Today millions of lower-income people across the United States pay inflated prices for basic necessities like transportation, insurance, food, housing, and financial services. These higher prices limit the ability of working families to meet their basic needs and save for the future. A recent report by The Brookings Institution Metropolitan Policy Program, From Poverty, Opportunity: Putting the Market to Work for Lower Income Families found that:

·         Lower-income families tend to pay high prices to cash checks and buy short-term loans. In the Seattle metro area, high-priced check cashers and payday loan providers are densely concentrated in poor neighborhoods.

·         Lower-income families tend to pay higher-than-average prices for car loans – an average APR of 9.2% for lower-income families compared to the 7.4% paid by all other households nationally. They also tend to pay the highest rates for car insurance.

·         In the Seattle metro area, 44% of lower-income tax filers pay to have their taxes prepared for them. Lower-income tax filers are also more likely to buy high-priced refund anticipation loans.

·         Lower-income families are more likely to buy high-priced mortgages. In 2004, about 12% of the mortgages originated to low-income households in the Seattle metro area were high-cost, sub-prime mortgages.

In some cities and states around the country, both public and private sector leaders have worked on reforms to curb the higher costs that lower-income people pay for basic necessities. These include public and private sector partnerships for retail development in low-income neighborhoods, new regulations on mortgage and payday lending, incentives for banks and credit unions to provide greater access to financial services for lower-income consumers, and efforts by mainstream businesses and nonprofits to compete with predatory businesses.

The High Cost of Being Poor in Washington State is a project to determine what barriers and conditions force lower-income Washingtonians to use higher cost goods and services, and to come up with solutions to the problem. We are a partnership of several organizations representing anti-poverty advocates, community-based organizations, research and policy institutes, and foundations. Over the next six months, we will hold conversations in several communities around the state to learn more about the problems and potential solutions. In the summer of 2008, we will publish our findings and recommendations in partnership with groups working toward solutions to poverty. It is our hope that these findings will provide useful information to those seeking to reduce poverty in Washington State, by clearly illustrating the problem and by advancing community-supported solutions.

For more information about the High Cost of Being Poor in Washington State, please contact:

Soya Jung Harris, Project Manager

Email: jungharris@gmail.com