Josephine Wiles Warner’s cozy town house in Herndon, Va., is filled with the laughter of her four children—children she brought into her home when their natural parents could no longer care for them. And Warner became their mom, but not through foster care, so she receives no aid.
Now the lights and water are off and she is being threatened with eviction. The cold caused the children to get bronchitis and pneumonia.
“It’s a nightmare,” Warner says.
Warner is one of millions of people who discovered that it often costs more to be poor than rich.
She used to own the townhome. For 20 years she worked as an airline customer-service agent but left to care for her terminally ill mother in 2010. “I had no idea that it would mean a spiral into poverty,” Warner says. Even with three college degrees, she is unable to find work in her field.
To pay mounting bills, she refinanced the home but soon learned that she was the victim of predatory lending, which, according to studies, affects African Americans at more than twice the rate of whites. The mortgage company said that if she paid $10,000 it would not foreclose, but two days after she gave the firm the money, the house was sold. Fortunately, the new owner let her rent back the home.
Like many other low-income Americans, Warner turned to high-interest loans after her part-time job and taking in boarders wasn’t enough. Within five months, a $1,500 loan had doubled to $3,000. According to the Center for Responsible Lending (pdf), these loans carry interest rates as high as 400 percent that keep the poor locked in a never-ending cycle of debt.
People living in poverty pay higher prices for food, financial services and other needs. Only 8 percent of African Americans live in a census track with a supermarket, which leaves only mom-and-pop stores, with higher prices and fewer healthy food choices. Poor diet exacerbates health issues (pdf) and creates higher medical costs, which in turn causes more debt.
For years the poor have been bearing the brunt of the budget debates on Capitol Hill. Since President Obama's re-election, Republicans have pushed through severe cuts in social programs, particularly through the sequester that mandated across-the-board cuts in federal programs. During that time, Democrats proffered public investments to create immediate jobs and preserve safety net investments, but the fight for those proposals was anemic at best.
During the latest budget battle, which resulted in the bipartisan compromise crafted by Sens. Patty Murray (D-Wash.) and Paul Ryan (R-Wis.), Democrats agreed to leave out extended unemployment benefits and adopted a budget close to what Republicans initially asked for. Adjusting for inflation, the $1.1 trillion budget gives the Obama administration $53 billion less to spend then President George W. Bush had.
Many economists predict that with the jobless nature of the recovery, the doors that traditionally have led families out of poverty have closed.
“The economic escalator of the 1950s and 1960s that saw wages rising for most Americans is in the down position,” says Howard University economist William Spriggs. “Unionization rates are down, a disproportionate share of black workers are in unions. The value of the minimum wage has fallen, which greatly affects workers in the lower third of the wage distribution, and black workers—especially black women—are heavily affected by declines in the real value of the minimum wage.”
There were 1.6 million more children living in poverty in 2012 than in 1996, yet Temporary Assistance for Needy Families was reduced by more than 30 percent. Almost 50 million Americans are food insecure, yet food stamps were dramatically cut. Investments in job and educational training have also shrunk, leaving people like Nevel Butler—a Washington, D.C., mother of six—despondent.
“I’m afraid we’ll be homeless again. We’ve gotten frostbite from sleeping in the streets, in cars, on a porch,” she says. “I’ve been on the waiting list for permanent housing for 13 years.”
The funds for her GED classes were cut. “Without a job, how am I going to be able to pay for a GED? Without my GED, how am I going to get a job?” she says. “I’ve tried everything, even McDonald’s.”
Her food stamps have been reduced to $358 a month. “At the end of the month, the cupboards are empty,” Butler says.
Robert Reich, former secretary of labor under President Bill Clinton, advocates raising the minimum wage and boosting public spending on education and infrastructure to reduce poverty. But those policies don’t tackle racism, often cited as a key cause of black unemployment rates that are perennially twice those of whites.
Poverty gnaws at the fabric of any society and its intrinsic humanity. It can foster social unrest as more people become disenfranchised from economic viability. Americans have to ask themselves what kind of society they want—one that embraces Darwin’s precept that only the powerful thrive or one that believes in serving a common good.
Leila McDowell is a freelance journalist. Follow her on Twitter.