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The Cost of Being Poor: Costa Rica vs. the USA

by Doug Dosdall in Central America , Costa Rica , Changing the World

I was musing this morning about the way that in the USA and Canada, the poorest segments of our population pay the most for almost everything. It is very expensive to live as a poor person in the USA (and also Canada to a somewhat lesser extent given the government medical care). Barbara Ehrenreich's Nickel and Dimed: On (Not) Getting By in America book detailed very well how difficult it is to live on a minimum wage or near-minimum wage in the USA and how much extra the poor ended up paying for basic services. And recent US studies show that low income earners actually pay some of the highest marginal tax rates on their income when all taxes (income and sales and payroll) are taken into account. But there's even a retail side which you just take for granted until you see how things are done in another country. Safeway in Vancouver, for example, has convenience store prices unless you can buy sale items or 'club packs' and stock up. If you can only afford to buy a few things at a time, you pay the highest prices. Loblaws/Extra Foods I generally find better but they often have 1 at x, 3 for y prices where if you only buy 1 you are paying 30-40% more. Walgreens in the USA is famous for this same predatory pricing strategy as well as an even more insidious one where they actually sometimes have higher unit prices on larger sizes of some products for those who can't do the math.

Retail prices in the USA are actually probably the cheapest in the world IF you're shopping at Costco or the like. Here in Costa Rica, a 1.5 liter bottle of water varies from US$0.75 to US$1.25 - very little variation whether you're buying it in a supermarket, a discount store, a tiny pulperia (small grocery store) or even a (non-tourist) restaurant or soda (lunch counter). Whereas back in Canada/US, getting a big bottle of water for a buck would be a miracle in the corner grocery store but I'd be offended if I went to Costco and bought a case of them at that same unit price. Water may be an off example somewhat since bottled water is a luxury item here more or less since the locals (and I) generally drink the tap water unlike in Mexico where everyone drinks bottled water and so it is cheap and plentiful (but where also corporate water interests may in fact be responsible for the fact that potable water has come to few parts of Mexico given that Mexicans are the world's biggest per-capita drinkers of bottled water).

But take another example: toiletries. Gillete packages 2 packs of Mach 3 razor replacements. The unit price is still ridiculously pricey (about the same as the 8 pack in Canada though I'd say) but at least one doesn't have to pony up $20 at a time to get a replacement razor. Almost all the disposable razors I've seen are sold in single packs. When I didn't want a 3 pack of garlic at the fruteria, he opened it up for me and sold me one. Larger packages are generally cheaper but by a few percent not the double and triple we often pay for small sizes. Same model applies to pretty much anything whether the wholesaler supplies it like that or not. One blank CD-ROM for example is about 25 cents in almost any local papeleria or in an internet cafe.

Even the local Ikea-like store, Aliss, which is chock-full of Asian imports which are all heavily taxed (import taxes are one of Costa Rica's few reliable sources of tax revenue), seems to manage prices well below that found in North America. No doubt simply because they know their market wouldn't bear higher prices and so seek out products for that. But they also must keep their margins low in order to maintain that where North American retailers generally when pricing subscribe to the "what can I get for it?" model (similar to the "how much money you got?" pricing model) rather than "what did I pay for it and what's a fair price?"

Here in Central America packaging is also often minimized in order to keep prices down. You can buy a 1 liter plastic bag of bleach for example for pennies. If you want the convenience of a bottle, you pay more. Otherwise you empty the bleach into something else, saving you and the environment all that extra packaging.

Retailers in the USA and Canada prey on the poor. They can't stock up on goods. They can't store goods. They can't drive across town to the warehouse store (which charges an annual fee to allow you to shop there). The cheapest retailers aren't even generally in their neighborhoods. Many US low income neighborhoods are completely bereft of retail except for the small corner grocery selling mostly goods (such as malt liquor and cigarettes) aimed at small scale frequent addictive consumption. The thing here in Costa Rica is that the small corner grocery isn't a rip-off. It's your neighbor. It's not a division of Southland Corporation (the operator of 7-11). And they too have to buy and be able to afford items. Although in an ominous sign, I've seen my first chain corner stores this year in Costa Rica (AM/PM has started popping up) although it's nothing like Mexico where in mid-sized and larger towns the chains have well begun the process of eliminating the corner store. The local corner store where I'm staying even extends credit to the locals or, if you've forgot your wallet, it's okay to pay the next day when you come by next.

Try living without a car in rural Texas or Oklahoma and see how marginalized you are.

Local public transit is another example. It is cheap and plentiful and goes everywhere on a frequent schedule simply because a much greater proportion of the population doesn't own a car and therefore relies on the bus. Try living without a car in rural Texas or Oklahoma and see how marginalized you are.

Tourists come to Costa Rica and occasionally complain that it is expensive. And it can be. There is a tourist infrastructure for gringos which charges tourist prices. Prices aimed at tourists spending hundreds of dollars a day for a hotel for example so another $75 each on a tour doesn't seem so crazy. But at the same time, I find it can be one of the cheapest countries to travel in. Buses are excellent and very cheap (for example, I'm writing this during a 4 hour trip from the Pacific Coast to the capital San José and the ticket cost less than $5). They're not as luxurious as Mexican Executivo buses by any means since there is just a single class instead of Mexico's three class bus system. That's because there is a segment of the tourism market aimed at both backpackers and locals Guatemala only has the former which means that if you go outside the Lonely Planet route there are no facilities at all.

In Mexico, the 2nd class buses are of substantially lower quality than the usual regular long distance bus here but they are often only 20-30% cheaper (and 30-40% slower with many stops) than the executivo with it's 3 across seats that recline almost into beds. There is enough of a middle class in Costa Rica (almost everyone really when middle class is defined in local terms) so that when Ticos (Costa Ricans) want to go to the beach for Semana Santa (Easter Week), there are basic facilities for them which are acceptable enough as well for a budget traveler from Canada or Europe (Americans, even college kids, may be another matter, they are notoriously picky as I recall from my days working for a US student travel agency where our main Europe tour operator didn't include their most basic level of accommodations in their US brochures and prices since they couldn't sell it and if they did they got nothing but grief when the Americans arrived and saw what they'd bought).

 

The impact of North American tourism is unfortunately at risk of changing this. As the best beachfronts are bought up by rich gringos who fall in love with this paradise, they are pushing out the locals. A gringo may buy a beachfront property, build their giant McMansion dream home and come a few times a year. Meanwhile the pool and the garden are sucking water and other resources from the local infrastructure and contributing little back. While a Tico run campground and cabanas project on the same beachfront would have provided many local people with some employment and many with access to their own beaches.

The impact of North American values and retailers is also a risk. Walmart is expanding big time in Latin America; buying up local discounters and opening their own stores. No doubt what will happen eventually is what has happened in the USA. Suppliers will be squeezed to offer the best prices to Walmart in return for access to their large market share. Meanwhile local retailers will become less and less competitive and marginalized needing to raise prices even more just to maintain their presence at all as a convenience only.

There's one more gripe I'll share with you. Which is that the main complaint people seem to have about Costa Rica is the quality of the roads. Don't get me wrong, I'm no fan of being jarred back and forth while driving on potholed gravel for hours at a time. Or getting out of the bus and walking because the bus has to lighten the load to make it across a river crossing where the bridge is out. The 45 km (30 mile) trip from Dominical to Quepos took a rather ridiculous 2+ hours. But keep in mind that even with a water shortage here in Manuel Antonio (from overdevelopment) and water being trucked in, the water has remained potable and safe to drink from the tap. Even with a developing world budget, the Caja (Costa Rican social security system) provides medical care to anyone else who wishes to participate in the program by contributing a small portion of their earnings (a entire family can be covered for about $16/month at the minimum earning level). Can the Americans say the same? Concrete aplenty they've got (both at home and no doubt now being built by Halliburton all over Iraq).

Meanwhile a series of natural disasters here (floods and landslides primarily but no single incident big enough to have attracted much attention from the international media) have decimated the budget of the country so that much of the road repair budget has gone simply to just making minimum repairs in the damaged areas.

Don't get me wrong, I'm by no means trying to glorify the situation of the poor here in Costa Rica or be an apologist for the problems in this country. There remain some very marginalized groups such as the indigenous Bri Bri on the Caribbean coast. The large number of alcohol and drug addicted who seem to be falling through the cracks and creating a large crime problem. No doubt because the safety net here is primarily focused on one's family and extended family so if you alienate them, well, you're out of luck. The first photo above shows there's a problem with homelessness, even among children. Driving through the banana plantations near the Panamanian border and seeing how the worker's lived (not so much the state of their houses but the complete and utter lack of any other opportunity for those that live in the area) was also poignant. But for a country with very limited resources, I think the country does pretty well.

Check out this amazing photo gallery of the local Bri Bri from the Caribbean of Costa Rica. If you want to assist in the helping of the lives of the Bri Bri, you can do so by visiting The Bridge which is a local grass roots organization dedicated to helping the indigenous people of Costa Rica. They are currently in need of some extra funds to help with school books and such. And if you're planning to visit, they always appreciate gifts of school supplies and other items.

Published 30 Apr 2006 |