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The High Cost of Poverty: Why the Poor Pay More
Time is money, they say, and the poor pay more in time, too.
When you are poor, you don't have the luxury of throwing a load into the washing machine and then taking your morning jog while it cycles. You wait until Monday afternoon, when the laundromat is most likely to be empty, and you put all of that laundry from four kids into four heaps, bundle it in sheets, load a cart and drag it to the corner.
"If I had my choice, I would have a washer and a dryer," says Nya Oti, 37, a food-service worker who lives in Brightwood. She stands on her toes to reach the top of a washer in the laundromat on Georgia Avenue NW and pours in detergent. The four loads of laundry will take her about two hours. A soap opera is playing loudly on the television hanging from the ceiling. A man comes in talking to himself. He drags his loads of dirty sheets and mattress pads and dumps them one by one into the machines next to Oti.
She does not seem to notice. She is talking about other costs of poverty. "My car broke down this weekend, and it took a lot of time getting on the bus, standing on the bus stop. It was a waste of a whole lot of times. Waiting. The transfer to the different bus."
When she has her car, she drives to Maryland, where she shops for her groceries at Shoppers Food Warehouse or Save-A-Lot, where she says some items are cheaper and some are higher. "They have a way of getting you in there on a bargain. You go in for something cheap, but something else is more expensive." She buys bags of oranges or apples, but not the organic kind. "Organic is too much," she says.
"When you are poor, you substitute time for money," says Randy Albelda, an economics professor at the University of Massachusetts at Boston. "You have to work a lot of hours and still not make a lot of money. You get squeezed, and your money is squeezed."
The poor pay more in hassle: the calls from the bill collectors, the landlord, the utility company. So they spend money to avoid the hassle. The poor pay for caller identification because it gives them peace of mind to weed out calls from bill collectors.
The rich have direct deposit for their paychecks. The poor have check-cashing and payday loan joints, which cost time and money. Payday advance companies say they are providing an essential service to people who most need them. Their critics say they are preying on people who are the most "economically vulnerable."
"As you've seen with the financial services industry, if people can cut a profit, they do it," Blumenauer says. "The poor pay more for financial services. A lot of people who are 'unbanked' pay $3 for a money order to pay their electric bill. They pay a 2 percent check-cashing fee because they don't have bank services. The reasons? Part of it is lack of education. But part of it is because people target them. There is evidence that credit-card mills have recently started trolling for the poor. They are targeting the recently bankrupt."
Outside the ACE check-cashing office on Georgia Avenue in Petworth, Harrison Blakeney, 67, explains a hard financial lesson of poverty. He uses the check-cashing store to pay his telephone bill. The store charges 10 percent to take Blakeney's money and send the payment to the phone company. That 10 percent becomes what it costs him to get his payment to the telephone company on time. Ten percent is more than the cost of a stamp. But, Blakeney says: "I don't have time to mail it. You come here and get it done. Then you don't get charged with the late fee."
Blakeney, a retired auto mechanic who now lives on a fixed income, says: "We could send the payment ahead of time but sometimes you don't have money ahead of time. That's why you pay extra money to get them to send it."
Blakeney, wearing a purple jacket, leans on his cane. He has no criticism for the check-cashing place. "That's how they make their money," he says. "I don't care about the charge."