The Cost and Limits of Being Poor
Imagine this: Your car breaks down and the mechanic says it will cost you $400. What do you do?
Imagine this: Your car breaks down and the mechanic says it will cost you $400. What do you do?
For most of us, this would be inconvenient, but not catastrophic. We’d charge it to a credit card knowing we can pay it off relatively quickly, or we’d take the money from our savings. Again, it would be inconvenient, but we could handle the expense.
This isn’t so for about 40 percent of American families, according to a recent report from the Federal Reserve detailed by CNN. According to CNN,
Four in ten Americans can’t, according to a new report from the Federal Reserve Board. Those who don’t have the cash on hand say they’d have to cover it by borrowing or selling something.
The study also found that “Notable differences remain across race, ethnicity, education levels and geography. The report shows hardship continues for people working to repay college loans, cover emergency expenses and manage retirement savings.”
This shouldn’t be surprising. The Federal Deposit Insurance Corporation, which insures American banks, found essentially the same thing two years ago, as did Jonathan Morduch and Rachel Schneider, authors of the important book The Financial Diaries, which attempted to dig into the reasons for the inability for many families to climb out of poverty and near-poverty.
The mythology of poverty is that it is created by a set of bad choices or bad behavior. As Morduch and Schneider write, “The available explanations for (savings, debt, and budgeting) tend to come down to failures of personal responsibility, lack of knowledge, or insufficient willpower” (7). Those explanations ignore the realities of the lives of those struggling, and while the broader inequality of our economic system certainly shares blame, it is only a partial answer.
The issues are structural, tied to the bogus bootstrap narrative we like to offer. The poor and near-poor are stuck on a hamster wheel, dutifully working and earning their pay — until the work goes away — and turning around and passing that money on to landlords and mortgage holders, power companies, insurance companies and doctors, supermarkets, gas stations, mechanics and the public transportation system. Every dollar earned is a dollar spent, which leaves nothing left at the end of the month, assuming, of course, that the earnings are enough to make it to the end of the month.
Savings, after all, is just household surplus, the difference between what is earned and what is spent, and if you are earning only enough to get by, you cant build up a surplus.
Lacking a surplus, families are left in a precarious position, cash flow failing to match expenses, with the ever-present catastrophe (illness, household or auto repairs, cuts in hours) lurking. Families are”driving on a very rocky road, hitting bumps and potholes, getting slowed down, knocked off course, and sometimes stopped entirely” (Morduch 12).
Susan Biegen, a single mother from North Jersey who I interviewed several months ago, told me that some of these expenses are expected but cannot be budgeted for — her monthly train pass, school supplies for her kids — because she has to stay focused on immediate needs — and Biegen works full time.
“School supplies are challenging,” she said. “Ideally, you want to buy them when they first go on sale when they are cheaper, however, the school doesn’t tell you what you need and you don’t want to buy things and be told you don’t need this and don’t need that.”
You have to think short term, she said. “When I get paid next, this is what we need to take care of. Every month it is the same thing. What can I do now, what can I put off and do another time. At this point, so much of it is playing catch up.”
She said the “day-to-day stressers — putting gas in the car, will I miss a car payment, do we have a copay for a doctor’s visit — are tough. A $20 co-payment (for a doctor) would be gas in the car or school supplies or new sneakers.
“There’s always that concern, ‘if I spend it on this, what am I not spending it on that I need,’” she said. “I make a lot of tough choices in what bills to pay, what food to buy.”
Brian Kulas, who lives on disability benefits and has a housing subsidy, tells a similar story. He has no cushion, no surplus to help him offset not only the unexpected expenses, but one-time expenses others might plan for. He is driving on bald tires and can’t afford to replace them. If his car breaks down, he won’t be able to repair it, which would leave him dependent on public transportation — which would be more expensive and would more than double his commute time to his catering job.
Kulas, who I interviewed for an upcoming project for Free Press’ News Voices program and coLAB Arts, has no savings and no way of generating a surplus. Every dollar goes to an immediate need — and even if he could generate savings, it would come at a cost. He would lose access to many of his benefits.
Both Biegen and Kulas study prices. Kulas, for instance, rattled off the prices of milk, detergent, bread, peanut butter and other staples for me — both their regular prices and their sales prices. It’s a necessary skill he says, because the money he gets rarely gets him through the month — and it is worse in those five-week months.
Biegen agrees.
“I am looking at prices more, because I know that this is how much I can spend,” she said. “I’m not going to buy the bread that is not on sale. Maybe I’ll go to Walmart instead of ShopRite, and then I’m moving around from one place to another to find the best prices. But that is a lot of work, and I’m traveling a lot and don’t have time to do that.”
Some things are not choices: a train pass for Biegen, which she needs to get to work; inhalers for Biegen’s asthmatic son, which are not covered by Medicaid; Kulas’ psychotropic medication, which he needs to function.
Having a surplus allows families to smooth out these bumps, though imperfectly. But as the Fed study shows, four in ten families lack the wherewithal to set one aside.
When I interviewed Biegen last year, she was in a good place — working full time with a non-profit in New York, her first full-time job, and was netting $620 a week. It was a raise, but it came with increased transportation costs and more time away from her kids.
“If the kids were younger, it wouldn’t have worked,” she told me. “They have me doing scattered hours. I have about 30 families in my case load. When the kids were younger, it would not have been good to get back home at 10 — but now my youngest is 14, so not as big a problem.”
Biegen appreciates the stability a full-time job provides, but her new income means she no longer qualifies for many of the programs — which is how most safety net programs are designed.
This creates a Hobson’s choice for the poor and near-poor — take a better, higher-paying job, but lose the benefits, which often leaves them no better than where they were before they changed jobs and sometimes worse off. This calculus forces some to turn down work, because the consequences are too great.
“What am I going to do,” Biegen says. “If I earn too much, my kid won’t qualify for free lunch. How do I feed my child if there is no free lunch?
“I’ve spoken to people who are dealing with this. One family I talked with, they had Section 8 (a federal housing program). They were working full time, and then getting overtime. All the pay stubs show overtime. But when they go for recertification, the program says they are making too much and they lose their subsidies.”
Biegen is “not qualifying for things I qualified for before,” she said. She had to ask herself, “Do you decide ‘am I going to work less to get benefits, or do I try to become self sufficient.’ It is a tough decision, and it’s never easy to explain why make you make the decisions you do.”
It’s not an easy question to answer, and the context of the question underscores the lie at the heart of conservative poverty arguments, which rely on language that mirrors the co-dependency movement. Safety net programs, they say, “enable” the poor, make them lazy. They get this free money so they opt not to work, as if the choice is between getting a job and a life of leisure.
This is a lie. The programs have been structured in a punitive manner, crafted to make it difficult for those in need to qualify. I’ve written about this before, but it bears repeating: We view poverty and need through a moral lens, assuming that economic circumstances are within our control and that most who need help are shirking in some way.
That’s just not the case. Much of where we end up is a matter of luck. If you are born into poverty, the chances that you can rise from it are slim — not because of any innate deficiency, but because you lack the support systems (family wealth, access to better schools, etc.) that those from the upper and middle classes have access to. One can make the climb, but it is significantly more difficult, even before you factor in race and structural racism, mental health and addiction issues and the inevitable mistakes we make as teens and as we grow to adulthood.
If we were truly concerned about those in need, we would remove many of the restrictions we place on their behavior, allow them to earn their way out of poverty and find ways to allow them not just to survive but to save and think beyond today. That we continue to find ways to burden them — the new work requirements being proposed for the Supplemental Nutrition Assistance Program and other federal aid programs — is testament to just how cruel we’ve grown.