It isn't illegal to be poor per se. Furthermore there isn't some grand conspiracy to keep the poor where they are. Or perhaps there is, if you want to count banks and the government as the conspirators. In any case, the system in place makes it very difficult to be poor.
If you're poor in this country, you may be living in section 8 housing, which charges only what they deem you can afford. If not, you may be spending half of every dollar you earn paying a bank or a landlord for a place to live. That's a nice chunk of change right off the bat. Unless you want to live in a tent city of a hippie commune, housing is a very pricy commodity in many parts of the country.
Many municipalities don't make it easy to be poor either. One typical community in Pennsylvania had sewage installed a few years ago. Residents already had perfectly working septic systems, but sewage became mandatory. If you didn't pay the rather expensive tap-in fee and pay someone to dig a line to the sewer, they would shut your water off and threaten liens on your property. This was a town full of senior citizens on fixed income and people living well below the poverty line taking advantage of what used to be a rock bottom cost of living. I sometimes wonder if they could force you to have electricity at a house. Not that I would ever want to be without it, but I wonder how far they go.
Many municipalities aren't satisfied with mandatory utilities, instead sending code enforcers out and about to write up fines for any number of nonsensical `violations'. Now I understand correcting things that affect the safety and health of the public, we can't have people out there with garbage piling up attracting animals or dangerous buildings threatening to fall into the street, but these are far more innocuous things like having a broken down car in sight or having a broken window.
No matter what your lot in life, banks are just something most of us have to deal with on a regular basis. Before backing off it it under heavy pressure, Bank of America famously unveiled a $5 monthly fee for people using their debit card. It didn't go over well, but it goes to show how banks operate. There are also naturally overdraft fees for those who spend more than they have. You might guess these such fees affect the poor disproportionately, and according to a recent FDIC finding that is the case, also estimating that overdraft fees made up as much as 74% of all revenue from bank fees in 2006.
Due to recent changes in the law, consumers must now opt in to overdraft `protection', the banks like to make it out as if they're doing consumers a huge favor, after all who knows what emergency could come up? But the truth is, it's a ploy to attempt to get those barely scraping by into a cascade of overdraft fees resulting in huge gains for banks at the expense of some of the poorest people. Another handy little trick of theirs is posting things to the account in order of largest to smallest. Say you have a balance of only $100 and you buy $99 worth of groceries then 5 more small purchases of $5. Regardless of the order in which you made the purchases, the largest one is deducted first, ensuring additional overdraft fees. For low income consumers, this could eat up half of their next paycheck. Naturally it also makes them likely to overdraw the account again, after all even the poor have to eat. Now to be fair, many banks will agree to remove SOME overdraft fees if it was a one time deal, but they are under no obligation to do so.
Some people simply can't afford to pay that kind of money, so they just write it off. Well that's where Chexsystems, Telecheck and other such companies come into play. They keep a record of who has been a victim of a bank and make sure that they can't get another checking account. That's not entirely true, there are alternatives out there, but it makes dealing with any convenient large bank impossible. So they're stuck going to check cashing places and paying a fee just to get their hands on their own money.
Of course you could always take out a payday loan to cover it. At 4000% APR (no, that's the correct amount of zeroes, though they are usually very short term loans) it amounts to financial rape, but some people are taken in by the prospect of $1,500 overnight. Then they get their next check and a few hundred on top of that to pay off the interest, next thing you know they're in need of another one. These of course target the poor. Do you think middle class folks would even consider for one moment something so usurious? I can assure you, we would not. Get hungry enough though and I suppose anything can seem alluring.
Another good scam the banks have going is the student loan system. Now I'm not saying that every student loan is a scam, some people do use such loans to get an education and a lucritive job that allows them to pay the loan back and enjoy a high quality of living. Some, however, are basically hoodwinked into getting a useless degree (or not even finishing school at all) and are tied to crippling debt for a very long time with absolutely nothing to show for it. Harassing collections agencies are easy enough to dispatch or simply ignore, but the debt itself is nearly impossible to shake, whether or not you actually received a useful education as a result.
Banks also offer credit to many. They act as if they are doing you a favor for this, and in some cases they are. Low interest loans provided to those with good income and a good credit history can be the right move in some cases, particularly on a mortgage or automotive installment loan. Don't expect to get a good interest rate if you're poor or have bad credit, however.
Often the poor are relagated to buying used cars from `buy here pay here' places. Shorter term loans with very high interest rates are the norm in that industry. And of course these being used cars and the poor being, well poor, disaster could strike at any minute. No worries, they'll just repossess the car, fix it up and sell it again to someone else. Quite a nice little niche, isn't it?
And then there's health care. What do you do if you're poor and have no insurance? Other than the obvious bootstrappy things, best bet is to go to the ER and simply not pay the bill. Not because you don't want to, because you simply can't. That cost is than absorbed by those of us who do have insurance or can pay, and often leads to personal bankruptcy. So informally, emergency health care is available to all, but as a practical matter preventative care is,like many things, out of reach for the poor. Since dental care is almost never an emergency matter, you can forget about caring for your teeth if you're poor.
As the cost of health care for those who can not afford it is already absorbed by those who can, you might think that making it official and streamlining the process would be in everyone's interest. You dirty socialist, you. That's commie talk right there! Other nations have decided that health care is a basic human right and part of the social contract between the government and its citizens. We're not having any of that here.
Sure there are programs out there, and they do help a lot. Most are for children, even those who can't muster a basic level of empathy for most tend to at least care a bit for the welfare of children, or at least pretend that they do. But don't fool yourself, you're basically screwed in the health care department here unless your employer has such benefits of you happen to inherit a lot of money.
Naturally when bills don't get paid, they get assigned or sold to collection agencies. I could write an entire essay on that subject alone. They lie, they mislead, they make threats they can't possibly take action on. When they do actually sue, they often don't have any paperwork that can demonstrate that the debtor owes them money. It's a very common practice to file a mountain of lawsuits knowing that most of the debtors won't even show up, then they get a default judgment.
With a judgment in hand, there are all sorts of legal remedies to involuntarily take money from the debtor. In some states, wages can be garnished. Elsewhere they can essentially raid a debtor's bank account. Should people pay their bills? Absolutely. Put yourself in someone else's shoes, however. Say a single mother who decided to get her kids much needed vaccinations instead of paying her Sears card. Years later after a default judgment, some attorney takes every cent out of her bank account, and now she can't afford any groceries. She can't ever get ahead enough to even afford to pay an attorney to file for bankruptcy. To those who would say "just pay your bills", have you not a shred of empathy?
Our culture of consumerism is no help either, nor are the advertisers. Children are bombarded with ads for expensive toys, people are led to believe that your worth as a person is based on what sort of vehicle you drive, even if you have to go heavily into debt to get it. Perhaps many adults can overcome that and realize that they can't afford the finer things in life, but they also have to explain to their children that they simply can't have the toys that they want for Christmas.
So they should stop being poor, right? From all of the poorest people I've met I can tell you from firsthand experience, they aren't poor because they're lazy. They're poor because the system keeps them poor. I'm not arguing for equal outcome in this country, but you're fooling yourself if we have anything even near equal opportunity.
Meanwhile CEO's of failed companies get million dollar bonuses. Is it any wonder why people are occupying this and that these days in protest? The only thing that continues to surprise me is the number of people who are actually defending the rich through this all. I don't mean the rich people defending themselves, that's quite understandable, I mean very poor people defending the rich. Perhaps it's because the right wing has lumped its pro-rich policy in with wedge issues such as abortion, perhaps it's because they expect to be rich some day and would rather pay lower tax rates. Perhaps they simply listen to too much talk radio. Whatever the case, it boggles the mind.
My recommendation to them would be to spend a few days with someone in the working poor class. Don't worry, they don't really smell like sour milk and they probably won't try to take your wallet. They work as hard as any of us, many work much harder for a pittance. If you think it's their fault they're poor, you're naive. If you think the rich deserve to be where they are, you're a fool. If you think things will ever change, you have far more hope than I do in this country.
Decent analysis, but you miss the most glaring reason. There's always been a certain tension between the interests of the employers and the interests of the employees. Ideally, a balance is reached, with decent worker-protection, but not so much that economic activity is stifled and stagnation occurs. USA at the moment has swung *far* to much in favour of employers, to the detriment of employees.
ReplyDeleteMinimum wage is a joke. You can be fired for no reason at all. There's no mandatory maternal/paternal leave. No universal healthcare. Bad rules for paid sick days, for days off when your child is sick, and any number of other rules. Salaries, even for those above minimum wage are frequently so low you can work full-time and still be poor.
Basically, USA is too kind to the owners of McDonalds, to the detriment of the employees of McDonalds. It's one of the biggest differences to Norway. It's not that everyone in Norway is so rich, infact there's less millionaires here than in USA. But the *poor* are much richer here. The floor is higher, the peaks aren't. Flipping burgers is a job that earns you $20 - $30/hour here. Meanwhile the federal minimum wage is $7.25 or something, which is less than a third of the GDP/capita of USA, thus a person working full-time at minimum wage, nevertheless earns less than a third of the average person. (and keep in mind that "average person" includes many that do not work at all such as children, elderly and unemployed)