The New Suburban Poor: More at Risk to Rising Gas Prices

A new book by authors Elizabeth Kneebone and Alan Berube of the Brookings Institution has highlighted an unexpected new trend in poverty in America today — the poor are moving to the suburbs. Enticed by more affordable housing, better schools, safer neighborhoods and new low-wage employment opportunities, this shift has taken the formerly solid middle-class to upper-middle-class communities into unfamiliar territory. Exacerbating the situation is that many suburbanites who were themselves formerly of the middle class or upper-middle class slipped into poverty as manufacturing jobs disappeared and housing prices tumbled.

The authors note that policy has not yet caught up to this alarming shift. The stubborn “myth of suburban prosperity,” along with the more “segregated” nature of these communities, has made it an easy problem to ignore. And while the socioeconomic and political impacts of this shift may indeed be monumental, the significance of this change for American’s energy policy is lost in the media frenzy surrounding this alarming new report.

Currently, American households spend more on transportation than on clothing, healthcare and entertainment combined. It’s no secret that gasoline expenses are a significant portion of any household budget. In fact, fuel expenditures are often so high that it has been likened to a “regressive tax,” an obligatory expense that disproportionately affects the poor and middle class. Now that we know that a greater portion of the poor are living in suburbs, communities that exist thanks to the invention of the automobile, they are likely to be even more vulnerable to the “regressive tax” that is high gas prices.

The negative impact of gas prices on these communities is not just expressed through more money spent on driving; rather gas prices affect every aspect of their lives through increased inflationary pressures on all goods and services, and have been linked to declining home values in communities that are farther from city centers. A 2008 study by Joe Cortright found that a gas price spike helped to precipitate the bursting of the housing bubble and led to a disproportionally large drop in housing prices in suburbs and other far-away communities. The impact of high gas prices was so pronounced that the study found the farther away the suburb is from a city center, the more housing prices dropped.

Combine the findings of these two reports and the picture begins to look bleaker. Cortright’s study concluded that since “the era of cheap gas is over,” housing demand will continue to shift from the suburbs to urban areas, meaning more poor will be living in the suburbs due to higher urban housing prices. Of course, this also means that the absence of “cheap gas” will make it ever more difficult for the poor to live in their new suburban homes. And thus a vicious cycle of high housing prices and high gas prices is likely to entrap even more people in a life of poverty.

While there is likely a plethora of policy solutions that can help ease this alarming situation, the most obvious issue suggesting itself is high gas prices. Successfully achieving lower gas prices, or conversely, enabling the use of cheaper fuels of any kind that can safely and effectively power our vehicles, may help achieve dual benefits on this issue. Lower fuel expenditures can help to restore suburban home values (thus creating a lot of new wealth) and make it easier for the poor to continue living in these communities while having the mobility necessary to do such basic things as commuting to work, taking the kids to school, grocery shopping and so forth.

fuel freedom