The Hidden Costs of Poverty

April 17th 2015

When you live in the world’s largest economy, poverty can seem like an elusive concept. In a nation of 318.9 million residents, 45.3 million people live in poverty, with another 14.7 million living near the poverty line. For those who like math that’s close to 20 percent of our population. Of that number, 16 million children live at or below the federal poverty line. With 22 percent of all U.S. children living in poverty, there should be little surprise that for the first time in history the majority of public school students in this country live in poverty. Similarly, as the federal minimum wage remains stagnant – despite the efforts of various states, retail stores, and the Obama administration – the middle class is steadily shrinking, leaving more people vulnerable to experience poverty at some point in their lifetimes.

What family of four can thrive on $23,850 per year when you have to provide for food, shelter, clothing, utility bills, medical expenses, etc.? The same goes for an individual making $11,670 per year -- let's see how for that gets you trying to make it on your own living in an American city. Being poor in America costs more than the bills paid each month -- the costs of being poor can be found in education, health, and finances.

James Baldwin said it best when he proclaimed, "anyone who has ever struggled with poverty knows how extremely expensive it is to be poor."

In the “land of opportunity,” it is commonly touted that education and hard work are all it takes to advance oneself. But when you’re poor and live in an underfunded school district with novice teachers and outdated materials, the odds of being academically competitive are slim. Students who work a part-time minimum wage job to help pay for higher education only earn $145.00 per week, not nearly enough to help pay for college -- even if you have the assistance of Pell Grants, the funding for which is hanging precariously on the line under the 114th Congress’ budget. One may also be strangled by student loan debt. So much for affordable education.

Beyond things like poor education and low wage work, living in poverty often means having to pay more money to finance your very existence. The lack of resources associated with being poor tend to go hand in hand with insufficient or bad credit, meaning that the interest rates you pay on credit cards and personal loans will be higher and the money leaving your pockets in repayment of your debts will be greater than if you had good credit. By the same token, people living in poverty tend to be under-banked, which means they’re more likely to rely on cash advances and payday lenders, the providers of which take a cut of whatever money they advance. John Oliver detailed predatory payday loans last year:

What about health and wellness when you live in poverty? Therein lies another conundrum. This is just one scenario: Living in food desert where there are no grocery stores for miles, means getting food from the local fast food joint or corner store. The result, starves the body of valuable nutrients it needs to survive and thrive, leaving it overweight and malnourished. Or, what do you do when you live in a high-pollution area, filled with soot and smog and whatever other residual gunk permeates the air in your part of town? Is it the best location to live? Doubtful, but it’s affordable. Detriments to your health affect your body, and your wallet.

So where does all of this leave us? To be sure, none of this is meant to suggest that growing up in poverty necessarily consigns future generations to social immobility indefinitely. But it should signal that there are substantial hurdles placed in the way of people with limited economic means, and if we ever hope to conquer the problem, we have to address the systemic and institutional factors that cause and perpetuate poverty.

The real costs of poverty are borne not just by those living in it, but by those who perpetuate it, either through their action or inaction. (A recent study found that poverty costs the American taxpayers $153 billion per year.) Baldwin was right, poverty is extremely expensive, and it carries with it a price we must all bear.

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