Poverty in the Not So Big City

The Brookings Institute did a study on poverty in large US cities. According to the Star, they found that Indianapolis has more of the kinds of businesses that target poor people – businesses such as pay day loan, rent-to-own, and instant tax refund stores – than other large cities. Grocery stores in poorer Indy neighborhoods are smaller than stores in more affluent areas and charge higher prices.

The photo in the Star shows a shopping plaza at 30th and Lafayette Road, which is an area with more black residents. But it’s not limited to black neighborhoods. There are at least four check cashing stores in my neighborhood. Thankfully, we have one bank. While there are grocery stores in our neighborhood, I have to travel 15 miles if I want to buy tofu, tempeh, or anything organic at anything that resembles a reasonable price. I live three miles south of Downtown Indianapolis. In general, prices are higher and the selection isn’t very good.

Mel asked me why I thought Indy had so many more of these businesses than other large cities. Part of what attracts and retains folks to Indy is the lower cost of living. We offer big city amenities in a mostly affordable package. Real estate is inexpensive. It’s cheaper to advertise. It costs less money to live and run a business in the city of Indianapolis. My guess is that there’s a much higher return on investment for these businesses in a city like Indianapolis. All big cities have large concentrations of poor people. It’s cheaper to open a check cashing store on South Madison than it is in San Francisco or New York or Chicago.

In response to this economic reality, the City of Indianapolis and the State of Indiana need to artificially inflate the cost of running these kinds of businesses. They need to call instant tax refunds, rent to own, and pay day loans what they are – loan sharking. We already have laws against loan sharking. They need to include these kinds of businesses in ordinances and legislation. Our community development corporations need to work on attracting businesses that don’t prey on poor people. Finally, our students should be required to take courses like home economics and personal finance where they learn about grocery shopping and banking (and how you shouldn’t be able to do both of those things in the same building).

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