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Testimony

Reducing the High Costs of Being Poor

Matt Fellowes

Mrs. Chairman, and other members of the Committee, thank you for the invitation to testify today about the higher prices that lower-income individuals often pay for necessities and the private- and public-sector responses needed to bring down those higher costs of living. Price premiums tacked onto goods and services pose a serious obstacle for lower-income workers that are trying to convert scarce dollars into economic mobility. Fortunately, steps that a select group of states, cities, and private-sector partners have taken in recent years provide a roadmap for a new federal agenda that will lower these costs of living for households across the country.

I want to make three broad points.

First, moderate- and low-income households often pay higher prices for basic necessities, from basic financial services to cars to mortgages.

Second, these higher prices curb the ability of moderate- and low-income households to convert their wages into economic mobility and erode the efficacy of federal work-support subsidies, including the $42 billion Earned Income Tax Credit.

Third, federal policymakers can lower these higher prices by a) reducing the real higher costs of doing business with low-income consumers, b) curbing market practices that unnecessarily drive up prices, and c) boosting the ability of consumers to find the lowest possible price in a market for a good or service.

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