How the Next President Can Help High-Poverty Neighborhoods

Between 2000 and 2013, the number of people living in high-poverty neighborhoods—where more than 40 percent of residents lived below the poverty line—nearly doubled. As of 2013, 13.8 million people lived in these impoverished neighborhoods, the highest figure ever recorded.

High-poverty neighborhoods are characterized by inferior housing, higher levels of pollution, underfunded schools, inadequate public infrastructure, and few employment opportunities—realities that carry significant consequences. A growing body of research shows that concentrated poverty undermines the long-term success of children and even lowers life expectancy. What’s more, despite the fact that most low-income people in the United States are white, people of color are much more likely to live in impoverished areas due to the enduring effects of segregation and ongoing discriminatory housing practices.

Historically, federal programs have prescribed a one-size-fits-all approach to address concentrated poverty, with a focus on housing. But it has become increasingly apparent that what’s needed is a more comprehensive approach—one that addresses the interrelated challenges faced by low-income people in high-poverty neighborhoods, alongside efforts to move some residents out of concentrated poverty. A Harvard study found that if a person moves to a low-poverty area as a child, he or she will be more likely to go to college and will see an increase in total lifetime earnings of roughly $302,000. While policies that enable low-income people to live in more prosperous communities, such as housing vouchers, are critical, leaders must address the challenges facing the many people who remain in underserved communities.

President Obama has taken note. When he took office in 2009, his administration set out to ensure that the federal government was supporting local innovation rather than dictating community development strategies, and established programs to help local leaders address modern realities such as changes in technology, aging infrastructure, and jobs moving to the suburbs and abroad. These efforts culminated in the announcement of the Promise Zones initiative in 2014, in which Obama declared, “A child’s course in life should be determined not by the zip code she’s born in, but by the strength of her work ethic and the scope of her dreams.”

Today, the Obama Administration announced the third and final round of Promise Zone designees, which include communities in Nashville, southern Los Angeles, Atlanta, Evansville, Indiana, San Diego, eastern Puerto Rico and southwest Florida. In addition, the Spokane Indian Reservation and the Turtle Mountain Band of Chippewa Indians also received the Promise Zone designation.

Designees will receive priority access to existing federal resources to help them implement their comprehensive plans to support job creation, increase economic security, expand educational opportunities, increase access to affordable housing, and improve public safety. In addition, new zones will receive AmeriCorps VISTA volunteers to help build capacity on the ground.

Over the course of just two years, the Promise Zone designation has proven to be an effective strategy for bringing local stakeholders together around shared goals, and for streamlining the relationship between local and federal leaders. For example, the designation has allowed the Los Angeles Promise Zone, one of the first cities selected, to leverage millions of dollars in grants across 14 agencies to support its work.

But with a new presidency on the horizon, the Promise Zones initiative could end with this administration.

The Los Angeles Zone, which includes parts of Hollywood, is one of the densest and most diverse parts of the city, but is also one of the poorest. As a result of the initiative, the zone is utilizing federal support to transform its 45 different schools into “community schools”—providing full-time nonprofit staff to work with parents, coordinate resources, and provide workshops and wellness classes for students and parents alike. In addition, the school district is placing its own staff in job training centers, youth centers, and family centers to ensure coordination of resources throughout the zone. According to Dixon Slingerland, Executive Director of the Youth Policy Institute and a leader in the zone, “We believe anywhere a family goes in the zone should be a one stop shop. It shouldn’t be that we need to send them to all these different agencies. Wherever they go, we’re going to make sure we have all the pieces in place to support them.”

To be sure, in a world of limited resources, targeting funding to high-poverty communities means fewer resources will be directed to less disadvantaged communities that still face many of the same challenges. However, the goal of the initiative is not only to transform the selected zones—it’s also to change how the federal government works with local communities overall, while demonstrating effective and efficient strategies that other communities can adapt.

Such values should appeal to leaders across the political spectrum. After Eastern Kentucky was selected as a Promise Zone during the first round, Congressman Hal Rogers (R-KY) released a press release praising the initiative stating, “This program shows promise for recruiting private industry in several of our hard-hit counties.”

But with a new presidency on the horizon, the Promise Zones initiative could end with this administration. The progress that has been made in just two years through this initiative must be built upon to ensure such efficiency and effectiveness becomes business as usual for how the federal government works with local communities. To be sure, the Promise Zones initiative is not a substitute for a comprehensive plan to address poverty, which would require paid sick leave legislation, raising the minimum wage, protecting unemployment insurance, among other proven strategies. But when it comes to addressing the unique challenges of high poverty communities, the next president should take the lessons from the Obama administration and include this initiative in their governing agenda. Unprecedented levels of concentrated poverty require long-term strategies that cannot end in just a few months.



Payday Loan Rules Would Help Low-Income Families Avoid $8 Billion in Fees

In 2007, then-Professor Elizabeth Warren reminded us that “it is impossible to buy a toaster that has a one-in-five chance of bursting into flames and burning down your house.” But as she noted, it’s entirely possible to buy a financial product with the same odds of causing financial ruin—payday and car title loans can come with annual interest rates of 300 percent or more, leaving many borrowers worse off than before.

Today, the Consumer Financial Protection Bureau  (CFPB) released new regulations to help take these harmful financial products off the shelf. This rule is expected to help struggling families avoid $8 billion in fees from predatory lenders each year. And yet, it faces an uphill battle—the CFPB will need not only public support for its rule to come to fruition, but also for Congress not to sabotage its efforts and for state legislatures to help push it to the finish line.

These reforms are sorely needed, as payday and title lending turn a profit on the backs of cash-strapped families. In exchange for access to someone’s bank account or a spare set of keys to their car, these lenders typically offer quick cash—anywhere from a few hundred dollars to a few thousand—expecting it to be paid back either from the next paycheck or within the next month.

Missouri has almost as many payday loan stores as grocery stores.

But, many borrowers can’t afford to pay back the loan at the next payday or the end of the month. Instead, 4 out of 5 borrowers have to roll over that loan, or take out another one to pay back the first. The result is that interest and fees pile up, and borrowers are unable to pay down the initial loan even. This can lead to enormous economic hardship. As St. Louis resident Naya Burks found after borrowing $1,000, her loan became a $40,000 debt through interest, fees, and a lawsuit. And as the CFPB’s own research has shown, 1 in 5 car title borrowers lose the car to repossession.

It’s no wonder, then, that faith leaders from all different traditions have spoken out against these loans. The states have taken action as well. As many as 14 states and the District of Columbia have instituted interest rate caps of 36 percent or less to ban these loans. Indeed, in Arkansas, where the state Constitution now puts a ceiling on interest rates, only 12 percent of former borrowers said that they were worse off as a result.

Unfortunately, many members of Congress seem to have missed the memo that these are toxic products that do more harm than good. Florida’s Congressional delegation, among others, has tried to block the CFPB, arguing that the state already has the problem under control—even as lenders take $76 million a year out of the state’s economy. And just last year, Congress tried to weaken tough anti-predatory lending rules that protect service members and also considered hampering the CFPB’s ability to act independently.

The CFPB’s rule will rein in some of the worst practices in this industry. In many circumstances, it will require lenders to figure out whether the borrower is actually able to pay back a loan before making one in the first place. It will limit how many loans borrowers can take out, and when. And it will limit lenders’ ability to pickpocket by seizing funds from borrowers’ bank account over and over without consent.

These strong federal rules are also important because many states haven’t been able to address this problem on their own. Missouri has almost as many payday loan stores as grocery stores, with an an average interest rate on these loans of 444 percent. And in 2014, the Louisiana legislature couldn’t even pass a weak bill limiting payday loans to ten per year. That’s not to mention Ohio, where voters overwhelmingly supported a payday lending ban, but lenders rechartered themselves as mortgage companies through a legal loophole. But states still can take action to curb this abusive practice. They can follow the lead of New York, North Carolina, and others states by capping interest rates, an action of extra importance given that a loophole in Dodd-Frank blocks the CFPB from taking this action. And even states with strong laws on the books need to stand firm when tempted to adopt a looser standard.

Stopping the debt trap won’t happen in a day. But today, the CFPB takes a big step toward taking a toxic product off the shelves. Congress, and the nation, should take notice.



When You Live in Poverty, You Probably Pay More for Baby Supplies

When you have a baby, everyone tells you how expensive your life will become. They aren’t wrong: between child care, diapers, formula, and baby supplies, some weeks it feels like most of my paycheck is consumed by my seven-month-old son. When I’m shopping, one of the first things I do is pull out my calculator to figure out the cheapest option. It quickly becomes apparent how much you can save by buying in bulk. For many families with low incomes, however, buying in bulk simply isn’t an option—saving money costs money.

Despite what some conservatives might have you believe, there are very few financial supports in place for families with young children that assist with the purchase of baby supplies. Families with low incomes are doubly penalized in that they have fewer resources to spend, and therefore pay more for basic supplies because they can’t buy in bulk or purchase memberships at wholesale stores.  In contrast, I have annual memberships with Costco and Amazon Prime and a car that allows me to shop around to find the best deals.

I decided to spend a week tracking just how much my husband and I save on baby supplies due to economic privilege. I tallied what we spent and compared our costs to what a low-income parent would need to spend for the same items at stores in our neighborhood.

Diapers and wipes

I’m able to purchase diapers for $0.22 apiece through a discounted online delivery service that requires a monthly fee for subscription. By comparison, a small package of diapers costs $0.36 per diaper at the local grocery store. At 60 diapers per week, I save $8 per week on diapers. Similarly, we buy our wipes at Costco and save $1.00 per week.

Additional cost for low-income parents: $9


We buy our formula at a big box store and stock up when they have a sale. Recently, they had a $25 rebate for shopper who spend $100 or more. A great bargain for us, but $100 is easily a quarter of what a minimum wage worker makes in a week. Our total for formula comes to $20 per week, compared to $29 per week at our local grocery store. Breast milk is also far from free. A pump, bottles, and other supplies can easily cost hundreds of dollars per month. And that assumes that a minimum wage job provides adequate breaks to pump and a place to store the milk, neither of which is common among low-wage jobs.

Solid food for babies is much cheaper to puree at home than to buy at the grocery store. I have a food processor, dish washer, refrigerator, and storage containers that make baby food production relatively easy. For $5, I bought enough food for a one-week supply of meals. To buy the same amount of jarred food at the grocery store costs $18.

Additional cost for low-income parents: $22

Baby supplies

I have a credit card that allows me to accrue points that I can spend on Amazon, which provides $30 to $50 per month (or about $10 per week) in free goods. In the last six months alone, I’ve gotten swaddles, laundry detergent, diaper cream, and bottles—all for free. Many parents in poverty do not have the necessary credit or income to qualify for a credit card, let alone one that provides rewards. And as a result of credit discrimination, people of color often have lower credit scores that might otherwise facilitate credit cards with these kinds of perks.

Additional cost for low-income parents: $10

All told, my family saved about $41 per week compared to what a minimum wage worker would likely spend. While that might seem like a small amount for a family with a lot of disposable income, it adds up to more than $2,000 a year and over 10 percent of total annual income for a family of three living at the poverty line. That means in D.C., where the minimum wage is $10.50 per hour, a worker earning that amount would need to work approximately 200 additional hours a year just to buy the same items.

Last year, the Center for American Progress proposed a Young Child Tax Credit that would invest in families when income matters most for children’s long-term outcomes and family budgets are often most strained. Representatives Nancy Pelosi and Rosa DeLauro introduced legislation that would create such a credit, as did Senator Michael Bennet.

This kind of reform would not only help all families afford the critical items they need to thrive, it would also mark a step forward in ensuring that people in poverty no longer have to pay more than other consumers for the things that all families need.



The Hidden Costs of a College Education

Over the past few weeks, students across the country, myself included, have received their college diplomas. When I set out to purchase a cap and gown for my graduation ceremony, I was immediately taken aback by its steep price tag: $150. These flimsy pieces of fabric are only worn once, but for many students this purchase creates a hole in their wallets felt long after the festivities have ended.

The rising cost of tuition over the past few decades has been well-documented, and all students, particularly those from low-income families, are increasingly unable to pay. But as analysts at the Wisconsin HOPE Lab have pointed out many times in recent years, tuition costs alone don’t reveal the full picture of how expensive it has become to get an education. In fact, tuition is only about one-third to two-thirds of the cost of a college degree, and students continue to be nickel and dimed even after they’ve paid their tuition bill. As the many facets of postsecondary education get pricier, the average low-income student is faced with expenses that exceed any financial aid they may receive. At a public four-year institution, this gap is about $12,000. At a private nonprofit four-year school, it’s $19,520.

Take housing. At over $10,000 a year, on-campus housing comprises anywhere from 24 to 42 percent of total student budgets. Meanwhile, the cost of off-campus housing surrounding universities tends to be higher than standard market rent. These steep costs have consequences. One survey conducted by the City University of New York found that 42 percent of their undergraduate students had experienced housing insecurity within the past year.

In many cases, housing insecurity is coupled with food insecurity. In one study, 59 percent of students at a four-year university in Oregon experienced food insecurity, compared to only 14.9 percent of the general population. And it makes sense: on college campuses, affordable options are often limited. At my own school, the University of Maryland, the average meal plan costs $2,185.39 a year. In a 15-week semester, this amounts to $145.69 a week, or roughly the same amount as the average monthly Supplemental Nutrition Assistance Program (SNAP) benefit. Yet despite high levels of food insecurity, college students have a hard time accessing SNAP at all.

In addition, the academic supplies that students need, such as textbooks and other supplemental course materials, can increase a student’s annual bill significantly. The University of Maryland estimates a student will pay an extra $1,130 a year for books and supplies. And prices are only going up. The average cost of a new textbook increased $22 between 2007 and 2013.

Finally, couple these expenses with the fees associated with student organizations, whose costs are unpredictable and can fall anywhere between $10 and somewhere in the quadruple digits. Texas A&M University lists that dues for certain sports clubs could be as high as $2,500. At some schools, Greek life is the primary vehicle for student involvement and can cost close to an additional $10,000 a year.

Given the changing demographics of the student population, these kinds of financial sacrifices should not be viewed nonchalantly. Between 1982 and 2012, the proportion of low-income students attending college jumped by 18.1 percentage points, compared to just 10 points for high-income students. The rate of first-generation students and students of color—who are far more likely to come from low-income families—is growing and is projected to continue to do so.

There has been considerable political momentum among progressives in favor of reduced or even free college tuition, which would enable students to channel more resources into necessities like housing, food, and textbooks. But until that’s achieved, we should seek to improve programs that are currently available. For example, most college students attending at least half-time are not eligible for SNAP unless they work at least 20 hours per week, take part in a work-study program, have young children, or meet certain other requirements. However, working 20 hours a week has been shown to lengthen the time it takes to graduate, increase college costs, and heighten the risk of dropping out. As suggested by the Wisconsin HOPE Lab, aligning SNAP with needs-based student financial aid and making it more accessible to students is key to combating campus food insecurity.

Students continue to be nickel and dimed even after they’ve paid their tuition bill.

Policymakers also need to pay more attention to housing instability among undergraduates. There is currently no standard method for determining cost of living allowances, which can impact how much assistance off-campus students receive. Low-ball estimates of living costs can also hinder students’ ability to plan financially, making them more susceptible to hardship. In fact, fully 30 percent of two-year institutions have set their allowances at more than $3,000 below the actual living cost. If campuses were to use a consistent measure across the board to estimate housing costs—for example, the Department of Housing and Urban Development’s (HUD) suggests its Fair Market Rent data—they could more effectively tailor efforts to meet their students’ actual needs.

Finally, in order to better serve students, the government should remove counterproductive red tape within its programs. Federal student loan regulations prevent schools from disbursing Direct Loan aid to first-year, first-time borrowers until 30 days after the first day of classes. This policy makes it extremely difficult for students to secure off-campus housing before the school year begins, as many properties require a substantial security deposit as well as first- and last-month’s rent. Moreover, HUD should revise its eligibility criteria for subsidized housing, which treats means-tested student financial assistance for fees, books, supplies, and other essential education expenses as income, thereby forcing some students to turn down additional aid in favor of loans to remain eligible.

Ultimately, we have to shed the assumption that all students are immune to financial burdens because they have unlimited access to their parents’ bank accounts. In the midst of encouraging everyone to attend college, we haven’t considered how students are expected to excel in their studies if they can’t purchase the necessary course materials or meet basic needs. Every student deserves to feel the pride in standing in front of their families, friends, and peers to receive their diploma. And yet, writing that $150 check for a cap and gown is sometimes just one more unanticipated barrier on the way toward getting a college education.

This article has been updated since the original post.


First Person

Why the Tipped Minimum Wage Forces Me to Endure Harassment

I was recently harassed while working as a server at Olive Garden.

It was a very busy weekend, and I was told to pick up a table outside of my section.  A few minutes later I greeted the group of white, well-dressed guests seated at the table.  One of them, an older gentleman, grabbed my arm and said, “There goes your tip! I guess we’ll take you out back and give you 30 lashes.”

I felt my blood begin to boil. I walked away, declining to wait the table. I knew that this refusal would cost me money—but I didn’t want to accept harassment in order to earn a living.

I had a similar experience while working at Denny’s on Christmas Day. The restaurant was completely dead, and the one table I served gave off an impression that they had just had an altercation at a family get-together. The father asked for a steak so rare it was bleeding. When I served it, he took one look and bellowed, “This steak is frozen! How am I supposed to eat that?” He then threw it at my head.

I didn’t want to accept harassment in order to earn a living.

These experiences haven’t happened in isolation. Incidents like these are the kinds of things servers endure to receive a good tip—or any tip at all. Because the federal tipped minimum wage has remained at $2.13 an hour for the past 25 years, servers are more likely than other workers to live in poverty and rely on some form of public assistance to make ends meet. All the while, multi-billion dollar corporations like Darden (the parent company of Olive Garden) get away with their customers or the government making up the difference through tips or public assistance.

Indeed, having your livelihood dependent on tips creates economic instability. Even when I put in the same number of hours from one month to the next, my earnings can differ by hundreds of dollars. If I have a slow week, I have to put off bills and pay late fees that I can’t afford. I often go from feeling like my family is getting by to wondering if the utilities will be turned off.

Working for tips also devalues the labor of people in the service industry. Servers are paid varying amounts every day based on whether someone else thought they deserved to make enough money to pay their bills or feed their children. You can provide great service to a customer, but if he doesn’t want to pay a decent tip, you lose.

I’ve come to this conclusion: Tips are referred to as gratuity for a reason. They are not meant to substitute for an actual wage.

But this isn’t a problem that should be rectified by the restaurant customer. As social media has come into vogue, I’ve started seeing posts about once a week about how a server at a restaurant was either grossly under-tipped or completely stiffed. The message is usually meant to shame the person who did not tip well and to promote awareness of the economic hardship that it causes. But, instead of fighting for people to tip more, we should be urging our state representatives to eliminate the tipped minimum wage and ensure that restaurants pay all of their workers livable wages.

We sorely need one fair wage for all working Americans. Despite conservative arguments that increases in wages cost jobs, cities like San Francisco that have eliminated the tipped minimum wage have actually seen positive job growth. In fact, raising the minimum wage can boost the wages for workers who earn more than the minimum wage, too. And, if a worker puts in a solid 40-hour workweek, shouldn’t she be able to afford the basic necessities to live?

Change can be unsettling, sure—but even more frightening, for tipped workers like me, is the thought of no change. We need to bridge the gap between those who are profiting in the food industry and their employees who are not, and fight for one fair wage.