Car Ownership and Poverty

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Margy Waller of Brookings has a modest suggestion for tackling poverty: Help low-income workers, especially those in urban and rural areas, buy their own cars so that they can actually commute to the suburbs, where most of the jobs are these days.

A recent GAO study determined that during the 1990s almost three-fourths of all welfare recipients lived in central cities or rural areas, while in over 100 metropolitan places three-fourths of all jobs were located in the suburbs. …

Bridging this spatial mismatch is difficult. … Employers report that transportation is a major barrier to retaining former welfare recipients, or even hiring them in the first place.

“Spatial mismatch,” that’s a good way of putting it. And Waller argues that better public transportation systems won’t necessarily solve this problem, partly because even the best bus lines can’t go everywhere:

[T]he effect of access to public transit on the likelihood of employment for welfare recipients is mixed at best. One recent study in six metro areas found that better access to public transit had no effect on employment for welfare recipients. Other research suggests that access to better public transit has a small effect on employment outcomes for welfare recipients who do not have access to a car.

By comparison, people with cars are more likely to work, and car ownership is positively associated with higher earnings and more work hours.

Car ownership, though, tends to be out of reach for many of these workers, especially since owning a car is usually much more expensive for low-income families than it is for everyone else (the poor need to pay, on average, $500 more to buy a car; they usually pay higher interest rates through subprime financing and the like; and insurance premiums are generally higher). Both President Clinton and, to some extent, Bush, have proposed a few very basic measures to help promote car-ownership—getting rid of rules that make it difficult for low-income car owners to qualify for food stamps, for instance—but Congress hasn’t done anything about it yet.

Anyway, the last thing this world probably needs is more cars, but Waller makes a good point, even if this is a Band-Aid approach to urban poverty. About a decade ago, when William Julius Wilson wrote about the flight of jobs from the cities, he suggested that the federal government create large-scale public works programs to turn things around. Handing everyone a car so that they can commute seems to be the low-budget version.

Oh, and there’s a flip-side to all of this. A lot of low-income urban workers can obviously still find jobs in the inner city. They could very much benefit from better public transportation, but that’s not always available. Urban policymakers these days have become fond of slashing funds for, say, the bus systems that everyone uses in favor of rail services that subsidize the costly commute from the suburbs for middle-class workers. About a decade ago, before being shot down in court, the Los Angeles transit system wanted to spend about 70 percent of its funds on rail services when 94 percent of its riders, mostly at the lower end of the income scale, used the bus system. That’s an extreme example but not, as far as I can tell, an aberration.

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