No full-text available
To read the full-text of this research,
you can request a copy directly from the author.
The “Poverty Tax” and America's Low-Income Households
Abstract
Although low-income U.S. households account for more than 6.5 billion—more than one-third of the benefit these families earn from the Earned Income Tax Credit—into their pockets (Fellowes, 2006).
... In addition to these direct impacts, there is evidence that CIM may compound broader economic disadvantage, which has implications for housing security. Scholars have long recognised that poverty is expensive, with low-income households typically paying more for items such as vehicles, insurance, food and mortgages (Karger 2007). This phenomenon has been referred to as the "poverty premium" (Hirsch 2013) or a "poverty tax" (Karger 2007). ...
... Scholars have long recognised that poverty is expensive, with low-income households typically paying more for items such as vehicles, insurance, food and mortgages (Karger 2007). This phenomenon has been referred to as the "poverty premium" (Hirsch 2013) or a "poverty tax" (Karger 2007). As Bielefeld (2016:864) observes, CIM appears to be contributing to this premium as "many of Australia's poorest people are facing increased costs of living under income management". ...
Compulsory Income Management (CIM) is a form of conditional welfare that involves the mandatory quarantining of a portion of welfare recipients’ social security payments. Quarantined funds are accessible via a government‐issued debit card, with restrictions surrounding where and on what funds can be spent. Official justifications of CIM have framed these policies as attempts to combat substance abuse and gambling problems, and to thus secure better outcomes for welfare recipients and their families. Central to this narrative has been the argument that welfare quarantining will ensure more money is spent on ‘essentials’, including accommodation. No existing studies, however, have specifically interrogated the impacts of CIM on housing security. This article responds to this gap in the literature by reviewing existing research concerning CIM's impacts and locating this research within broader debates regarding the causes of homelessness and the efficacy of individualised policy interventions. In doing so, it highlights CIM's potential to exacerbate housing insecurity not only through technical issues such as rental transfer failures, but also by contributing to underlying stressors such as economic disadvantage; relationship difficulties, poor health and addiction; and social stigma. The article concludes that – far from addressing the structural causes of homelessness – CIM has enflamed them.
... The AFS industry grew rapidly in the 1990s and 2000s amidst gaps in regulations, financial institution consolidation and divestment in disadvantaged neighborhoods, increases in immigration, technological innovations, and the financing from large banks (Apgar and Herbert 2006;Bianchi 2012;Graves 2003;Karger 2007;Negro et al. 2014). Payday lending, in particular, grew rapidly in the 1990s and 2000s (Caskey 2005), increasing by tenfold from 1996 to 2003 (Bianchi 2012). ...
... AFS are criticized as harmful to consumers because of exorbitant interest rates, high service fees, and repeated loan rollovers that trap consumers into a cycle of debt and re-borrowing (Caskey 2005;Fox 2007;Karger 2007;Skiba and Tobacman 2009). The AFS industry claims it serves the financial service needs of customers who eschew or are unserved by mainstream financial institutions and charges high interest rates and fees to reflect the high-risk nature of the business (Bianchi 2012;Edmiston 2011;Elliehausen and Lawrence 2001;Lewison 1999). ...
Alternative financial services (AFS) such as check cashing and payday loans may help unbanked households meet transaction and credit needs, yet often at a very high price. Saving tax refunds can help low- and moderate-income (LMI) households build emergency savings as a way to reduce dependence on AFS and cope effectively with irregular cash flows and financial shocks. This study examined the impact on AFS use of message-based interventions encouraging LMI households to save their refunds when they electronically filed their federal income tax returns. We found that 3 out of 18 interventions resulted in statistically significant reductions in credit-related AFS use with small effect sizes. None of the interventions resulted in reduced transaction-related AFS use. Other factors—especially prior AFS use and financial shocks—were strong predictors of AFS. Financially vulnerable households may need additional opportunities and protections to reduce dependence on AFS.
... High-cost alternative financial service providers offer a wide variety of products and services including short-term loans (including payday, refund anticipation, pawnshop, and title loans), check-cashing, bill payment, tax preparation, money transmitting services, and rent-to-own products (Barr & Blank, 2009;Karger, 2007). Although these businesses provide needed products and services unavailable to many families and communities from traditional financial institutions, the costs are very high. ...
... The following examples illustrate this point: (a) Check cashing fees at a retail check-cashing store typically range from 1.5% to 3.5% of face value of the check (Barr, 2004), and can range as high as 4% to 5%; (b) low-income families paid almost $1.75 billion in fees and interest charges for refund anticipation loans (i.e., a type of short-term loan for tax refunds; Karger, 2005); and (c) a household with a net income of $20,000 that cashes a biweekly payroll check and purchases about six money orders each month may pay as much as $1,200 annually for alternative service fees, which is substantially more than the expense of a monthly checking account fee (Beard, 2010). The profits from these industries are high and most are owned by large, publically-held corporations (Karger, 2007;Rivlin, 2010). In 2008, the profits were: payday lending, $7 billion; rent-to-own stores, $7 billion; pawnbrokers, $4 billion; and the check-cashing industry, $3 billion. ...
In the wake of the recent economic challenges, it is clear that social workers must be educated about the financial opportunities for low-income households. Encouraging low-income households to have a bank account at an insured depository institution, or become banked, is increasingly emphasized in policy and practice. Becoming banked offers the opportunity to avoid high-cost alternative financial services. Social workers can facilitate relationships between low-income households and the mainstream financial services industry to help families advance their long-term financial interest. Understanding the structure of all types of banks and credit unions is imperative. Implications for social work practice are explored.
... Black families' median and mean wealth is less than 15% of white households, at $24,100 and $142,500, respectively (Bhutta et al. 2020). Income inequality is further exacerbated for Black households because they contribute a higher percentage of their household's income to energy bills than any other racial and ethnic group (Karger 2007) (for further details see Section 4). ...
The existing built environment and DOE’s technology research, development, demonstration, and deployment (RDD&D) activities benefit many, but not all Americans. An unequal distribution of RDD&D benefits has burdened some communities more than others, especially those who are already vulnerable, under-resourced, and disproportionately affected by current and historical energy and social systems. These inequities have produced higher rates of pollution, negative health impacts, and higher energy burdens and energy insecurities in these communities. This report demonstrates how energy and environmental justice relate to the building energy sector overall, starting with energy burden and energy insecurity as the primary vehicles.
... For example, economic inequalities create unjust conditions that disadvantage many. Consider the so-called "poverty tax" (Karger 2007). People with low incomes or who live in poor areas often face a variety of costs-not just monetary but also in terms of time, health, and opportunity costs-that people with higher incomes do not. ...
There is growing philosophical interest in “affective injustice”: injustice faced by individuals specifically in their capacity as affective beings. Current debates tend to focus on affective injustice at the psychological level. In this paper, I argue that the built environment can be a vehicle for affective injustice — specifically, what Wildman et al. (2022) term “affective powerlessness”. I use resources from ecological psychology to develop this claim. I consider two cases where certain kinds of bodies are, either intentionally or unintentionally, deprived of access to goods affording the development and maintenance of their subjective well-being: hostile architecture and masking practices in autism. This deprivation, I argue further, leads to a significant weakening and diminishment of their spatial agency, hinders their well-being, and in so doing gives rise to a pervasive experience of affective powerlessness. By drawing attention to these themes, I show that an ecological approach helpfully supplements existing approaches. It highlights how affective injustice can emerge via the way bodies are positioned in space, and the central role that built environments play in determining this positioning.
... Unbanked and underbanked consumers who utilize AFSPs are at a disadvantage because they likely pay a more significant percentage of their income for financial services (Baradaran, 2013;2015;Servon, 2017;Birkenmaier and Fu, 2018). Karger (2007) estimates that an average unbanked household pays up to 10% of its annual income on alternative financial services. Equality of access remains a predominant concern, as unbanked and underbanked consumers tend to be relatively lower-income, less educated, younger, disproportionately black and Latinx, and working-age disabled (FDIC, 2020). ...
Access to safe and affordable financial services is essential to the economic well‐being of individual households and entire urban neighborhoods. However, prior research raises concerns about spatial inequities in the distribution of brick‐and‐mortar financial services offerings—either mainstream financial institutions or alternative ‘fringe’ financial service providers—and the resulting implications for financial inclusion and social justice. This study uses a novel method to identify fringe financial ecologies that captures the recent tandem processes of abandonment by mainstream financial institutions and the proliferation of alternative financial service providers. We explore how fringe financial ecologies potentially overlap existing inequalities of race, class and subprime mortgage lending in two US metropolitan areas, Los Angeles, California, and Miami, Florida. Our results raise concerns that communities of color, low‐income neighborhoods and otherwise vulnerable segments of the population are disproportionately at risk of both financial exclusion and predatory targeting. We find that fringe financial ecologies are associated with a high prevalence of subprime mortgage lending. The results advance an understanding of financial ecologies that raises awareness about place‐based financial exclusion as a form of systemic racism in the broader context of the national reckoning with racial justice in the US.
... The racial links to poverty and material hardship also determine the energy cost burdens disproportionately borne by African Americans who earn less, have less accumulated wealth, and, in many cases, pay more for basic services in what is known as a Bpoverty tax ( Karger 2007). African Americans have been repeatedly shown to contribute a higher percentage of their household income to energy bills than other racial and ethnic groups (Driebhol and Ross 2016;U.S. ...
Structural racism in the form of racial residential segregation and the series of laws, policies, and practices that continue to reinforce it have robbed generations of African Americans of socioeconomic opportunity, wealth accumulation, safe, secure or energy-efficient housing, and full societal inclusion. Research indicates that African Americans are more likely to live in older, energy-inefficient homes with structural deficiencies, outdated appliances, and faulty energy systems. These conditions lead to a disproportionate burden of energy insecurity, defined as “the inability to adequately meet household energy needs” among African Americans across the economic spectrum. This, in turn, generates increased costs and decreased comfort, conditions closely linked to adverse physical and mental health outcomes. Persistent income inequality, wealth gaps, and entrenched racial residential segregation have disenfranchised African Americans and reduced their ability to escape this pernicious cycle. Weatherization, which is the practice of protecting a building’s interior from the elements while enhancing its energy efficiency and reducing costs, could be a catalyst for reducing the disproportionate energy burden affecting low-income individuals and ultimately improve health and social outcomes among African Americans. We argue for investing in policies that provide energy efficiency and weatherization assistance—and not only energy bill assistance—to provide a long-term and equitable solution to energy insecurity that is also a critical step toward restorative justice.
... In contrast, the informal economy has been described as "a process of income-generation … unregulated by the institutions of society, in a legal and social environment in which similar activities are regulated" (Castells & Portes, 1989, p. 12). However, the distinction between fringe economy and informal economy is not relevant to this study, because the fringe and informal economies share some of the same customers (people with low incomes) and geographies in an economically developed nation like the United States (Karger, 2007;Mann, 2012;McMillian, 2012). ...
This paper is a meta-ethnography of four low-income communities in order to explore fringe economic behaviors. Rejecting the interpretation of fringe economic behaviors as irrational, we affirm these behaviors as viable alternatives for people marginalized in the mainstream economy. Using a meta-ethnographic method and employing the concepts of sociologist Pierre Bourdieu, we identify the habitus and social capital values of each community as distinct Bourdieusian fields and conclude that an awareness of the localized
development of a fringe economic cluster with distinct goals and rules undermines one-size-fits-all social welfare programs.
... poverty), advertising access to goods through low weekly payments. However, these businesses often levy a 'poverty tax' or 'a hidden tax paid by the poor because they are poor' (Karger, 2007, p. 413; Rivlin, 2011) through staggeringly high interest rates. While positioning vulnerable consumers as deserving and agentic, these discourses are used to detrimental effect. ...
In this article, we consider the representations of poverty within consumer culture. We focus on four main themes – social exclusion, vulnerability, pleasure and contentment – that capture some of the associations that contemporary understandings have made with poverty. For each theme, we consider the portrayals of poverty from the perspective of key agents (such as marketers, media, politicians) and then relate this to more emic representations of poverty by drawing on a range of contemporary poverty alleviating projects from around the world. We conclude with a set of guidelines for relevant stakeholders to bear in mind when elaborating their representations of poverty. These guidelines may act as a platform to transform marginalising representations of poverty into more empowering representations.
... Other factors beyond the control of individuals and families that may increase their risk for financial problems include unemployment, lack of health insurance, jobs that fail to pay a living wage, and limited options for affordable child care and housing. At the policy level, the absence of adequate consumer protection laws (Willis, 2008) places individuals and families at risk for abusive lending and financial services practices (Barr, 2004; The causes and current state of the financial crisis, 2010; Grunstein Bocian, Li, & Ernst, 2010;Karger, 2007). ...
Social workers have opportunities to help clients address their financial problems through a variety of practice settings, yet little is known about how they do so. Using qualitative methods and descriptive statistics, we analyzed responses from a survey of social workers and other human service professionals (N = 56). Participants primarily characterized their clients’ financial problems as the result of making poor financial decisions and mostly used financial education techniques in response. Most participants said they faced workplace barriers to helping their clients with financial problems, including lack of expertise and time and inability to bill for services. Social workers who want to address clients’ financial problems should recognize that financial problems stem not just from difficulties in managing money, but in the need for increased income, resources, and assets and an understanding of financial services. Future research with a larger sample of social workers is needed to assess how intervention methods vary by client population and to conduct pilot efficacy evaluations of well-conceptualized interventions to promote financial well-being.
... Social workers are trained to recognize and ameliorate various forms of oppression and understand human behavior in relation to the social environment. Therefore, with collaborative work with AFCs and CFP® professionals, social workers can integrate financial education, counseling, and planning efforts with a perspective of environmental risk (Barr, 2004;Karger, 2007) and protective factors. ...
Social workers have many opportunities to integrate a focus on personal finance into their practice with mostly lower-income and vulnerable client populations. However, little is known about social workers’ interest in personal finance. Results of a survey of social workers (N = 56) interested in integrating personal finance content into their practice are reported in this paper. Ways in which social workers might further develop knowledge and skills in personal finance are discussed. Professional perspectives that social workers may lend to inform financial education and counseling and the emerging field of financial therapy are also explored. Social workers can offer an understanding of the environmental risks that affect the financial health of low-income individuals and families and resources that can help build financial capability.
Despite the ubiquity of poverty, its causes remain largely misunderstood and many attribute poverty to individual shortcomings. This stigma not only predicts negative physical and mental health outcomes for those living in poverty, it also psychologically distances them from the economically advantaged. Thus, solutions to the problem of poverty should include efforts to reduce stigma among the economically advantaged, who are often crucial decision‐makers with the power and resources to act as allies. The current research utilized an intensive and immersive intervention designed to challenge the attributions that underpin poverty stigma. In two studies, we tested the effectiveness of this intervention. Results of both studies demonstrate that participation in the intervention consistently predicted more favorable attributions for poverty, and that these changes in attributions, in turn, had meaningful positive effects on participants’ support for poverty‐reducing policies and willingness to engage in poverty‐related allyship.
Low-wage workers have borne the brunt of the changing labor market, including wage stagnation, growing income inequality, and increasingly unstable work environments. Most research on low-wage workers focuses on precarious minimum wage employment; however, some low-wage workers hold jobs earning more than minimum wage with consistent, full-time hours. This study explores strategies parents in these “good” low-wage jobs use to provide for their children, using data from in-depth interviews with hospital workers. We find workers use multiple strategies, which we categorized as scarcity, maintenance, and investment strategies to highlight the distinct types of resources and varying amount of stress associated with them. Finally, we compare the types and number of strategies parents use by hourly wage versus net household income.
Objective
To characterize geographic variability of generic benign prostatic hyperplasia (BPH) medications in order to improve drug price transparency and improve patient access to affordable medication sources. This is of interest because BPH is one of the most common chronic diseases in men and contributes to individual healthcare cost. Medical therapy is the main treatment modality for BPH, burdening patients with lifelong medication expenses which may impact adherence and subsequent outcomes. With an aging population, this is compounded by many older individuals requiring multiple daily medications.
Methods
All pharmacies within a 25-mile radius of our institution were identified and classified as chain, wholesale or independent. The out-of-pocket price for a 30-day supply of tamsulosin (0.4 mg), finasteride (5 mg), oxybutynin (5 mg TID), and oxybutynin 10 mg XL were obtained using a scripted telephone survey. Multivariable linear regression assessed the association between census-tract level demographic and socioeconomic factors and disparate generic out-of-pocket drug-pricing.
Results
The response rate was 93% with 255 pharmacies across 173 census tracts providing data. By pharmacy type, there was up to 5.5-fold variation in median out-of-pocket drug prices for the most common BPH medications. Demographic and socioeconomic factors were not significantly associated with generic BPH drug price variation.
Conclusion
The out-of-pocket price of generic medications for BPH varies significantly between pharmacies in a geographically-confined area. This study highlights the need for quality improvement initiatives that empower patients to price-compare and improve drug price transparency.
http://csd.wustl.edu/Publications/Documents/RB15-57.pdf
As the United States' economy continues to experience challenges, more families at or near the poverty level fall prey to
predatory financial practices. Their vulnerability to these operations is increased by a lack of knowledge of asset-building
resources and alternative financial services. This article focuses on Volunteer Income Tax Assistance (VITA)—a free income
tax preparation program, which is a vital resource available to low-income families. Unfortunately, VITA is largely underused
and often unknown to economically strained families and to the social workers and other professionals to whom these families
turn for assistance. This article concludes with policy and practice implications for social workers and other professionals
engaged in providing services to financially vulnerable families.
Many tumours undergo disregulation of polyamine homeostasis and upregulation of ornithine decarboxylase (ODC) activity, which can promote carcinogenesis. In animal models of colon carcinogenesis, inhibition of ODC activity by difluoromethylornithine (DFMO) has been shown to reduce the number and size of colon adenomas and carcinomas. Indole-3-carbinol (I3C) has shown promising chemopreventive activity against a range of human tumour cell types, but little is known about the effect of this agent on colon cell lines. Here, we investigated whether inhibition of ODC by I3C could contribute to a chemopreventive effect in colon cell lines.
Cell cycle progression and induction of apoptosis were assessed by flow cytometry. Ornithine decarboxylase activity was determined by liberation of CO2 from 14C-labelled substrate, and polyamine levels were measured by HPLC.
I3C inhibited proliferation of the human colon tumour cell lines HT29 and SW480, and of the normal tissue-derived HCEC line, and at higher concentrations induced apoptosis in SW480 cells. The agent also caused a decrease in ODC activity in a dose-dependent manner. While administration of exogenous putrescine reversed the growth-inhibitory effect of DFMO, it did not reverse the growth-inhibition following an I3C treatment, and in the case of the SW480 cell line, the effect was actually enhanced. In this cell line, combination treatment caused a slight increase in the proportion of cells in the G2/M phase of the cell cycle, and increased the proportion of cells undergoing necrosis, but did not predispose cells to apoptosis. Indole-3-carbinol also caused an increase in intracellular spermine levels, which was not modulated by putrescine co-administration.
While indole-3-carbinol decreased ornithine decarboxylase activity in the colon cell lines, it appears unlikely that this constitutes a major mechanism by which the agent exerts its antiproliferative effect, although accumulation of spermine may cause cytotoxicity and contribute to cell death. The precise mechanism by which putrescine enhances the growth inhibitory effect of the agent remains to be elucidated, but does result in cells undergoing necrosis, possibly following accumulation in the G2/M phase of the cell cycle.
Annual report Annual report on form 10-K for the fiscal year ended
- Ace Cash
ACE Cash Express. (2005). Annual report. Retrieved June 20, 2006, from
http://www.acecashexpress.com/annual_reports/2005.pdf
ACE Cash Express. (2000). Annual report on form 10-K for the fiscal
year ended June 30, 2000. Filed with the Securities and Exchange
Commission, Washington, DC: Author.
The price of paying taxes
- A Berube
- A Kim
- B Forman
- M Burns
Berube, A., Kim, A., Forman, B., & Burns, M. (2002, May). The price of
paying taxes. Washington, DC: The Brookings Institution.
The plastic safety net: The reality behind debt in America
- Center Demos
- For Responsible Lending
Demos and Center for Responsible Lending. (2005, October 12). The
plastic safety net: The reality behind debt in America. New York:
Demos.
U.S. savings rate falls to zero
- A Marks
- R Scherer
Marks, A., & Scherer, R. (2005, December 12). U.S. savings rate falls to
zero. Christian Science Monitor, p. 3.
Low-income and minority families rely increasingly on high-cost financial services From poverty, opportunity: Putting the market to work for lower income families
- Fannie Mae Foundation
Fannie Mae Foundation. (2001, August). Low-income and minority
families rely increasingly on high-cost financial services. Retrieved
June 15, 2006, from
http://www.fanniemaefoundation.org/news/pr/2001sum/010802.shtml
Fellowes, M. (2006, July). From poverty, opportunity: Putting the market to
work for lower income families. Washington, DC: The Brookings
Institution.
Investment Centre, HSBC
- Aib Corporate
- Banking
AIB Corporate Banking. (2003). Investment Centre, HSBC. Retrieved
September 2, 2003, from
http://www.aibcorporate.ie/viewarticle.asp?1047
Families, deep in debt, facing pain of growing interest rates. The New York Times
- L Uchitelle
Uchitelle, L. (2004, June 28). Families, deep in debt, facing pain of
growing interest rates. The New York Times, p. 15.
Maybe it's not all your fault. The New York Times
- S Lohr
Lohr, S. (2004, December 5). Maybe it's not all your fault. The New York
Times, p. 8.
Household Finance settlement
- Washington State
Washington State, Office of the Attorney General. (2004). Household
Finance settlement. Retrieved August 10, 2006, from
http://www.atg.wa.gov/householdfinance
Citigroup, Wall Street, and the fleecing of the South
- M Hudson
Hudson, M. (2003). Citigroup, Wall Street, and the fleecing of the South.
Southern Exposure, 31(2), 3–4.
National foreclosures increase 38% in first quarter
- Realtytrac
RealtyTrac. (2006). National foreclosures increase 38% in first quarter.
Retrieved August 9, 2006, from
http://www.realtytrac.com/news/press/pressRelease.asp?PressReleas
eID=99
The poor pay more Coalition for Responsible Credit Practices The crisis of growing consumer debt from www.responsiblecreditpractices.com/issues/growing.php The payday advance service: Author. Consumer Federation of America Predatory lending Reducing the number of uninsured motorists
- D Caplovitz
Caplovitz, D. (1967). The poor pay more. New York: The Free Press.
Coalition for Responsible Credit Practices. (2004). The crisis of growing
consumer debt. Retrieved March 2005, from
www.responsiblecreditpractices.com/issues/growing.php.
Community Financial Services Association of America. (2006). The
payday advance service. Washington, DC: Author.
Consumer Federation of America. (2002). Predatory lending.
Washington, DC: Author.
Consumers Union. (2001, January). Reducing the number of uninsured
motorists. Consumers Union SWRO Issue Pages for the 77th Texas
Legislature, Austin, TX: Author.
Remarks by Governor Edward M. Gramlich at the Financial Services Roundtable Annual Housing Policy Meeting
- E Gramlich
Gramlich, E. (2004, May 21). Remarks by Governor Edward M. Gramlich
at the Financial Services Roundtable Annual Housing Policy
Meeting. Chicago, IL: Federal Reserve.
The price of paying taxes
- Berubea
- Kima