Voices of Others: Dr. King’s Dream

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“…I swear there’s more but the homeless tend to disappear…domestic homelessness is lethal…did I just lose my home or my humanity?…It takes the community to change the community…”

Voices of Others: Somewhere in America

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“Kids are late to class for working the midnight shift. They give awards for best attendance but not for keeping your family off the street…every state in America the greatest lessons are the ones you don’t remember learning.”

We Just Need Political Will

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The problem is systemic and is reaching almost epidemic proportions. Rents are soaring in every state and community at that same time when most Americans haven’t seen enough of an increase in their paychecks.

The result: more than 7 million extremely low-income families do not have an affordable place to call home and half a million people are living on the street, in shelters, or in their cars on any given night. The human toll this places on families – through stress and job loss – are extraordinary and well-documented by Harvard sociologist Matthew Desmond in his recent book, “Evicted: Poverty and Profit in the American City.”

…The most shameful part is the fact that we already have the resources and solutions needed to effectively end homelessness and housing poverty for millions of families. We just need the political will to do what is right

Out of Reach 2017, National Low Housing Coalition (NLIHC), Preface by Representative Keith Ellison

Poverty Premium: Rent to Own

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In some ways, the business harkens back to the subprime boom of the early 2000s, when lenders handed out loans to low-income borrowers with little credit history. But while people in those days were charged perhaps an interest rate of 5 to 10 percent, at rental centers the poor find themselves paying effective annual interest rates of more than 100 percent. With business models such as “rent-to-own,” in which transactions are categorized as leases, stores like Buddy’s can avoid state usury laws and other regulations.

And yet low-income Americans increasingly have few other places to turn. “Congratulations, You are Pre-Approved,” Buddy’s says on its Web site, and the message plays to America’s bottom 40 percent. This is a group that makes less money than it did 20 years ago, a group increasingly likely to string together paychecks by holding multiple part-time jobs with variable hours.

“We’ve always talked about the benefits and costs,” she said on the drive home. “Because with a family you can’t just say, ‘I want this, I’m going to get it.’ But growing up having the chair, the recliner, the love seat, the couch and everything, you just get used to the normal stuff. Sometimes it’s hard to break from the normal stuff and get to reality.”

Rental America: Why the poor pay $4,150 for a $1,500 sofa, Washington Post, Chico Harlan, 10/2014.

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Then in the fall of 2001, Motta discovered Rent-A-Center. Situated in mostly poor neighborhoods, this chain’s 2,600 stores offer big-ticket items like furniture and electronics to millions of people with no credit. Hiking up prices and charging exorbitant interest, using a scheme critics have called “pay now, pay later,” the company racks up sales in the billions and is a key player in what one market research firm calls “the poverty market.”

But the story didn’t end there. Monthly bills continued to arrive, late fees stacked up, and “incomplete” payments were rejected. Rent-A-Center employees routinely called her at home, says Motta, and even came by in person to pressure her to pay. After two years, Motta had paid Rent-A-Center almost $2,000. “I was giving and giving and it was never done,” she recalled. “I told them to take their sofa.” The company would not comment on her case.

Darnley Stewart, an attorney who is leading a New York class-action suit against the company, finds this outrageous. “Rent-A-Center explicitly targets poor, largely minority neighborhoods and has no qualms about selling a cheap television for $700 to people who can’t afford it,” she says. Stewart’s suit, which is awaiting a ruling from the state Supreme Court, alleges that Rent-A-Center engaged in deceptive and fraudulent business practices by misrepresenting the actual costs of its merchandise and coercing customers with a “high-pressure sales scheme.”

In the face of steady complaints, Rent-A-Center argues that it is offering a service to an otherwise excluded demographic, and that its mission is simply to “improve the lives of our customers.” But others, like attorney Darnley Stewart, are not even mildly persuaded: “I don’t think you are doing the poor a favor by gouging them.”

Pay Now, Pay Later, Mother Jones, Anya Schiffrin, May/June 2005

Poverty Premium Research (Harvard Business Review)

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Multinationals that failed to take these realities into account saw their best-laid business plans go bust. P&G’s PUR sachets were envisioned as a low-priced competitor to bottled water; in reality, though, poor households are used to boiling their tap water or drinking it untreated. Grameen Danone’s real competition among rural populations wasn’t expensive store-bought yogurt—it was homemade yogurt that consumers produced for a fraction of the cost.

In places where poor consumers benefit from lower prices, they often incur other costs. For example, the informal economy fails to ensure safe working conditions and reasonable wages, product quality controls, or taxes for the state. The brunt of these externalities is borne by the poor, as workers, consumers, and beneficiaries of government funds. Such places may have a “poverty premium” that multinationals could help eliminate, but that premium does not take the form of higher prices.

The Problem with the “Poverty Premium,” Harvard Business Review, Ethan Kay and Woody Lewenstein, April 2013

Ethan Kay gave a Ted Talk about creating cookstoves for poverty survivors.

Better Options Mean Better Results

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Clearly a much better set of options could be provided to African Americans—and poor people of all colors—today. As historian Lerone Bennett Jr. eloquently reminds us, “a nation is a choice.” We could choose to be a nation that extends care, compassion, and concern to those who are locked up and locked out or headed for prison before they are old enough to vote. We could seek for them the same opportunities we seek for our own children; we could treat them like one of “us.” We could do that. Or we can choose to be a nation that shames and blames its most vulnerable, affixes badges of dishonor upon them at young ages, and then relegates them to a permanent second-class status for life. That is the path we have chosen, and it leads to a familiar place.

The New Jim Crow by Michelle Alexander

Economics of Fertility and Childbearing

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Are you likely to have more kids if you are rich or poor?  Or to put this in econo-jargon: Are kids normal or inferior goods?  (Reminder: When you get rich you buy more of a “normal good,” and less of an “inferior good.” And yes, the language of economics can be a bit cold.)…

Whether you cut the data across countries, through time, or across people at a point in time, the same fact arises: The richer you get, the fewer kids you have.

Yep, kids aren’t normal.

The Rich vs Poor Debate: Are Kids Normal or Inferior Goods?, Freakonomics.com, by Justin Wolfers

Locked Up or Locked Out

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In Milwaukee’s poorest black neighborhoods, eviction had become commonplace—especially for women. In those neighborhoods, 1 female renter in 17 was evicted through the court system each year, which was twice as often as men from those neighborhoods and nine times as often as women from the city’s poorest white areas. Women from black neighborhoods made up 9 percent of Milwaukee’s population and 30 percent of its evicted tenants. If incarceration had come to define the lives of men from impoverished black neighborhoods, eviction was shaping the lives of women. Poor black men were locked up. Poor black women were locked out.

Evicted: Poverty and Profit in the American City by Matthew Desmond

The New Caste System

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Dealing with this system on its own terms is complicated by the problem of denial. Few Americans today recognize mass incarceration for what it is: a new caste system thinly veiled by the cloak of colorblindness.

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We may improve some school districts, prolong affirmative action for another decade or two, or force some police departments to condemn racial profiling, but we will not put a dent in the prevailing caste system. We must face the realities of the new caste system and embrace those who are most oppressed by it if we hope to end the new Jim Crow.

The New Jim Crow by Michelle Alexander

 

Rent Takes 80 Percent

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A black woman whose hearing had just concluded stepped back into the room, holding her child’s hand. Her head was wrapped, and she had kept on her heavy blue winter coat. She continued down the middle aisle of Room 400, walking by an anemic white man with homemade tattoos, a white woman in a wheelchair wearing pajama pants and Crocs, a blind black man with a limp hat on his lap, a Hispanic man wearing work boots and a shirt that read PRAY FOR US—all waiting for their eviction cases.

Tenants in eviction court were generally poor, and almost all of them (92 percent) had missed rent payments. The majority spent at least half their household income on rent. One-third devoted at least 80 percent to it. Of the tenants who did come to court and were evicted, only 1 in 6 had another place lined up: shelters or the apartments of friends or family. A few resigned themselves to the streets. Most simply did not know where they would go.

 

Evicted: Poverty and Profit in the American City by Matthew Desmond