Tuesday, July 18, 2006

The Poor Pay More

A new study from the Brookings Institute shows that the poor in 13 major cities in the US tend to pay substantially more for the same consumer services.

By taking out higher-interest mortgages, shopping at rent-to-own furniture stores, using check-cashing businesses instead of banks and buying groceries at convenience stores, the nation’s working poor households pay much more than moderate- and high-income households for life’s essentials…

The report — “From Poverty, Opportunity: Putting the Market to Work for Lower-Income Families” — calls on government officials to create laws to curb services that gouge low-income consumers, and it proposes reproducing fledgling programs the authors found across the country.

The report finds that:

Reducing the costs of living for lower income families by just one percent would add up to over $6.5 billion in new spending power for these families. This would enable lower and modest-income families to save for, and invest in, incoming-growing assets, like homes and retirement savings, or to pay for critical expenses for their children, like education and health care.

To download the report go here.

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