Poorer city residents pay more for goods


Low-income families in the Baltimore region and 11 other major metropolitan areas pay more than their wealthier counterparts for a wide array of basic goods and services, from buying groceries to cashing checks, according to a new study.

The study, funded by the Baltimore-based Annie E. Casey Foundation and released yesterday by the Brookings Institution, says the additional costs can add up to hundreds or even thousands of dollars a year per family -- money that could be used for education and health-care expenses for children.

The report called on government leaders to encourage banks and large-scale groceries to open in poor neighborhoods, to more closely regulate price-gouging enterprises that are there and to improve the education of consumers.

Matt Fellowes, a researcher at Brookings and author of the study, said the Baltimore region "really does stand out across the board" for the high cost of goods and services in low-income neighborhoods.

Fellowes said that one possible explanation was the high poverty rate in the city, limited consumer protections and the relative shortage of banks and credit unions in poor neighborhoods.

In the Baltimore region, 31 percent of neighborhoods with family incomes below $30,000 had a bank or credit union, the fourth-lowest percentage among the areas studied, the report found. In contrast, 60 percent of Baltimore area neighborhoods with family incomes between $30,000 and $59,999 had a bank or credit union.

Fellowes said a $15,000-a-year Baltimore-area wage-earner could save $600 a year by going to a bank instead of relying on a check-casher, and that the same worker would save more than $400 a year in auto insurance if he or she lived in a high-income suburban community rather than a poor city neighborhood.

Bonnie Howard, a senior associate at the Casey Foundation, which works to improve the lives of disadvantaged children, said the issue of financial well-being was an "important element in the family-strengthening agenda."

"The children who are most vulnerable are those who don't have economic stability," she said.

The Abell Foundation is funding a similar study that will take a more in-depth look just at Baltimore.

Tom Kertes, spokesman for the United Workers Association, which represents low-wage workers said he welcomed any attention to poverty but added the study's conclusions are "not news to us."

"We call it the ghetto tax," he said.

The Brookings study also found that low-income families were more likely to purchase high-cost mortgages and to pay more to insure their homes.

The study noted several innovative approaches to address the problem. They include an effort in San Francisco to sign up 10,000 new low-income banking customers and one in New York in which the state agrees to deposit public funds in branches that agree to open in underserved areas.

"It's a whole lot more complicated than traditional antipoverty programs," said Fellowes.


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