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Economy

To Cut Down Poverty, Cut Down the Cost of Living

A basic principle of finance could yield big wins for U.S. cities, according to a new policy agenda.
An anti-poverty billboard is pictured on Wilshire Boulevard in Los Angeles.
An anti-poverty billboard is pictured on Wilshire Boulevard in Los Angeles.Jonathan Alcorn/Reuters

Proportionally speaking, Americans living in poverty pay more for basic necessities. On energy bills, the poorest 20 percent of Americans spend more than seven times the share of their income than do the wealthiest. Dividing American incomes into three, households in the bottom third spend twice the portion of their incomes on transportation than the top third. High housing costs are hurting everyone—but they’re hurting poor Americans the most.

The more you spend, the less you save, and the harder it is to climb up rungs on the economic ladder. Jobs and job-training programs are often heralded as the answer to poverty—but so long as the costs of living continue to rise faster than wages, better-paying work won’t break this vicious cycle alone. Poverty’s precipitous rise, it often seems, is intractable.