Lack of enough opportunity, social inequality, and exploitation are the main factors in capitalist America that cause poverty, but an often overlooked contributor are the “ghetto taxes” and abusive social policies that go hand in glove with lack of incomes that keeps people poor. Ghetto taxes are the extra fees, rates, and miscellaneous surcharges that the poor as a class are forced to pay for the same basic goods and services that the middle and upper classes get for less – a lot less. One example is life-sustaining utilities: natural gas and electric.
The rates you’re charged for utilities are based on three things:
1. Your credit score
2. Where you live
3. Consumption rates (which depend on how well your home is insulated, and whether or not you can afford $20 energy-saving light bulbs and energy-efficient appliances).
This rate tiering scheme unfairly penalizes the poor for their poverty. Since poverty means not having enough income to afford basic needs, a poor credit score usually accompanies poverty. Those with poor credit are charged between 20% and 50% more for their utilities than those with plenty of income to afford their bills for the same consumption rates. Utility bills eat up around 30% of a poor household’s total income, while only eating up 3% of middle class households’ total incomes.
To understand how these punitive rate tiering schemes and excessive prices impact the poor, consider what it would mean to have 30% of a middle class income at $50,000/year eaten up by basic utilities (gas and electric). Based on a $50,000/year income, this would translate to paying $15,000/year for the privilege of having hot water to bathe properly, not dying from heat stroke in the summer, or freezing to death in the winter.
Utilities are allowed to price-gouge those least able to pay, thanks to deregulation which removed rate caps that previously existed to protect the public from price-gouging. The poor are the one group that you’re allowed to discriminate against in America. Senator David Sibley (R-TX), who co-sponsored the Texas deregulation bill, defended unfair rate tiering and its implications for the poor. Sibley said, “People who do not pay their bills are not going to enjoy the same rates as everybody else. We wanted them [the poor] to have electricity, but they don’t have a right to electricity at the same rates as everyone else.”
Contrary to conventional “wisdom,” the poor are not getting a “free ride” and living undeservedly large off the middle class. It’s not the poor who mostly have the patio heaters, heated garages, dishwashers, clothes washers and dryers, etc. The truth is that the comfort enjoyed by the middle class is, indeed, subsidized by the poor. And the poor often pay the ultimate price – with their lives.
In February 2009, the Erie Times News ran an article featuring the issue of unaffordable utilities in post-deregulation Pennsylvania. Pennsylvania’s utility deregulation bill, Act 201, was signed into law in November 2004 by Governor Ed Rendell. Since then, natural gas and electric utility rates have skyrocketed by a total of over 110%, pricing out the poor. The Erie Times News understated the resulting utility shut-off crisis, and the deadly impact this is having on Erie’s poor. The article only quoted representatives of National Fuel, the gas utility that services all four of northwestern Pennsylvania’s counties – including Erie, the state’s poorest city where half the population struggles to live on less than $20,000, and where long-term unemployment from disinvestment created a permanent and growing underclass.
National Fuel’s spin doctors lied, claiming that the utility doesn’t cut off poor people’s gas in the winter where temperatures dip into the single digits if they can’t pay; and that there was “plenty of help for those unable to afford their bills” – implying that those in poverty whose gas got shut off were too stupid, lazy, or incompetent to go to get help to keep their heat on. He cited sources of help: the federal Low Income Home Energy Assistance Program (LIHEAP) and Greater Erie Community Action Committee (GECAC), Erie’s social services agency which administers the federal Community Action Program, National Fuel’s non-profit charity donations through the Neighbor-For-Neighbor Fund (which never seems to make it to the poor); and LIRA, National Fuel’s miserly discounted rate program which is capriciously and arbitrarily administered.
The reporter never bothered to investigate by calling social workers at GECAC, which dispenses utility help through CAP and its winter weatherization program, which always seems to run out of money. Many eligible and desperately poor applicants are left without getting any help at all while some are given two or three energy-saving light bulbs. But nobody is talking about those who are turned away.
Reports of house fires that are directly related to utility shut-offs from unaffordable rates and a severe lack of help are whitewashed by the establishment media. When a malfunctioning electric space heater or kerosene heater is determined as the cause of a fire, what ignored by the media is the fact that these alternative measures were used because the gas or electric had been shut off when the victims couldn’t pay their bills and couldn’t get enough help through LIHEAP. In 2005, poor elderly and disabled childless adults struggling on their $600/mo income from Supplemental Security Income (SSI) got an average annual LIHEAP grant of $157 per household per year — which doesn’t cover one month’s worth of winter heating bills — and that amount has been reduced since then due to LIHEAP budget cuts. For most of Pennsylvania’s poor, the only protection against winter shut-offs was Pennsylvania’s winter shut-off moratorium. But Act 201 abolished that.
In 2006, a tax cut for the middle class and the rich was funded with a $1.6 billion dollar funding cut to LIHEAP. A February 2006 report from America’s Second Harvest, the nation’s food bank network, showed that 45% of those going to food pantries for help with food reported that they had to choose between food and utilities.
Sonny Popowski, the head of the Pennsylvania Consumer Advocate Office, testified before state lawmakers last December, producing a report on LIHEAP recipients conducted by the National Energy Assistance Directors’ Association (NEADA) which showed that:
• 73% of survey respondents reported that they had cut back on other basic necessities to pay utility bills.
• 19% reported that they kept their homes at unhealthy and unsafe temperatures (too cold) due to unaffordable utility bills.
• 24% reported that they used their stove/oven for heat because their winter heating utility was cut off for nonpayment.
• 20% reported that they went without food for at least one day every month to try and meet utility companies’ unaffordable payment arrangement plans to avoid shut-offs.
• 60% of all LIHEAP recipients couldn’t pay their utility bills because they lost their jobs or had other income reductions.
As of 2010, another $1.8 billion was cut from LIHEAP, targeting the poorest and most vulnerable people. David Fox of the National Low-Income Energy Consortium said that prior to this year’s funding cuts to LIHEAP, only 20% of eligible poor households were able to be served. That means 80% of those who are eligible and desperately poor are turned away.
As of December 2009, 6 million US households were without electric or gas. By the end of December 2010, that number is expected to exceed 10 million, as more and more long-term unemployed are economically “disappeared.” Given that no one in government touting the “success” of Welfare Reform tracked the outcomes for poor women that were thrown off of welfare, regardless if they were able to get a job after exhausting their 5-year lifetime benefit limits, the real toll may be much higher.
The link between utility shut-offs and deadly fires has been clearly established. The National Fire Protection Association (NFPA) places utility shut-offs as the leading cause for residential fires. When utilities are cut off, poor people are forced to resort to unsafe alternatives, including illegal hook-ups, to stay warm. NFPA data showed that from 2003-2007, space heaters were involved in 72% of fire deaths and 62% of injuries related to winter heating; 24% of fatal candle fires occurred when electricity was cut off. If there were enough living wage jobs for everyone, and if there truly was “all this help out there,” and if deregulated utility rates were not unaffordable, people wouldn’t get shut off for nonpayment and the preconditions for these fires would not have existed.
Close to 300,000 poor Pennsylvania households are without gas or electric. According to Pennsylvania’s Public Utilities Commission, 69% of poor households whose utilities got cut off were unable to get their service restored due to unaffordable security deposits and reconnection fees.
More than 400,000 poor households in Michigan had their utilities cut off due to lack of income and high joblessness, and 221,000 of those households were in Detroit, which has a real unemployment rate close to 50%. Detroit is America’s poorest city. On March 2nd 2010, Michigan’s gas and electric monopoly, DTE Energy, cut off gas to Sylvia Young – a poor single mother struggling to support herself and her 7 children (ages 18 months to 12 years) on $675/mo Transitional Assistance to Needy Families (TANF – AKA “welfare”) cash assistance plus food stamps. Her rent was $500/mo. A devastating fire broke out less than 2 hours after Sylvia Young pleaded with the DTE worker not to shut off her gas. His response was, “I’ve got a job to do.”
With no car, Sylvia Young trudged on foot through ice and snow in Detroit’s sub-freezing temperatures to the nearest Dollar Store to get a second space heater. It was too cold to drag all her kids along, so she left them in the care of the eldest who was 12. She was only gone for about a half hour when the fire broke out, ignited by a donated space heater dropped off by the landlord who didn’t want the children to freeze to death. Sylvia Young lost everything she had, including 3 of her 7 children in the fire.
But the worst came after the fire when Michigan’s state agencies and the establishment media in concert with DTE Energy launched a massive attack on Sylvia Young, bringing criminal child neglect charges against her and taking custody of her surviving 4 children. The media didn’t wait for the smoldering embers to die before seizing the opportunity to crucify a poor single mother on welfare, stating that the fire broke out while Sylvia Young left her kids unattended while she stepped out to go to a “party store.” After the truth came out in court, they never retracted their errors, and they never apologized for their classism.
Fighting the injustice of classism is not only calling out beneficiaries of unearned privileges for poor-bashing; it is also working to dismantle the apparatus which allows people to die from poverty from discrimination, marginalization, and lack of opportunities in our hyper-competitive society. The opposite of poverty isn’t wealth; it’s justice.
Jacqueline S. Homan was born and raised in Philadelphia. She comes from extreme poverty in the urban underclass. She had been orphaned and on the streets at age 13. She moved to Erie in 2002 in search of affordable housing and a job after 9/11.
After a disabling car accident caused by an uninsured driver took her out of the workforce at age 24 in 1991, she went to college and earned her Bachelors’ degree in mathematics with a minor in physics from Kutztown University of Pennsylvania as a non-traditional aged student at the age of 34 in 2001 – the first in her family to graduate from high school and college.
She struggled for most of her life in poverty due to gender and social class discrimination in the job market and every other social institution: often malnourished, living without access to medical or dental care and struggling with utility shut-offs. Jacqueline S. Homan is a genuine “poverty expert.”
She is an author and advocate for poor people’s economic human rights and educates the educated about the realities of poverty and the barriers of classism that serve to keep the poor in crushing poverty in America. She has written and self-published four non-fiction books, including Classism For Dimwits. She is a member of the Michigan-based group, CAUS, which seeks to reverse utility deregulation and end utility shut-offs. She lives in Erie, Pennsylvania with her disabled husband, Donnie E. Homan, Sr.