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"Opportunity and the Automobile,"

by Margy Waller January/February 2006 issue of Poverty & Race

A century ago, getting to work seldom required a lengthy commute. In rural areas, farmers walked out the kitchen door to their jobs. And most urban residents either lived within walking distance of their places of employment or could rely on convenient public transit systems like streetcars. Today, however, two-thirds of residents in metropolitan areas live in the suburbs, and two-thirds of new jobs are located there as well. It’s therefore no surprise that 88% of workers drive to their jobs.

Left behind in this car culture are central-city poor residents without cars, who have become increasingly isolated from the American economy. As Mark Alan Hughes, William Julius Wilson and other scholars have documented, the steady movement of jobs out of cities and into the suburbs has helped create and sustain the concentrated poverty that is now endemic to America’s urban areas. Because new jobs tend to be located in ever-expanding suburbs, which are poorly served by mass transit, poor central-city residents find themselves living further and further away from economic opportunities. Evelyn Blumenberg, a professor of urban planning at UCLA, found that car-driving residents of the Watts section of Los Angeles have access to an astounding 59 times as many jobs as their neighbors dependent on public transit. Even more isolated are the car-less low-income families who now live in the suburbs—nearly half of all metropolitan poor.

There is reason to believe that not having a car isn’t just a consequence of poverty—it’s a barrier to escaping it. A significant body of research shows that low-income people with cars work at higher rates, and earn more, than those without. Outside factors like personal motivation—the type of people who get cars are likely to be the type who also get jobs—could go some way to accounting for the difference. But researchers who have evaluated that possibility by looking at existing survey data and at a small program that provides cars to the working poor find that car ownership does indeed directly help people to work, and to earn, more.

The lack of a car limits opportunities for America’s poor in other ways too. It’s never easy to be a working single parent, but it’s infinitely harder without a car. When you spend three hours a day commuting to work by bus and train, then have to buy groceries and pick up your kids, there isn’t much time for anything else—like helping with homework or after-school activities, taking yourself or your family to the doctor when necessary, or even finding a partner to help share the load. And lack of access to a car limits your housing options, making it even harder to move into safer neighborhoods, or ones with better schools.

Perhaps worst of all, the lack of a car leaves people more vulnerable to unforeseen emergencies. Hurricane Katrina was an extreme example, but the daily lives of the poor are filled with smaller ones. In American Dream: Three Women, Ten Kids, and a Nation’s Drive to End Welfare, Jason DeParle follows Angie Jobe, an inner-city Milwaukee single mother. At one point, Jobe has her Food Stamps cut off because of a bureaucratic error. Not having a car, she takes the bus to the Food Stamp office to clear up the problem, but it breaks down on the way there, and she arrives late, so no one will see her. She’s forced to return the following day and eventually has her stamps reinstated, but the episode somehow ends up costing her $500—more than a week’s wages.

Clearly, the problems are most acute for low-income families without cars. But even for low- and middle-income workers who do own cars, purchase and operating costs take a significant bite out of their income—more than 20% of all household expenditures go for transportation, second only to housing. For the vast majority of households, those costs aren’t optional—cars represent a fixed and non-negotiable expense. And every time the price of gas increases, it is in effect a tax on work.

Automobile Credits for Low- and Moderate-Income Workers

Federal policy has long given favorable treatment to work expenses, and rightly so. The government subsidizes the cost of college and worker retraining. The tax code allows deductions for the cost of uniforms, job searches, tools, home offices and work-related moving. There are even tax breaks for non-commuting work travel and parking. Yet one of the largest and least avoidable work-related expenses for most Americans—the cost of getting to and from work— receives no favorable treatment in the United States, though it does in countries like Germany and France.

This inequity can be remedied in a simple and straightforward way. The federal government should offer a tax benefit to anyone who commutes to work and is in the middle to bottom of the income scale—that is, anyone in the 60% of U.S. households making less than $52,000 a year (the upper limit of income for the bottom three quintiles). Those who need the credit most would get the most help: Lower-income workers would receive a refund if their credit exceeded the amount of taxes they owe, in the form of a check for up to $3,000. That’s enough to help significantly with the purchase and maintenance of a decent, though not fancy, car. Those higher up the income scale would get a dollar-for-dollar credit against taxes owed; a family making $40,000 would get back around $1,000. To avoid punishing those who don’t use cars, all workers with commuting expenses—even those who take mass transit—could claim the benefit.

Automobiles for the Poorest Families

A federal tax credit will be insufficient for the poorest working families, who may also have credit problems or who cannot to provide a downpayment. In most American cities, public transportation is inadequate to bringing poor inner-city families reliably to suburban jobs, and for families who are trying to move to higher-opportunity communities, a car is often a necessity for a successful move.

Fortunately, nonprofit organizations like Working Wheels in Seattle and Vehicles for Change in the Washington, DC region, already help to provide loans and decent cars for poor workers. These successful programs could be expanded using federal resources to cover all working families who need assistance.

Even a small investment in subsidized car ownership could have a powerful impact on job and housing mobility for the poorest families. Workforce development counselors could provide subsidies to workers who would otherwise be unable to reach suburban job opportunities. Similarly, Section 8 housing mobility program staff often note the lack of public transportation to rental housing opportunities in low-poverty areas. A targeted national program could dramatically expand housing options for low-income families who wish to move to higher-opportunity communities.

Automobile ownership subsidy programs help in other ways. Insurers and car dealers often make the poor pay excessive rates, which acts as a further obstacle to car ownership. Widening the reach of nonprofit programs would reduce the impact of these bad business practices. In addition, these programs aid working families to improve their credit rating, and develop traditional banking relationships—two more crucial steps in rising up the income ladder.

Automobiles and Housing Mobility in Baltimore

The Vehicles for Change program began as a low-income car ownership program in rural Carroll County, Maryland. Later, the program expanded to serve clients of two Baltimore housing mobility programs who are moving to suburban areas.

The Baltimore-based Abell Foundation initially funded the mobility initiative in 2002. Vehicles for Change provides cars to low-income, employed individuals at very low cost—typically $900 to $1,100, financed over a 15-month period. Grant funds are used to subsidize the cost of the cars in order to make them affordable to low-income individuals. Monthly car payments range from $70 to $98 for a 15-month loan. Clients must, however, purchase their own auto insurance. A survey of car purchasers suggests very promising employment and family well-being outcomes for workers buying a Vehicles for Change car. Last year, the Housing Authority of Baltimore City made a $38,000 matching grant to provide car purchase assistance to an additional 33 families referred by the two housing mobility programs.

Political Prospects

The proposal for a federal tax credit is ambitious and expensive. If all eligible workers took advantage of the option—an unlikely prospect, based on experience with other credit programs—the cost could reach $100 billion a year. Any initiative that big raises certain obvious objections.

Some would argue that funds invested in a federal tax credit—or smaller direct grants to housing mobility programs—would be better spent on mass transit, in the hopes of reducing congestion and pollution. Others would encourage more transit-oriented affordable housing development. These are certainly worthy goals, but there is little reason to think that even a massive investment in public transportation would substantially reduce the overall amount of driving Americans do. Anthony Downs, a transportation expert at the Brookings Institution, has projected that doubling the number of people who take mass transit to work (a Herculean achievement) would reduce the number who drive by only around 5%. While it unquestionably makes sense to improve service to the transit-dependent, particularly in dense urban neighborhoods, no amount of money will enable us to use transit to meet the needs of most workers. Only cars can do that. And even if every car-deprived household in the bottom half of the income scale were to buy an automobile, it would increase the number of vehicles on the road by only around 3.5%. The modest effects of this slight increase are far outweighed by the moral imperative to give the poor access to a crucial commodity enjoyed by the rest of society.

Former Senator John Edwards, among others, argues that the country would be better off, and the economy stronger, if we rewarded work instead of wealth. This was the approach of the 1990s, when taxes on the rich increased, the Earned Income Tax Credit doubled and the minimum wage rose. These changes coincided with the longest economic boom in American history; incomes rose while poverty and unemployment declined. Replacing the current Administration’s tax cuts with the commuting credit would result in a net savings of around $1 trillion over 10 years, and would realign tax policy to reward the American value of hard work.

Would such an idea ever be politically feasible? In fact, there is reason to believe that it could attract broad support and help forge some unlikely alliances. Unreliable cars and unpredictable transit are a major contributors to employee tardiness and absenteeism, cutting productivity and profits. Commuting credits would ease that problem and increase the pool of applicants for low-wage jobs, making the credits a natural sell to major employers. And the automakers and the powerful auto unions would surely welcome the prospect of creating a new market for cars.

The political logic may be the most compelling for candidates: Any proposal that involves money in the pocket for this many voters won’t lack for public support. In particular, rural and exurban workers who have long been particularly hard hit by this tax on work are a natural constituency for the commuting credit. Indeed, in addition to transforming the lives of America’s inner-city poor, commuting credits could also be the first step toward making low- and middle-income voters feel that the federal government is making a difference in their economic well-being.

The idea that driving a car is a lifestyle decision has long since become outmoded. Americans do love to drive, but these days, they also must drive. To be a fully functioning citizen in this country today, a car is a virtual necessity, and any American willing to work ought to be able to afford one. And for poor families, most suburban moves will not prosper without access to reliable transportation. We use the tax code to subsidize most other work expenses. It’s time we did the same for the most common and unavoidable of them all.

Margy Waller is a cofounder of Inclusion and director of The Mobility Agenda. She served as a domestic policy advisor in the Clinton-Gore White House and a visiting fellow at the Brookings Institution. More about Inclusion's alternative to the poverty framework can be found at

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