The Market is Failing Low-Wage Baltimoreans

August 2007 / Abell Reports / Community Development

The “poverty premium” is as much as $3,000 a year in cost-of-living—everything from groceries, financial transaction, cars, home mortgages. Recommendations to help restore equality, and availability of goods and services.

After decades of decline, Baltimore has taken a number of positive steps in recent years, as officials and residents have pursued the shared vision of a city that features strong neighborhoods and a diverse, growing economy, where families can thrive and the path to upward mobility is well-marked and heavily traveled. But city leaders have yet to address a major obstacle blocking that path: low-wage individuals tend to pay more than their wealthier neighbors for a wide range of goods and services, from groceries and financial transactions to cars and home mortgages.

Over the course of a year, The Job Opportunities Task Force estimates that low-wage Baltimoreans can pay as much as $3,000 more than their wealthier neighbors for equivalent goods and services. This “poverty premium” can consume over 10 percent of a low-wage family’s total income. And every dollar that goes toward the poverty premium is a dollar that cannot be saved or invested in education, home ownership, or retirement.

The magnitude and specifics of these added costs vary from one low-income family to another, depending on whether the family owns or rents their home, owns a car or relies upon public transit, or shops for food at a neighborhood corner store rather than a supermarket. But a number of systemic factors—neighborhoods with limited consumption choices, predatory business practices, and under-informed consumers—all but assure that they’re paying more overall.