Reflecting on Casey's 2003 Report on the High Cost of Being Poor

Posted April 22, 2015
Blog highcostofbeingpoorshortversion 2015

A recent news seg­ment on the boom in preda­to­ry auto­mo­bile financ­ing prac­tices tar­get­ed at low-income con­sumers car­ried the tagline, the high cost of being poor.”

A dozen years ago, the Casey Foun­da­tion pop­u­lar­ized that phrase in an essay that was part of the 2003 KIDS COUNT Data Book. The High Cost of Being Poor: Anoth­er Per­spec­tive on Help­ing Low-Income Fam­i­lies Get By and Get Ahead” doc­u­ment­ed the inflat­ed charges peo­ple in poor com­mu­ni­ties pay for every­thing from gro­ceries to check cash­ing. It also described how preda­to­ry sub­prime mort­gage lend­ing was putting work­ing poor fam­i­lies at risk of finan­cial ruin.

Over­all, the amount of mon­ey lost to low-income fam­i­lies and to com­mu­ni­ties them­selves as a result of income-strip­ping finan­cial ser­vices and preda­to­ry prac­tices is enor­mous,” stat­ed the essay.

Before Casey’s 2003 report, no one had cat­e­go­rized all these issues as part of the same sys­temic prob­lem or called it the high cost of being poor.”

That catch phrase, and the hard data in the report, ignit­ed a new con­ver­sa­tion,” notes Bon­nie Howard, direc­tor of nation­al part­ner­ships at the Foun­da­tion. It had wow’ power.”

Today, there is an entire field devot­ed to finan­cial sta­bil­i­ty and how to pro­vide low-cost finan­cial ser­vices to those who would oth­er­wise use rent-to-own, pawn­shops, pay­day lend­ing, and oth­er high-priced ser­vices,” notes Bead­sie Woo, a senior asso­ciate in Casey’s Cen­ter for Com­mu­ni­ty and Eco­nom­ic Opportunity. 

The 2008 mort­gage fore­clo­sure cri­sis prompt­ed new safe­guards for con­sumers, includ­ing the Cred­it Card Account­abil­i­ty Respon­si­bil­i­ty and Dis­clo­sure Act of 2009, the Dodd-Frank Wall Street Reform and Con­sumer Pro­tec­tion Act of 2010, and the Con­sumer Finan­cial Pro­tec­tion Bureau (CFPB).

Casey’s sup­port enabled us to lay the ground­work and build the capac­i­ty to act when the tim­ing was right,” notes Chi Chi Wu, a staff attor­ney with the Nation­al Con­sumer Law Cen­ter

With Casey sup­port, the Nation­al Con­fer­ence of State Leg­is­la­tures (NCSL) has held an annu­al meet­ing on oppor­tu­ni­ties for work­ing fam­i­lies since 2002. Ses­sions on the high cost of being poor inspired leg­is­la­tors to look at how poli­cies could be strength­ened,” says Mary Fairchild, a senior fel­low at NCSL.

For exam­ple, Penn­syl­va­nia Rep­re­sen­ta­tive Dwight Evans led a statewide effort to launch the Fresh Food Financ­ing Ini­tia­tive, which has improved access to fresh foods for more than half a mil­lion peo­ple and gen­er­at­ed some 5,000 jobs. The effort helped inspire the Healthy Food Financ­ing Ini­tia­tive, a fed­er­al part­ner­ship that helps finance gro­cery stores, small retail­ers and farm­ers’ mar­kets sell­ing healthy food in under­served areas.

While car pur­chas­ing is still one of the least reg­u­lat­ed mar­kets, the CFPB has estab­lished some lim­its on markups, and a coali­tion called Work­ing Cars for Work­ing Fam­i­lies helps con­nect low-wage work­ers to low-inter­est loans and matched sav­ings for cars. 

Casey has helped sup­port low-cost finan­cial ser­vices and bank­ing options, free or low-cost tax prepa­ra­tion by trained vol­un­teers, and help in ensur­ing fam­i­lies claim tax cred­its for which they qual­i­fy. The Foun­da­tion also invests in finan­cial coach­ing to help fam­i­lies over­come obsta­cles in meet­ing their finan­cial goals; mech­a­nisms to help low-income tax­pay­ers direct some of their refunds toward sav­ings; and efforts to reduce high fees paid by immi­grants to send mon­ey back home to their families. 

Casey has been at the fore­front of under­stand­ing that high qual­i­ty finan­cial ser­vices are rel­e­vant to fam­i­ly well-being,” notes Rachel Schnei­der, senior vice pres­i­dent of the Cen­ter for Finan­cial Ser­vices Inno­va­tion.

A longer ver­sion of this arti­cle is available.

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