.