It Costs More to Be Poor, and Businesses Are Totally Cool with That

There’s a huge spectrum of poverty and wealth, ranging from the destitute to that mystical 1 percent. In an economy touted as performing so well, it’s amazing that the number of “working poor” continues to rise so dramatically. It wouldn’t be an exaggeration to claim that here in the Bay Area, one of the wealthiest regions in the world, the working poor constitute the majority of the population. That may seem odd, until you realize that misfortunes of working poor largely contribute to business success – in other words, it’s by design.

It doesn’t take an expert or data set to confirm that working people who struggle to make ends meet pay more each month for basic necessities than do their wealthier counterparts. Raise your hand if your cell phone has ever been cut off for nonpayment.

Yeah, thought so.

Photo courtesy of Bureau of Labor Statistics.

There are certain things in life we can do without, something those of us living on the edge of complete poverty are very aware of. Want a new pair of jeans? Eh, you can probably get by another few months before they’re completely shredded. Thinking about going out to the movies? You can wait until it comes out on Netflix. You really want the steak, but you’ll order off the value menu instead, if you even go out.

Things like that are luxuries that many of us forego, even happily if it means we can pay a bill instead.

The other stuff like power, garbage service, water, school expenses, cell phones, groceries, transportation, health care and yes, even internet access – those things fall into in the basic needs box. It’s literally almost impossible to live without those things and so, you’ll do just about anything to keep those services flowing and needs filled.

But inevitably, you’ll be short on funds some (or all) months and bills for some of those necessities will be put off. It’s this struggle that puts poor people in the unfortunate position of paying more for the same services than your neighbor does if they pay on time. If the cell phone gets cut off, you rush to rummage up enough to turn it back on and in the process, providers tack on late fees and reconnection fees – mine comes out to $25 per line and as a single mom with kids on my plan, that adds about $100 to a bill I already couldn’t pay.

In order to turn your power or cable back on, or even make a payment arrangement, be prepared to shell out extra fees. The car is making a noise that you should get checked out, but petty stuff like making sure there’s food in the kitchen gets in the way of taking the car into the shop. The end result is you broken down on the side of a highway with a future repair bill at least three times what it would have cost to have it looked at from the start. You can use that same analogy for health-related issues – that toothache becomes a root canal the longer you wait.

We all know it’s cheaper and more efficient to buy food in bulk, but seldom do we have the $300 upfront that will net us the $450 worth of groceries. So, we search out the sales and buy the little we can day-by-day, costing us more in the long run.

It’s not bad choices or laziness that puts us in those situations, it’s a matter of survival in the moment. And in that moment, many of us are forced to take out payday loans or use credit cards we really shouldn’t be touching. On a $250 payday loan, you can expect to pay back $300. Credit card balances swell as interest fees accumulate. We’re all just trying to make a dollar out of 50 cents, and businesses are happy to take $3 tomorrow to make that happen today.

The reality is that credit companies and utilities benefit from the interest, late fees and reconnection fees (that don’t take much more than the push of a button, by the way) – so much so that it’s become an important piece of their revenue streams.

The working poor are often vilified, threatened by phone and made to feel ashamed, but it’s exactly those people who pad bottom lines. It’s time we stop feeling guilty about being a drain on society and start realizing that businesses are succeeding by draining us.