Low-interest car loans for low income workers

May 29, 2013

A piece on this Morning’s Today show highlighted a program that helps low-income workers obtain car loans at reasonable interest rates.  The piece highlighted a single mother who worked at a call center and had a commute that required two train trips and a bus ride each way, totaling some two hours.   By obtaining an affordable car, she was able to significantly reduce her commute and avoid the steep charges she regularly incurred when late for picking up her daughter from day care.

I have no doubt that this program helped this individual, at least for the short run, but did it help her in the best way, both for her and for society?  As the web site piece points out, the root of the problem is the location of jobs for low-income workers, which have become less accessible for those who do not have access to an automobile.

By providing a car, at a monthly cost that approximates what the recipient was spending on transit, it appears the program has solved the problem.  But this type of program, if it becomes very popular, could be the victim of its own success.  The additional traffic it generates could increase commute times to those rivaling the time transit trips consume.  I don’t recall whether the story mentioned that recipients were counseled about the need for saving regularly to cover the cost of major repairs, which have a habit of coming up unexpectedly and which, if not budgeted for, could put the driver back on public transportation, while remaining liable for the monthly car payment.  Also, further reductions in transit use caused by this type of program (much of it “reverse commuting,” which is the cheapest type of transit service to provide) will further the downward spiral of reduced service and increased fares that we may all regret after we no longer are able to drive.

It seems to me a better answer to this problem would be to encourage the relocation of either employers or employees.  If an apartment comparable to what the person in this story had was available for the same rent within reasonable commuting (or, better yet, walking) distance, paying for the move would be a one-shot solution that would not have the negative effects on society outlined above.  It would not solve the wider problem, though, of access by low income people to appropriate jobs, and could limit this person’s access to other job opportunities that might pay her more than her present job.

Moving employers back downtown, or to other areas well-served by transit, would be in their own best interest.  Having employees easily access their jobs would reduce absenteeism, tardiness and stress, and would better use and support existing transit and road infrastructures.  Unfortunately, those who make business location decisions often shortsightedly exercise that power to maximize their own convenience, rather than that of their entire work force.

While the low-interest car loan program undoubtedly has short-term benefits for those who can drive, I question whether it is the best global, long-term solution to the lack of accessibility of jobs for low income workers.

Footnote:  The person featured in the Today show story may not have been the most sympathetic to viewers.  By her own admission, her situation was caused in part by poor financial choices, and many comments on the web article  noted that she had enough money to pay for a very fancy smart phone, nail tips and hair treatments,  which could have been used to pay for a car without a subsidy.  On the other hand, financial education is part of the loan program, and the individual portrayed clearly wanted to work and improve her and her child’s situation.  Unfortunately, those types of observations open up the whole “deserving poor” debate which is not relevant to the main topic of the story.


It’s not over yet

May 24, 2013

More fallout from the stunning LIRR pension fraud mess.


Not everyone’s entitled to my opinion

May 22, 2013

Recently, several businesses I patronize have asked me to complete on-line surveys. Initially flattered that my opinion was being sought, and hopeful that I might influence corporate policy, I dove in, only to abandon my efforts after several minutes of irrelevant, repetitive and often illogical questions. I imagine that companies pay a lot of money to those who design and administer these surveys. I submit that this money is largely being wasted, and would be better spent on bringing in customers and speaking with them directly. Most recently, for example, I was asked by a particular business about customer loyalty programs. After identifying several of which I was not aware, I was then asked several questions that clearly assumed my familiarity with those programs. Further, I was asked a question to the effect of “Every (this type of business) should offer a customer loyalty program.” The possible responses were not “yes” or “no”, but an invitation to select among several companies presumably offering such programs. I have promised myself never to again waste time on customer surveys unless I am being compensated for my time. If I want to express my opinion to a company, I’ll send a letter or an e-mail.