High gas prices might squeeze Chicago's poor tighter than others

With gas prices registering $1.25 a gallon higher than they were last year in the Chicago area, the average household is spending more on gas. Economists estimate that it’s almost 8 percent of their income on gas.

But some say that percentage is probably higher for the poor who earn less and typically travel farther for work and to buy goods and services.

It’s late-afternoon as Tamica Craig, 26, pulls her car into the Jackson Citgo gas station, 300 S. Cicero Ave., on the city’s West Side.

“To fill my tank, I have to pay double the amount [compared to last year],” Craig said. “It’s definitely cut into my bill money and other money.”

Even though it takes her only about 10 minutes to drive to work, Craig — who lives in the Austin community area on the city’s West Side — estimated she spends as much as $300 a month at the pump. “I use my car to take my kids to school and other things,” she said. “I think it would be cheaper if I just use public transportation.

In Chicago, the average price of a gallon of regular unleaded gasoline is currently around $4.11, one of the highest in the country according to the U.S. Department of Energy’s Energy Information Administration, compared to $2.86 around the same time in 2010.

While many motorists have responded to higher prices by simply driving less or taking public transportation more often, the solution has not been quite as simple for many of the city’s poor.

“In a sense, it’s a double-barreled dilemma,” said William Sampson, Ph. D., a public policy professor at DePaul University. “When prices for essentials like gasoline go up, the poor are hurt disproportionately because they have less money to pay for it. But just as importantly, they have longer distances to travel.”

As Sampson explained, in order to buy goods and services not found near their communities, Chicago’s low-income residents often must travel outside of their own neighborhoods. The problem is particularly felt in Chicago’s African-American communities. An investigation by The Chicago Reporter found that residents of African-American communities spend an estimated 64 percent of their consumer dollars, more than $5.3 billion a year, outside of their neighborhoods. The investigation also showed that the rate of major retailers per 10,000 residents is three times higher in white communities than black communities.

“In poor neighborhoods you have fewer places that sell essential goods and virtually no services so you have drive or take public transit for almost anything,” Sampson said. “If you live in a relatively affluent area, the pharmacy is right down the street, the supermarket is across the street, the schools are down the block and the hardware store is three blocks away, you don’t need to travel as much – but for poor folks, none of that is convenient and they have to travel everywhere for everything .”

Sampson said higher gas prices have also hurt the city’s poor because of the increasingly long commutes many are making in order to get to jobs that don’t pay that well.

“With jobs, the real growth in the economy is in the service industry and has been for some time,” Sampson said. “A disproportionate number of those jobs are in the suburbs, so they were for a long time difficult to negotiate. And if you’ve got a one or one-and-a-half hour commute each way from Englewood or the West Side out to Northbrook for some service job, you really have a problem.”

African-Americans in the Chicago region may be hit the hardest by this phenomenon, which some call “jobs mismatch” because the jobs are growing far from areas where people need employment the most. That point is illustrated by a Chicago Reporter investigation, which
showed that between 1991 and 2007 job growth occurred in 97 of Cook
County’s 139 communities. But just five of those communities were
predominantly black. Much of the job growth occurred in more affluent and predominantly white north suburban towns and villages.illustrates.

According to a study conducted by the Oil Price Information Service, an analysis of gas prices and median household incomes throughout the country showed Americans spent on average around $392.57 on gas in May 2011, or about 9.5 percent of total monthly income.  By contrast, in May 2010 the average U.S. household spent around $290.03, totaling about 7 percent of monthly income.

Below is a table from the group showing the average price of gas, median household income and the percent of income spent on gas for all 50 states, the District of Columbia and the nation as a whole for May 2011.

In Illinois, the average gasoline bill for May 2011 was around $352, or about 7.8 percent of total household income for the month. But that’s based on the state’s median household income of nearly $54,000. In Chicago’s poorest communities, the median household income is much less than that.

So, if you’re poor, that percentage is probably higher than 7.8 percent, according to Roosevelt University Economics Professor June Lapidus. “If you had somebody making a $1,000 a week and their fuel costs went from $40 to $50, it doesn’t have the same impact as someone making $100 a week whose fuel costs go from $40 to $50 a week,” Lapidus said. “So it works like a regressive tax essentially.”

Some, however, feel the overall impact of higher gas prices might be somewhat overstated.  University of Chicago Economics Professor Allen Sanderson said even though the effects were felt by all in the short-term, over time the problem became less significant as people learned to adjust.

“One of the issues, I think with gasoline, it’s one of those things for which all consumers, rich or poor, are affected in the very short run,” Sanderson said. “They’ve made decisions – whether it’s where to live or where to work – that are somewhat entwined with how they are going to get to work, so in the short run, folks rich and poor are sort of somewhat boxed in.”

Steven Ross Johnson


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