USA: Why so many people may never recover from Hurricane Michael
By Eleanor Goldberg
[...]
That a major natural disaster can hurl a family living on the fringes into a downward spiral makes sense. Most Americans today can’t even afford a minor emergency. According to a January report from Bankrate, a website that provides financial advice, just 39 percent of respondents said they’d be able to cover an unexpected $1,000 bill with funds from their savings. Most of the other respondents said they would have no choice but to pay with a credit card, borrow from family and friends, or get a loan.
[...]
Hurricanes are particularly punishing because of the exorbitant costs associated with adequate preparation.
Low-income people are more likely to live in areas that are susceptible to storm shocks and reside in shabbily built homes that can’t withstand major damage, according to a report by the Brookings Institution last year. In Houston, for example, low-income neighborhoods were the hardest hit by Harvey, in large part because the city spends more on infrastructure in wealthier neighborhoods. Lower-income areas are also less likely to have embankments, drainage systems and other measures that can protect them from raging floodwaters.
This demographic is also less likely to be able to afford flood insurance, which they can be penalized for.
[...]
For those without car or personal insurance, it doesn’t even take losing a big-ticket item to wreck a family’s finances. Having to suddenly come up with a few hundred dollars to replace a refrigerator that breaks during a storm can be the thing that sends a family into a tailspin, said Brian Greene, president and CEO of the Houston Food Bank. In these instances, strapped families may resort to seeking out payday loans ― high-interest loans with rates based on the borrower’s credit and income profile. Annual interest rates are around 400 percent and can plunge families into inescapable debt.
[...]