Higher costs of many essentials are hitting Fargo's poorest the hardest
As inflation reaches heights not seen in more than 40 years, many are feeling the burden and it’s ‘scary.’
FARGO — The line never shrank for free groceries on Wednesday, Aug. 3, outside the Emergency Food Pantry on Fourth Avenue North. Cars filled the parking lot. When one person left, another came soon after.
Jason Castro stood in line for about 20 minutes while breathing in the sweet aroma of baking bread from Country Hearth bakery a block away as volunteers prepared his food. Rising expenses of transportation, groceries and rent forced him to seek help.
“It’s terrible,” said Castro, who is among the 11% of people with disabilities in Fargo. He is living on a $1,250 fixed monthly income. “Groceries: You barely get a few things and it’s a $100 bill.”
Castro lives in a trailer and is also paying double to keep his home cooler during the summer months. Middle-aged, he’s wondering if he should move into a nursing home.
“(It's) the only thing I can think of to make ends meet. It’s scary,” Castro said.
"Scary" is what the Consumer Price Index reported in its latest July report. The nation is seeing the largest 12-month price increase since the early 1980s, with the food index rising 10.4%, energy costs climbing 41.6% and the "all items" index increasing 9.1% over the past year.
Since June 2021, prices for consumers have been increasing month over month, with the heaviest inflation rates occurring in March, May and June.
The prices for food, housing, day care, health care, taxes and transportation have increased to painful levels, leaving people like Castro watching pennies, no longer able to afford a McDonald's combo meal.
“I pretty much have to stay home. One day you’re used to going to the movies, but that’s now a thing of the past,” Castro said.
David Flynn, a professor of economics and finance at the University of North Dakota in Grand Forks, said the problem of inflation is expected to continue until 2024.
“We should be very clear to acknowledge that what they are feeling is here. This inflation is here, it is pernicious, and it is a real problem,” Flynn said.
Additional financial worries for some include the federal government reinstating student loan payments on Aug. 31. Tack on smaller bills like student meals for children at public schools, no longer backed by federal assistance programs, and that’s more money out of family pockets.
Politics and taxes
Rising costs will force people like Castro to dip into their limited savings, which is creating a serious political problem for President Joe Biden, who Republicans blame for the price increases.
Sen. John Hoeven, R-N.D., outlined the need for regulatory relief in a recent press release and issued a scathing critique of the current administration, saying Biden is doing the opposite of what the nation needs.
“They’re raising taxes and increasing regulations and spending more, which just drives inflation higher. Inflation is the cruelest tax of all, because it hits the lowest-income people the hardest. Now, we have stagflation, which we haven’t seen in 40 years,” Hoeven said in a press release.
Biden’s proposed tax increases would make the income tax rates in America the highest in the developed world, according to the Tax Foundation , a nonprofit tax policy organization that started in 1937.
The combined marginal rate on individual income tax would rise nearly 14%, and the corporate tax rate would rise nearly 7%. Additionally, the combined marginal rate on capital gains income tax would rise nearly 20%, and corporate income taxes would rise nearly 18%, according to the Tax Foundation.
The combination of ingredients causing inflation to rise and the possibility of additional higher costs will affect parts of Fargo differently, with the poorest area directly south of North Dakota State University. The U.S. Census Bureau income and poverty interactive data tool offers a look at the poorest sections of the city.
From the Census Bureau’s statistics, they determined with 90% accuracy that about 75,781 people over the age of 15 in North Dakota are living in poverty. That's about 10% of the state's population. The statistics do not include residents of college dormitories, military housing and all institutional group quarters populations.
In Cass County, the state’s most populated area, the Census Bureau determined there are 17,324 people living in poverty, the highest county concentration in the state. Burleigh County, home to Bismarck, has 7,934 people living in poverty.
From the numbers in Cass County, there are 3,429 people under the age of 18 who struggle with poverty.
The annual median family income in Cass County is $61,338, but the costs of food, housing, health care, day care, transportation, taxes and other expenditures add up to $67,860 per year for a family with two children and one full-time worker, according to the North Dakota Labor Market Information data.
Estimated expenses for Cass County households
|Single with no children and one full-time worker|
In 2020, the U.S. Census Bureau reported in its five-year estimates that the median household income was $57,024 for families living within the Fargo Public School district, and 12.8% of that number were living in poverty.
The majority of workers in Fargo, 81.7%, drive alone to work, which means higher gas prices financially hit those drivers harder.
In 2020, the U.S. Census Bureau reported the median cost for monthly rent in Fargo was $774, with 67.2% of people paying up to $999 in rent every month. Only 9% of people in Fargo pay less than $500 for monthly housing, according to the U.S. Census Bureau.
This year, the North Dakota Labor Market Information data reported the median housing cost for a family with two children in Cass County has risen to $1,317, and $734 for a single person with no children.
For an individual with no children, the total cost of living per month now averages out to $2,010, or $24,120 per year, which barely exceeds the $24,107 basic annual minimum income needed to live in Cass County, according to the North Dakota Labor Market Information data.
Combating rising costs
With costs of living rising, only one in three companies across the United States are planning on giving employees a 3 to 3.4% wage increase in 2022, according to a 2021 survey of 1,004 companies compiled by Willis Towers Watson , a leading global advisory company.
“It doesn’t take rocket science to figure this out,” said Kevin Iverson, demographer in the North Dakota Department of Commerce. “You definitely see a segment of the population that really is living paycheck to paycheck and really don’t have any extra income, and suddenly everything is 10% more expensive and they have to figure out how to find those dollars. They’re in a bind."
Iverson said Fargo has grown by about 20,000 people in the past 10 years, and poorer people have migrated to the area in search of economic opportunity.
“We’re a classless society in North Dakota because we grew up from peasants, and they start out poor and build up, kind of like the Great American Dream in some way, and that’s still true today," he said.
UND professor Flynn said there is no easy fix to solving the economic gap for many people, and that a creative solution has to be discovered.
“The problem is that there is nothing that we can do to make our lives better today,” he said.
Pay increases, solving supply chain issues and subsidies would help. “But these are the kinds of things that can provide insulation, even though they come at a cost,” Flynn said.
“People are still getting jobs, but we’re still sort of dealing with the ripple effects that occurred because of the pandemic," he said. "It may be something people don’t want to hear. Throw a rock into a calm lake. It’s not the splash, it’s the ripples that we’re trying to figure out."