High Cost of Poverty in the United States Essay

Poverty can be defined in many different ways. In certain attempts, it can be used in numbers, while other definitions can be more vague, and used to define a life style. The defined term of poverty is â€Å"the state of one who lacks a usual or socially acceptable amount of money or material possessions†. (Mirriam Webster, 2011) According to the U.S. Census Bureau, more than 37 million people live below the poverty line. â€Å"The ranks of America’s poor swelled to almost 1 in 6 people last year, reaching a new high as long-term unemployment left millions of Americans struggling and out of work. The number of uninsured edged up to 49.9 million, the biggest in more than two decades.† (Yen, 2011) Poverty is obviously very common in our country, and all over the world. Even with the United States being the wealthiest country in the world, we still have many Americans who struggle everyday to survive. The topic I chose to focus on is the high cost of poverty, and ho w it actually costs more to be poor. Although it seems like an oxymoron, it is a very realistic topic. I chose this topic because I have personally been involved in both sides of economic statuses. Although I do not live in extreme poverty, I technically have an income that falls within the line of poverty, but I do not have a family to support and have student loans to live off of. I wanted to know further detail of how those who only experience poverty, have limited choices, and how their disadvantages actually cost them more money. My personal life experience is one from an upper middle class family, and was raised in a wealthy suburb in a predominately white community. My family never had financial struggles, so I had no experience with battling bills. I worked in high school and had my own money, but I had nothing to pay for. I thought I made a decent amount of money making $7 an hour, and only working 15-20 hours a week. For a person with no bills or rents to pay for, $150-200 a week was a lot to me. Recently, I moved out of my parent’s suburban home and into the city to be closer to school and gain some independence as an adult. I make about $250-400 a week, depending on the activity of the restaurant I waitress at. I soon realized that I am very dependent on my two roommates to split bills and rent, because I could never afford to live on my own. Although we live in a low income neighborhood, the cost of food, rent, electric, heat and cable bills stack up, and I struggle to pay them. I also only pay one third of the full cost. I have a car I need to put gas in, a gym membership I pay monthly and credit card bills every month. I now see how people that make just as much, or less than I do, struggle even more to make ends meet when their income is at the head of the household. I wanted to show to people that it is more expensive to be poor, because of the lack of resources, income and credit, and also what their options become for survival due to these circumstances. I also did a quantitative study on renting versus owning an item, to show that it actually costs more to rent something than to purchase it upfront. I chose to sample the same three items from two different stores, and recording the prices to see the differences of renting and owning it. I am aware that most individuals in poverty, usually do not have enough money to purchase items or homes upfront so they often rent them, thinking they can afford weekly or monthly payments to stretch out their income to afford other life necessities. My first concept I chose to focus was access to food. I thought about how much I spend on the food I enjoy for just for me personally, and I think it is expensive. I enjoy fruits and fresh vegetables, brand name cereals and expensive breads. Since I grew up eating the certain brands, I continue to try and afford the things I like. Being an individual with a low income, I cannot imagine supporting not only myself, but a family solely on my income. In this research paper, I will explain the hardships of getting to and from the grocery store, and if you cannot, you need to shop elsewhere, such as corner stores.† Prices in urban corner stores are almost always higher, economists say. And sometimes, prices in supermarkets in poorer neighborhoods are higher. Many of these stores charge more because the cost of doing business in some neighborhoods is higher.† [ (Brown, 2009) ] This can lead to spending extra time, danger, stress, and in the end, costing the individual more money. It also forces those with less money to spend, higher risk for obesity. â€Å"Inequitable access to healthy foods is one mechanism by which socioeconomic factors influence the diet and health of a population†. (Drewnowski, 2009) Since they do not have the money to afford healthy choices, they must choose foods that they can stretch out in order to feed their families, even if it is not healthy. My next concept I chose to study was the price of minimum wage, and how it isn’t really the minimum coverage of standard living. In New York State, the minimum wage is $7.25. â€Å"About 20% of American adults who have jobs are earning less than $10.65 an hour. Even at 40 hours a week, that amounts to less than $22,314, which is the poverty level for a family of four†. [ (Isidore, 2011) ]. This simply states that a monthly income of about $1,000-$2,000 is almost impossible to survive on. This may lead to bad credit, forced into renting, and having people do dangerous or criminal activity to get money or items for their families. The poverty rate for all people disguises substantial variation between racial and ethnic subgroups. Poverty rates for blacks and Hispanics greatly exceed the national average. According to the United States Census Bureau, â€Å"In 2010, 27.4 percent of blacks and 26.6 percent of Hispanics were poor, compared to 9.9 percent of non-Hispanic whites and 12.1 percent of Asians.† (Bureau of the Census, 2011) Poverty rates are most often the highest for families headed by single women, particularly if they are black or Hispanic. â€Å"In 2010, 31.6 percent of households headed by single women were poor, while 15.8 percent of households headed by single men and 6.2 percent of married-couple households lived in poverty.† (Bureau of the Census, 2011). â€Å"The official poverty level is an annual income of $22,314 for a family of four â€Å". (Yen, 2011) On average, depending on the size of a household, a family living in poverty has an average income of less than $20,000. This can include couples with children, single parents with one or more children. Needless to say, this is not a lot of money to support a family on, and thus they have to take extra steps to survive, which results in higher costs, and contributing to the statement of the high cost of poverty. You have to be rich to be poor. This is what some people, who have never lived below the poverty line, don’t understand. The poorer you are, the more things cost. Additional steps in money, time, hassle, exhaustion, and danger. This is a fact of life that television, magazines and media, do not often explain. Take for example, food. First, if you do not have a car, getting to the supermarket can take anywhere from one to three hours of public transportation, and costing a price to use the bus or a taxi. To use the method of public transportation, it is necessary to hav e to load all of your groceries into the bus, or taxi. This is limiting to space and capability of carrying all of the groceries. A simpler version of this would be to walk to the corner store, for free, but where the grocery selection is limited and prices are doubled. â€Å"Prices in urban corner stores are almost always higher, economists say. And sometimes, prices in supermarkets in poorer neighborhoods are higher. Many of these stores charge more because the cost of doing business in some neighborhoods is higher.† (Brown, 2009) Also, if you are living in poverty, you will most likely not be making enough money to buy $100 or more worth of groceries for your family. This results in the person or family spending more money, to either get to the grocery store, or paying more for the food to save money traveling to and from. In the end, it is a losing situation, and the poor are paying more in the end than someone who is wealthy and has access to the necessary resources. Spending more money than middle class, or wealthy class to buy groceries is one example of how high the cost of poverty is. If the poor is spending money in the corner stores, they are most likely not getting nutritious foods or healthy choices that most corner stores do not carry. Obesity is a direct result from that, seeing that unhealthy foods cost way less than healthy eating does.† Obesity and type 2 diabetes follow a socioeconomic gradient. Highest rates are observed among groups with the lowest levels of education and income and in the most deprived areas. Inequitable access to healthy foods is one mechanism by which socioeconomic factors influence the diet and health of a population†. (Drewnowski, 2009) Low income levels leave people no choice but to choose foods that are nutrient poor, because it is a price that can afford and something they can stretch out among their whole family to feed them. It is also the best way to provide daily calories at an affordable c ost. Those who are struggling financially are clearly the most disadvantaged when it comes to healthy eating habits. In our grocery stores today we have so many artificial sweeteners, preservatives, fats and sweets that are sure to taste good, but not good for our health. Fats and sweets tend to cost way less, where as healthy foods cost more. It makes no sense to have unhealthy foods cost less than healthy foods, but it is the manufacturing and production that determines the cost of foods. Therefore, those who do not have the money to purchase healthy options have to choose foods that fit in their budget. These are usually unhealthy, packaged, canned or frozen options that have little to no nutritional value. Even those families that have government support, welfare checks and food stamps are still on a restricted budget. The foods they are allowed to get for free or reduced price are items such as fruit juices, canned fruits, cereal, grits, and corn tortillas. These items are all packed with sugar and calories which is not aiding in healthy lifestyles. â€Å"Researchers have shown that low-income neighborhoods attract more fast-food outlets and convenience stores as opposed to full-service supermarkets and grocery stores† (Drewnowski, 2009). This also relates back to travel costs, transportation and affording food. Since it is easier to get to the corner stores, it is a disadvantage to the customers because the corner stores are usually just packed with unhealthy options. It is economic deprivation that is a key factor in obesity, and one key factor of weight gain may be low diet cost. Another example of how the high cost of poverty is, is the price of minimum wage and if it really acceptable to be the minimum wage you can survive on. Most people and experts agree that to get out of an economic slump, we need more jobs. But another problem is that millions of Americans already have jobs that don’t pay very much. â€Å"About 20% of American adults who have jobs are earning less than $10.65 an hour. Even at 40 hours a week, that amounts to less than $22,314, which is the poverty level for a family of four†. (Isidore, 2011) In New York State, the federal minimum wage is $7.25. Minimum wage is supposed to be the wage in which it is the bare minimum amount of money that one can survive on. Even at 40 hours a week, that equals to be $290 without taxes taken out. This would be a paycheck of about $250 for one week, and this equals about $1000 a month. Taking into consideration that those who are the working poor, they need to spend more money getting to and from work, which also costs extra time. They also need to pay bills, feed themselves and their families. For an individual making $1,000 a month, this is almost impossible to survive on even in minimal conditions. An average cost of rent in Buffalo NY is fairly inexpensive, and taking into consideration that Buffalo on of the poorest cities in the United States, we have to be aware that there is many people in the city below the poverty line. According to Rentjungle.com, An average one bedroom apartment in Buffalo is $679 a month and two bedroom apartment rents average $750. To see this in comparison to another large city, one bedroom apartments in New York City rent for $2356 a month on average and two bedroom apartment rents average $2767. Minimum wage is clearly not enough to survive on if your average monthly income is $1000. Out of $1000 income, you have to set aside an average of $600 for rent, leaving you $400 for car fees, if you have one, or transportation fees if you depend on them. If your apartment does not include utilities, you need money for electric bill, gas bills, which can skyrocket in our area when it is winter, cable or internet if possible, and food budget. Another example of a disadvantage the poor have is the actual process of cashing their check to get their money. The rich or middle class usually have the option of direct deposit for their paychecks. The poor have check-cashing and payday loan joints, which cost time and money. The poor pay more for financial services, and many people who cannot be capable to have a bank account may have to pay extra money for a money order to pay their bills and cash their checks. â€Å"They may pay a 2 percent check-cashing fee because they don’t have bank services.† (Brown, 2009) Many people in poverty literally live paycheck to paycheck. If they have a bill that’s due, they do not have a luxury of online payments, because they cannot afford computers or internet, so they have to mail it. If they do not have the money in time for a bill, they have to wait for their next paycheck. This can cost late fees, and in an end result, spending more money than a person with those luxuries. While many people are surviving in this manner, people will look for any way to get by without spending their money. Many people in poverty may depend on credit cards to help them afford things they cannot. Credit cards can help out for temporary reasons, but if not paid off, this can cause more problems. People who are struggling to pay their bills will most likely have bad credit, and have no other option but to rent homes, items, and many other things they cannot afford, due to their credit and income. Bad credit also costs more money than those with good credit. If a person does not have enough money to pay off bills in full, they will get extra interest charges and fees that stack up and end up costing more for them. Since I did not have the option of going into homes of the people in poverty, I decided to do research on items, rather than homes, to compare the costs of rent to own. Poor people do not have the option of owning homes, because of their credit and/or income, so they have no choice but to rent. I wanted to see if the price you pay for being a low income individual actually costs you more, than to own something. This is to show that poverty does in fact cost more to live I chose to look at a refrigerator, a range and a television from two different department stores to compare prices on a rent versus owning the item. My first item, the refrigerator, a 25.3 cubic foot, Side-by-Side with thru-the Door Ice and Water, Black color, was $799.99 to own immediately from Best Buy. At Rent- A-Center, the same exact refrigerator was $37.99 to rent per week, for 91 weeks. At first, it seems like a cheap deal and a realistic price for those who do not have the $799.99 upfront to spend. When you do the math, $37.99 per week for 91 weeks is $3457 total to own after renting at the $37.99 per week. This is over four times the price it would cost to buy at Best Buy and own immediately. I also learned that consumers can get a â€Å"discounted† price by purchasing the item after 90 days, which seemed a little better to me. When I did the math again, it would equal out to be $1728 total to own after renting for 90 days. This is still about double the price of buying it immediately. My next item I compared was the range. A GE-30† Freestanding Electric Range, Black-on-Black Quickset III oven. At Best Buy this was $429.99 to own immediately. Rent-A-Center had the same oven for $24.99 to rent per week for 74 weeks. The total to own after renting for 74 weeks at $24.99 was $ 1849. After 90 days of renting, the total price to own would be $924.63. The prices are clearly different, but yet it seems manageable when you are there. Looking at a price of $25 a week for a nice, brand new stove seems pretty manageable if you have a low income. When you look at the math and how much it will actually cost to rent rather than own, it is actually over four times the original price to own the oven upfront. The last item I compared was a television, an Insignia © Advanced 42† Class/1080p/ 120Hz/ LCD. This item from Best Buy was $749.99 to own immediately. Rent-A-Center had the same television for $39.99 to rent per week, for 74 weeks. It seems like a reasonable, affordable price until you calculate it and realize that it would cost $2959 total to own after 74 weeks of renting. This is about four times the original price. After 90 days of renting, the â€Å"discount† price to own, at Rent-A-Center is $1479, still double the original price. All three of the items I chose to compare are most needed in homes, with the exception of the television. Although it is not a necessity, almost all homes have at least one television. When those who are living in poverty want to own these items, they will have struggles to afford paying them. They turn to the option of renting because they see the low price and it appeals that it is affordable to them. The small payments they think they can afford weekly add up and end up costing them quadruple of original prices. In conclusion, being poor is a struggle. It costs much more money and time to be poor. Working lots of hours and making little money takes a toll on many people here in the United States. I wanted to show readers that this is a very realistic topic to study, and that the cost of poverty is high. The obstacles and disadvantages those in poverty have to deal with are frustrating, stressful ,and in need of change. Poverty is a very difficult thing to understand and take control over because lifestyles cannot be forced upon. People choose their own paths of life, and lack of education, jobs, motivation, children and many other situations are uncontrollable. In our society, I think it is important to know the struggles of those in poverty stricken situations and to understand their hardships. This can be motivation to those in it, or headed towards it in their future. Learning about the costs and disadvantages poverty comes with can be a motivating factor for people to go to college and get an education to receive a well paying job, get a job in general, educate themselves about saving money, and learning that renting is not cheaper than owning. Hopefully my research will be beneficial to those in college, living on low income, to do well in school to gain better jobs, educate those in poverty about the costs they are spending and figuring new alternatives, and to open eyes to those that think it is cheap to be poor. Being in poverty costs time and the cost of poverty is certainly high. In the end, the high cost of poverty will be a never ending cycle of time and money and I hope this research paper opens the eyes of all individuals to help make this problem change. Bibliography Brown, D. L. (2009). The High Cost of Poverty: Why the Poor Pay More. Lexis Nexis Academic , A-4. Bureau of the Census. (2011). Income Alternative Poverty Estimates in the United States. Washington D.C: U.S Census Bureau. Drewnowski, A. (2009). Nutrition Reviews: Obesity, diets, and social inequalities. Seattle: University of Washington. Isidore, C. (2011, September 27). CNN Money. Retrieved November 15, 2011, from Not getting by on minimum wage: http://money.cnn.com/2011/09/27/news/economy/minimum_wage_jobs/index.htm Jason M. Sutherland, E. S. (2009). Getting Past Denial — The High Cost of Health Care in the United States. The New England Journal of Medicine , 1227-30. Mirriam Webster. (2011). Mirriam Webster Dictonary. Dictionary . Brittanica Company. Yen, H. (2011, September 13). Yahoo News. (A. Press, Ed.) Retrieved November 15, 2011, from Census: US poverty rate swells to nearly 1 in 6: http://news.yahoo.com/census-us-poverty-rate-swells-nearly-1-6-142639972.html