From Poverty, Opportunity

From Poverty, Opportunity: Putting the Market to Work for Lower Income Families by the Brookings Institution is a fascinating new publication about the high cost of being poor, and strategies for communities to help with this. Banking is almost prohibitively expensive for the poor - monthly charges are high if you do not have much in the bank, and charges for overdrafts are, well, ridiculous. Consequently the poor pay high prices just to cash checks ($400 - $800 a year for a family making $30K a year, depending on where they live). Grocery stores in low income areas tend to be small and expensive. Auto loan prices are higher for lower income borrowers - hundreds of dollars per year more. Same for home mortgages. Same for auto insurance. Rent-to-own businesses flourish in low income neighborhoods - a new $400 washing machine can cost $1000 if bought rent-to-own.

Strategies to help level the playing field include promoting market opportunities in lower income neighborhoods, curbing unscrupulous business practices in the lower income marketplace (by the way, the Charlottesville-Albemarle Association of Realtors is having a course on "Avoiding Predatory Lending" on November 14), and assisting lower income consumers to become educated and savvy.

The Metro Section of the Brookings Institution regularly provides useful and thoughtful publications for local governments; this is one of their best.