Trapped in the Middle

Gasoline and transit spending isn't fair. As you'd expect, wealthier families spend a smaller percentage of their income of gasoline than those with less money. But the cost of getting to work doesn't fall evenly across the income spectrum. Using preliminary data from our survey of 2000 households, cut up by income levels, it's clear that some working households drive further, in less efficient cars, and need more car repairs than those with more money. Some families squarely in the middle appear to pay higher insurance costs than those richer and poorer than them. The graph above shows how the energy trap--the necessity of buying gasoline--hits households at different income levels in unique ways.

For working families, there's a painful irony to the red bars on the graph: They need a car to get to work, to have a choice of jobs, and to get ahead, but the unique challenges they face mean that the car itself may be undermining their financial stability. While we haven't analyzed these survey answers, it would appear that working families run greater financial risks for both high gas costs (because their cars are less efficient and their commutes are longer) and catastrophic repairs (because of their higher repair rates.) A 2006 study by the Center for Neighborhood Technology found that while average American households spent 47 percent of their income on transportation, families making between $20,000 and $50,000 spend 57 percent because they've moved to further flung exurbs where housing is affordable, increasing the cost of their commutes. Some families making $20,000 to $35,000 spent more than 70 percent of their income on housing and commute. These households live in the most extreme version of the energy trap, in a fragile balancing act between income and expenses. Our data suggest that the characteristics of their cars themselves could tip them out of solvency. The slow bleed of gas costs could drain their reserves. Then something as small as a breakdown could make it impossible to get to work and keep a job.

There's a clear opportunity for policies to help working families, or communities with high costs of transit, reduce the total cost of their transit spending. Ranging from programs to make efficient vehicles more affordable, to increasing transit options, such programs could also include local initiatives to help people repair their cars.

Unfortunately, most government policies to cut transit costs are aimed at higher income levels. An elaborate set of tax incentives encourage households at the upper end of the income scale to buy highly efficient hybrid and electric vehicles, which can save them thousands of dollars a year in gasoline costs. But these vehicles are expensive and require access to credit, which many middle and lower middle families do not have. Furthermore, the incentives, in the form of tax rebates, are not relevant to households paying lower taxes. Even public transit appears to have a bias towards the relatively well off: A recent national study by the Brookings Institution found that high skilled jobs are better served by public transit than low and middle skilled jobs. These policies are failures on several levels: They fail to shore up struggling households and increase their financial independence. They also overlook a political opportunity to engage the lower middle class in the fight to increase America's energy security and usher in a greener, more sustainable economy.

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