In mid-August, Barbara Grayson received a 10-day notice from Equitable Gas warning that she would face a gas shut-off if she didn't pay her bill. So Grayson looked for quick, easy cash the only way she knew how ... through an advance loan from a check-casher in East Liberty.
The $200 Grayson received must be repaid in eight installments of $43.27, for a total of $346.16, or 173 percent of her original loan amount. Grayson, who lives in Greenfield and works as a clerk at Highmark Downtown, says she didn't have anywhere else to turn.
But Pittsburgh's lower-income neighborhoods make it easy for struggling workers to seek such quick, high-interest loans. Up and down Penn Avenue, check cashers beckon customers with neon signs promising money. And now the Brookings Institute has found that Pittsburgh ranks first among 12 cities surveyed for its concentration of such stores, which critics contend prey on the poor.
According to a report released in July, Brookings found that 92 percent of the city's check-cashers and advance-loan providers are in neighborhoods where the median income is under $30,000.
Brookings, a Washington, D.C., think tank, found that residents in low- and moderate-income neighborhoods typically pay far more for basic financial services such as short-term loans, check-cashing and tax preparation. They also fork out more for home insurance and face higher mortgage rates, adding up to more than $2,000 extra compared to wealthier residents in some cities.
"Most of our [social] policy focuses on boosting their income," says the report's author, Matt Fellowes, of lower-income families, "but very little attention is focused on how that income is actually spent."
Lower-income residents in Pittsburgh, as well as in the larger metropolitan area (Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland counties) fared better in some categories than residents in Atlanta, Baltimore, Chicago, Denver, Hartford, Indianapolis, Los Angeles, New York, San Francisco, Seattle and Washington, D.C.
Pittsburghers, for example, fared better with auto-insurance premiums and the accessibility of banks and credit-union branches.
But poorer Pittsburghers are tied for being the most reliant on high-interest lenders for home mortgages. And Pittsburgh is ranked third-worst for placement of grocers in poorer neighborhoods ... as anyone who has been waiting for a Hill District market can testify.
Some local community-development groups have tried to keep such income-eating businesses away. Two years ago, the East Allegheny Community Council, on the North Side, went before the city's Zoning Commission to fight the opening of a second check-cashing location on East Ohio Street. The neighborhood group lost that battle.
Says Lynn Glorieux, the group's vice president, today: "We didn't need more temptation for people to get advances on their paycheck and pay an exorbitant rate of interest."