Economic Scandal, Environmental Travesty
Last weekend my daughter had her first sleepover party, to celebrate her 7th birthday. Having six giggling and occasionally hysterical 7 year old girls in my house didn’t do much to help my sleep deficit, but it did give me a chance to catch up on reading all the those old New York Times Sunday Magazines that litter my dining room.
As I was reading the Feb. 16 issue, one thing caught my eye: an article by Shaila Dewan about low-income families and their lack of access to credit. Dewan makes the point that a poor credit score can be potentially ruinous for families, even more so than a lack of available hard cash. “If you want to buy a car, and you have good credit, a $10,000 loan might cost you $1,300 in interest. With bad credit, you’ll pay $7,600. If that car breaks down, a $500 expense might mean a crushing payday loan, or even a lost job.”
Finding safe, efficient, and affordable options for California families without big incomes and strong credit was one of the major motivating factors for my team when we set out to write a paper we just released this week, “No Californian Left Behind: Clean and Affordable Transportation Where It’s Needed Most.” The paper, written by Cole Wheeler, Visiting Fellow Jesse Morris (normally based at the Rocky Mountain Institute), and me, takes a hard look at the 10-15 percent of California’s cars and light trucks that produce over 50 percent of our state’s smog from the light-duty vehicle sector. We find that the households that own these vehicles are often low-income and live in more rural areas of the state where vehicle ownership is a necessity.
As our report shows, these vehicles don’t just impose disproportionate damages upon our air quality; they also take a severe toll on already strained household budgets. When you’re driving an older car that gets 15 mpg, you’re spending about $100 more per month on gas alone than you would if you drove a newer 30 mpg car - and that's on top of the additional costs of repairing an aging, broken-down vehicle. And in some of the most rural parts of California, the Center for Neighborhood Technology estimates that transportation costs exceed one-third of area median incomes.
The paper includes a variety of policy recommendations, mostly targeted to the Air Resources Board as it considers new regulations for the state’s current vehicle programs, on how to help these households retire their older vehicles and purchase newer, more efficient, and safer cars. But one of our strongest recommendations—one that is not often part of a laundry list of environmental goals, but is at the core of our mission at Next Generation—is for the state to help low-income families with poor credit ratings get access to fair and reasonable auto loans. It’s a simple fact that for many California families, credit access may be the biggest barrier to owning a safe, reliable, efficient vehicle. As the L.A. Times noted in its award-winning 2011 series on the used-car business, for many families the only available auto lenders are so-called “Buy Here Pay Here” dealers, who not only charge unconscionable interest rates but also often base their business models on the repeated repossession and resale of the same badly-maintained vehicle.
That’s not just an economic scandal; it’s an environmental travesty in a state that prides itself on its climate and energy leadership.