Louisville Hosts Presentation on "The High Price of Being Poor in Kentucky"

Did you know that Kentucky’s lower-income families tend to pay higher-than-average prices than other consumers do for basic necessities? From car insurance to home mortgages to basic financial services, low-income families in Kentucky pay more.

On June 20, 2007, the Louisville Branch of the Federal Reserve Bank of St. Louis hosted Matt Fellowes of the Brookings Institution. Fellowes presented his research findings, “The High Cost of Being Poor in Kentucky: How to Put the Market to Work for Kentucky’s Lower-Income Families,” the first study to evaluate costs that affect low-income families in an entire state. The study rollout was held at the Louisville Branch and at the Springs Conference Center in Owensboro, Ky. More than 65 community officials, business leaders and bankers were in attendance.

Fellowes stated that drivers who live in lower-income Kentucky counties and neighborhoods pay on average $384 more a year for car insurance. Those living in rural and urban areas were affected the greatest. Some of the factors are dangerous roads, credit scores, education and occupations.

“Lower-income families in Kentucky tend to pay more for basic financial services than higher-income families, because of their greater reliance on high-cost non-bank financial service companies, including check cashers, payday lenders, pawnshops and tax-preparation firms that sell refund anticipation loans,” Fellowes said.

Another problem is the lack of large grocery stores in lower-income neighborhoods, especially Louisville’s West End. Those residents have to travel through several neighborhoods and often rely on public transportation. Because of this inconvenience, they often go to smaller grocers that are more expensive.

To help with these problems, Fellowes encouraged Kentucky leaders to examine “unscrupulous practices” such as payday loans. He also recommended educating consumers on how to make better financial decisions.