Being Poor

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“We have learned not to try too hard to be middle class. It never works out well and always makes you feel worse for having tried and failed yet again. Better not to try. It makes more sense to get food that you know will be palatable and cheap and that keeps well. Junk food is a pleasure that we are allowed to have; why would we give that up?”

“We know that the very act of being poor guarantees that we will never not be poor. It doesn’t give us much reason to improve ourselves. We don’t apply for jobs because we know we can’t afford to look nice enough to hold them. I would make a super legal secretary but I’ve been turned down more than once because I “don’t fit the image of the firm”, which is a nice way of saying “gtfo, pov”. I am good enough to cook the food, hidden away in the kitchen, but my boss won’t make me a server because I don’t “fit the corporate image”. I am not beautiful. I have missing teeth and skin that looks like it will when you live on B12 and coffee and nicotine and no sleep. Beauty is a thing you get when you can afford it, and that’s how you get the job that you need in order to be beautiful. There isn’t much point trying.”

““Free” only exists for rich people. It’s great that there’s a bowl of condoms at my school, but most poor people will never set foot on a college campus. We don’t belong there. There’s a clinic? Great! There’s still a copay [cost levied by health insurance companies]. We’re not going. Besides, all they’ll tell you at the clinic is you need to see a specialist, which, seriously? Might as well be located on Mars for how accessible it is. “Low cost” and “sliding scale” sound like “money you have to spend” to me, and they can’t help you anyway.”

“So let’s break this down: you’re poor, so you desperately need whatever crappy job you can find, and the nature of that crappy job is that you can be fired at any time. Meanwhile, your hours can be cut with no notice, and there’s no obligation on the part of your employer to provide severance regardless of why, how or when they let you go. And we wonder why the poor get poorer.”

‘Poor people don’t plan long-term. We’ll just get our hearts broken’, The Observer, Linda Tirado

Also published in:

Poverty Premium: Rent to Own

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Amazon.com

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.

Amazon.com

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

Women’s Empowerment

What is Women’s Empowerment?

Simplified, it is the actions that result in women being able to own and control property. It is primarily financial, but extends into the areas of body autonomy (the ability to chose what is done with your own body), childcare, education and violence against women because they all directly impact a woman’s ability to work, run a business and/or manage property.

Addressing inequality and Human Rights violations are key to resolving poverty. When inequality is high, poverty goes up; when inequality is low (and equality is high), poverty goes down.

It’s an important economic concept that has been thoroughly examined, discussed and researched by academics and activists all over the world (see references below).

My Own Experience

Since I’m just a poverty survivor and not a world-renowned academic expert in economics (or anything else), allow me to provide a ground-zero perspective from life here in the United States of America.

The examples I have collected show how an individual is kept in poverty or under absolute financial control of another individual. Therefore, it is important to understand that placing one person in a family (or community or collection of humans) under the absolute control of another person contributes to poverty overall.

The most simplistic explanation for this statement is this: If the controlling person is wealthy, the person they control is impoverished because they care unable to own property.

However, these human rights violations continue the cycle of poverty in many other ways. If a woman is unable to make decisions, maintain control over her body or well being, is subjected to violence, or is simply trapped in her home, then she is not contributing her full potential to the household or the community. Also, if something happens to the individual who is controlling all finances, leaving him unable to work, then the entire family becomes homeless.

For the purposes of this answer, I will focus on the effect on the women (specifically). Please understand that there are others who are effected, both directly and indirectly, by these issues.

1960s

Image source: Asterisk Gallery: No Moms Allowed: Teen Hangouts Through History

(Note: this is NOT a photo of my mom. Technically, it’s a 1950s photo, but the hairstyles remind me of photos of my mother during her late teens.)

During the late 1970s, my mother told me the story of her first drivers license. She a navy child, so my grandfather was out at sea when it came time to go to the DMV, take the test, and get her license; so, my grandmother took my mother in herself.

The man behind the counter asked one question: “Where’s your father?”

They explained the situation and he flat out refused to allow my mother to get her license without a man present, providing his permission. She was not allowed to drive until my grandfather returned home. You can imagine how infuriating it was for both my mother and my grandmother.

Why this is important

Not being able to drives means being shut out of nearly all forms of employment in the far majority of people in the USA. It also significantly restricts movement and the ability to complete simple daily tasks, like shopping for food and going to the doctor.

Simply making divers licenses available to women (and punishing this sort of discrimination on the part of DMV workers) improves both women’s rights and women (economic) empowerment.

1970s

Images Source: NIH: Domestic Violence in the 1970s

As a kid growing up in the Midwest, I had a stay-at-home-mom and lived in a house surrounded by houses filled with stay-at-home-moms. Some of the women were literally trapped in their homes without a vehicle or access to public transportation (at that time, it did not exist outside of the city). A few were doubly trapped by an abusive spouse.

Domestic violence was also common. Not just in my little town – everywhere.

This was when the women’s movement was picking up steam and making a lot of progress, but deep social and political change always seem to take an extra 5–10 years to reach the deeply rural areas and the states located in landlocked areas between the coasts. It took a while, but it did, finally, arrive.

Why this is important:

Without realistic options for income, these women were unable to escape violence and abuse against themselves and their children. Without employment they could not escape. Employment was not possible until after they managed to escape. It was an impossible situation.

When domestic violence awareness campaigns reached all corners of the USA, and changes to the laws provided all people of all ages protection from violence and abuse, then large numebrs of women were finally able to achieve both physical and financial freedom.

1980s

Image Source: 1985 cover of TIME | Current & Breaking News | National & World Updates

As a teenager in the 1980s I found myself faced with some strange contradictions. There were people who were claiming that women had achieved equality and feminism was dead (sound familiar).

Yet, at the exact same time, many of my classmates were getting pregnant due to many difficult realities. Chief among them were the anti-birth control and anti-abortion sentiments of the local religious and political leaders and the disturbingly common occurrence of date rape.

While the majority of teenage girls simply gave their babies to family members to raise, there was a not-insignificant minority of teenagers who were forced to marry their boyfriend and/or rapist. I listened to more than one story that roughly translated into the following process:

  1. Boy ‘likes’ girls and wants to control her (permanently).
  2. Boy rapes girl.
  3. Boy tells everyone, including girl’s parents, that they had sex and the baby was his. There may not be a baby on the way. This did not appear to matter.
  4. Girl is now socially tied to boy. Other teens and adults perceive her as ‘his.’
  5. Boy continues to rape girl until she gets pregnant.
  6. Boy demands marriage.
  7. Parents force marriage, while trying to absolve themselves of any wrongdoing.
  8. Girl is now physically, socially and financially trapped by boy.

This is not a relic of the past – it continues to happen.

Why This is Important:

Body autonomy is about significantly more than ‘wanting to be a parent.’ It’s about physical safety and freedom – literal freedom.

No human being, regardless of age or gender, should be subjected to rape. Laws are in place to protect the victim, but they are difficult to enforce. The circumstances are also frequently complicated, particularly when it’s ‘date rape.’

The ability to prevent a pregnancy under any circumstance is the last line of defense against this particular kind of predator. Therefore, birth control is absolutely necessary in the fight against rape, domestic violence, and women’s inequality.

The ability to raise a child as a single parent, and still pursue a career and/or life goals is something our entire society MUST support, because it provides freedom to girls facing this kind of abuse,

The ability to address everything that goes along with a teen pregnancy, including medical care, without being forced into a marriage, is also absolutely necessary.

Those who have access to these necessities are also provided access to the possibility of a financially independant and reasonably secure future.

1990s

Image Source: Huffington Post: Why Anita Hill’s 1991 Testimony Is So Haunting Today

I started working full-time after college. Then I went to grad school, and returned to working full time immediately after. That makes the 1990s the decade of my introduction into the regular workforce. Here are somethings that I heard on a regular basis during that decade (said to me directly and to other women):

  • Of course your pay is low, you’re married. Your husband is bringing in the real income.
  • You’re young and married. You’ll be having babies soon. We don’t expect you to stick around.
  • We need someone to take notes. [Name of only female in room], you can be the secretary for the meeting.
  • The best job [a woman] can get is secretary (nurse, teacher, [other stereotypically female position]).
  • You should wear clothes that are tighter (more revealing, more fashionable, etc.). If you want to get ahead, you have to learn to work it. Don’t you want to succeed?

I could go on but you get the idea.

While all of these things were frustrating, uncomfortable and occasionally infuriating; none of them were perceived as harassment. In fact, the possibility of harassment didn’t come up until the Anita Hill hearings brought the topic into the TV sets and living rooms of every American with access to standard news channels. Even then, the focus was on extreme examples of sexual harassment.

Therefore, I will put aside the general atmosphere that was prevalent a few decades ago, and focus on the one specific comment that had real and far-reaching consequences for every working woman in the USA:

  • Of course your pay is low, you’re married. Your husband is bringing in the real income.

This is just one of the many excuses/responses to questions about pay disparity that I, personally, encountered. Attempts to pursue this line of inquiry, or negotiate for a simple pay raise, were usually (invariably?) met with threats (direct or implied) of dismissal.

(Note: Reason it’s important will be explored in 2000s)

2000 to Present

Image Source: Equal Pay For Equal Work (Also see: Equal pay for equal work – Wikipedia)

While being held back in the pay-scale during my 20s was frustrating, I didn’t realize just how important it was until many years later. The problem is this:

  • New employers base their pay-level offering on the amount of money previous employers have already paid you.

Requesting pay history and verifying the amount former employers paid is standard background check process. These are also standard discussion points during the interview process.

When it comes time to talk salary, it’s ALLWAYS based on information the new employer has on what previous employers paid. If you made $30,000 doing the same (or similar) work at your last company, why would the new company pay you significantly more? The fact that the men in the company are getting $90,000 during their first year, is irrelevant.

Bottom line: Your price has been set.

Why this is important:

Women consistently making 70% of the salary earned by men (across all professions) has serious implications for total household income. It reduces a woman’s ability to sustain herself and her children without a roommate or a husband. It significantly reduces her ability to find a job that pays a living wage, if she happens to be an unskilled worker.

However, it also has wider implications that directly affect men. The existence of wage disparity establishes a process by which some people are financially discriminated against. This process can be…and often is…applied to any group of people, as the company sees fit.

This isn’t about finding the best candidate or paying for a stronger skill set. Wage disparity is the act of paying significantly different wages to people who are doing the exact same work.

This perpetuates poverty by systematically restricting select groups of people from accessing key resources.

What the Academics Have Said

There are many highly respected academics and activists who have been saying poverty is reduced when women are economically empowered for a long long time. Here are a few examples of published academic papers that illustrate this fact:

For an excellent speech on the effects of violence (specifically) and unenforced laws (in general) on poverty, please watch this TED talk:

Ted Talk (YouTube.com) Gary Haugen: The hidden reason for poverty the world needs to address now

Originally posted in response to How powerful is female empowerment in resolving world poverty? on Quora.

Poverty Premium: Banking in the USA

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Life is expensive for America’s poor, with financial services the primary culprit, something that also afflicts migrants sending money home (see article). Mr Martin at least has a bank account. Some 8% of American households—and nearly one in three whose income is less than $15,000 a year—do not (see chart). More than half of this group say banking is too expensive for them. Many cannot maintain the minimum balance necessary to avoid monthly fees; for others, the risk of being walloped with unexpected fees looms too large.

Low smartphone penetration in turn makes life more expensive in other ways. The unconnected do not benefit from the cheap communication, education, and even transport the app economy provides. A quarter of poor households do not use the internet at all, which makes seeking out low prices harder.

Inflation has also squeezed the poor more in recent years. The prices of items which soak up much of their budgets—such as rent, food and energy—have risen faster than other goods and services.

It’s Expensive To Be Poor, The Economist,  09/2015

Poverty Premium Research (Harvard Business Review)

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Amazon.com

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

Stillbirth Equals Prison Time

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Amazon.com

Marsha wandered through her first days at Tutwiler in a state of disbelief. She met other women like herself who had been imprisoned after having given birth to stillborn babies. Efernia McClendon, a young black teenager from Opelika, Alabama, got pregnant in high school and didn’t tell her parents. She delivered at just over five months and left the stillborn baby’s remains in a drainage ditch. When they were discovered, she was interrogated by police until she acknowledged that she couldn’t be 100 percent sure the infant hadn’t moved before death, even though the premature delivery made viability extremely unlikely. Threatened with the death penalty, she joined a growing community of women imprisoned for having unplanned pregnancies and bad judgment.

Just Mercy: A Story of Justice and Redemption by Bryan Stevenson

Poverty Premium Research (University of Michigan and UC Davis)

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“Because they have to buy small quantities, they have little inventory at home and can’t wait until a sale presents itself to purchase again, making it even harder to take advantage of sales,” says Orhun, professor for marketing. “It’s a double whammy.”

“It’s not about poor people making poor decisions; it’s about them facing liquidity constraints,” she says, “and it matters even for what we’d consider small purchases.

Frugality is Hard to Afford, news release about research completed by Professor Yesim Orhun and PhD student Mike Palazzolo; 02/24/2016

Frugality is Hard to Afford, Working Paper (Revising for invited resubmission at Journal of Marketing Research), Mar 20, 2016, Mike Palazzolo – Paper available for download

Amazon.com

Perhaps this sounds like a subtle discovery about minor household goods. But it supports a larger point about poverty: It’s expensive to be poor. Or, to state the same from another angle: Having more money gives people the luxury of paying less for things.

Why the poor pay more for toilet paper — and just about everything else by Emily Badger, Washington Post, 3/8/2016

Amazon.com

In a recent working paper, the University of Michigan’s A. Yesim Orhun and Mike Palazzolo, point to how two of American shoppers’ (and marketers’) favorite money-saving strategies, the limited-time offer and buying in bulk, come with savings that are more accessible to some consumers than others. Choosing to buy things when they’re on sale or packaged in huge quantities is something lots of shoppers may take for granted as a matter of preference, but for many, these purchases—and the savings that come with them—are out of reach.

The Privilege of Buying 36 Rolls of Toilet Paper at Once, The Atlantic, Joe Pinsker, MAY 12, 2016

Amazon.com

Limited access to supermarkets and discount stores, which contributes to the idea that poor people end up paying more for things or the “poverty penalty,” is one of the biggest problems facing low-income neighborhoods.

But the study suggests that low-income families can’t always afford bulk or sale items in the stores that they do have access to.

Why poor families are paying more for everyday items like toilet paper by Ahiza Garcia, CNN Money, March 25 2016.

Can Technology Solve Poverty?

Technology can address the symptoms of poverty

Apps are basically high tech communication devices. They are really useful for gathering and distributing information. In that respect, they can help address the symptoms of poverty by providing poverty survivors access to:

  • Information about potential resources.
  • Free educational resources, tutoring services and MOOCs.
  • Crisis lines addressing everything a person without health care or the cash to pay for professional help, including: medical questions, parenting questions, suicide hotlines, 12-step program hotlines, etc.
  • Legal advice
  • Job listings, resume advice, job advice, etc.
  • Establishing funding platforms to meet the needs of schools and similar resources in poverty stricken neighborhoods.
  • Applying for assistance through online forms (it is important to note that this has both positive and negative affects on access to those resources)

These apps can also affect public perception by answering the questions and addressing the prejudices surrounding poverty. They can attempt to educate the masses about the realities of poverty and the truth about who poverty survivors really are, including those of us who have experienced homelessness.

The voices of poverty survivors

All of these things currently exist and all of them require access to the internet and the specific technology required to connect to the applications. While there are plenty of poverty survivors (homeless included) who have some form of smart phone (Tracfone offers several android phones for less than $100 and a SUPER cheap pay-as-you-go plan…it’s really easy to get one), for many people that is where the technology ends.

Being able to leverage these opportunities often requires access to more than a low grade android cell phone. Determined poverty survivors with access to a reasonably well funded public library will use the computer lab to access all of these things. Others just shrug their shoulders and assume they don’t apply to them.

The thing that is missing from all of these resources and opportunities is the voice of poverty survivors themselves. Please watch the following TED talk by Mia Birdsong. She says it far better than I ever could:

Can technology solve poverty?

No. Poverty is not caused by technology, so technology is not close enough to the source of the problem to have a profound effect on the problem.

Technology does not pay the bills or end human rights violations. It does not block human trafficking, slavery, violence, exploitation or stalking (cyber or face-to-face). It does not end racism, sexism, homophobia, ageism, slander or classicism. It does not prevent police brutality or government corruption. It does not put food on the table, a roof over your head or clothes on your back. It does not force your employer to pay a living wage – or provide the paycheck that is owed to you.

It doesn’t even get you a job. Access to long lists of jobs posted to websites like LinkedIn is helpful, but it is NOT a job. If one of those job postings happen to materialize into a job, there’s no guarantee it will pay a living wage.

Poverty can be positively affected by technology. I encourage those with this particular skill set to look for ways to use those skills to positively change the world in every possible way, including addressing the symptoms of poverty. But never forget that these are symptoms and not root cause. Until the root cause is addressed, poverty will remain epidemic in this country and around the world.

-Originally posted to Quora in response to the (frequently asked) question Can apps be used to tackle societal problems like hunger or homelessness or income insecurity?

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