urban policy wonk's Blog

The Low-Cost Housing Drain, and Why it Matters

2008-11-25T02:54:47Z

This is more or less a follow up to my last post. I hadn't intended to offer up these thoughts so soon (I'm trying to pace myself here), but a fairly remarkable piece from this past Sunday's Detroit Free Press has incited me to blog onward.

A quick preface: what's remarkable about this article isn't its content (at least to me) but its timing. Just check the headlines. Citigroup bailout. Obama's unenviably tasked economic team. The trillions of dollars being pumped from the fed fire truck. Housing market numbers still going south, and not in a sweet tea and sunny clime kind of way. Who has time to care about "low-cost housing" these days?

Well, I do, for one. And I think you should too. It's a piece in the puzzle before us, a crucial one in fact. But more below. On to some key points in the Freep piece:

From 2000-06, the number of families with housing costs exceeding 50% of their income increased by 2 million, or 34%. Because of a lack of funding, however, federal housing assistance programs serve only one in four of eligible low-income families.

This is endemic to several of our social programs. You can be fully eligible today, but it may take months or even years to avail yourself of such opportunities, with no other obstacle but a waiting list standing in between. Some manage alright in the meantime. But many others might be further along their path if they had that hand up when they needed it.

The nation has already lost an estimated 350,000 of its 2 million units of subsidized housing over the last decade. They either deteriorated or owners converted them to market-rate housing.

This is not so good. More to be said in the coming weeks and months.

Making matters worse, over the next five years, contracts between the government and landlords on more than 900,000 Section 8 units will expire, reports the National Housing Trust.

Ditto.

Again, it is rather remarkable to see a newspaper article promoting things like "public housing preservation" at a time when pretty much all we hear about housing-wise involves burst bubbles, mass foreclosures, the subprime fiasco, and "toxic" debt (a horrible metaphor, by the way---we're not talking about EPA Superfund sites here; but another post for another day...).

But this issue really does matter, a lot, and it needs to be addressed in the forthcoming stimulus package. I'll sum up why with three points, which I hope to elaborate upon in subsequent posts.

ELI renters have been detrimentally impacted by the current crisis in several ways (see my previous post and comments). I understand fully that home foreclosure is a traumatic experience for many families. But ELI renters are the workplace equivalent of "last hired, first fired". There are a lot of them. And their housing vulnerability leaves them disproportionately exposed to the current crisis.
In my previous post, I emphasized expanding the supply of affordable housing in order to make it more affordable. As important as this is, it alone won't suffice. Owners of rental housing, who often play a crucial role in affordable housing availability, have to stay afloat and make a profit too. This is where federal housing subsidies come in. These need to be expanded. Significantly, if not dramatically.
And then there is public housing. Well over a million American households live in it and depend upon it to provide the roof over their heads, including many elderly. Recent estimates suggest that there is a backlog of repairs and upgrades totaling roughly $20 billion. This is money that, if spent, would maintain a public investment seven decades in the making. Local construction contractors probably wouldn't mind the work coming their way either. Roofing? Plumbing? Heating and Cooling? Interiors? This is a relatively cheap and easy avenue of economic stimulus.

The Other Housing Crisis, What To Do About It, And What It Can Do For You

2008-11-23T04:22:38Z

By now we are all quite familiar with the mortgage crisis that followed hot on the heels of the burst housing bubble. However, you probably have not heard much about the other housing crisis. It has been as quiet as it has been persistent, year in, year out. This crisis, I would argue, is the central obstacle to upward mobility in America today. It is the crisis of affordable housing.

The National Low Income Housing Coalition published a report earlier this year, entitled Housing at the Half: A Mid-Decade Progress Report from the 2005 American Community Survey (PDF), and its findings are telling:

There are 9 million extremely low income (ELI) renter households earning less than 30% of the median income for the state in which they live. ELI households comprise one in four renters, an increase of 15% from 2001 to 2005.
The ratio of housing costs to income for ELI renters was 83% in 2005, compared to 75% in 2001.
6.4 million ELI renters spend more than half of their income on rent.
There are only 38 affordable and available (some higher income renters live in housing that would be considered affordable to ELI renters) for every 100 ELI renters.

Debilitating housing cost burdens aren't limited to ELI renters. Renters and homeowners alike, higher up the income ladder, contend with excessive housing cost burdens as well. But the scale and scope of ELI renter burdens alone suggest that something should be done to address the silent crisis of affordable housing.

Adequate shelter is a basic need, and people will pay what they must to keep a roof over their head, or else join the ranks of the homeless. All too often, this means cutting back on many other necessary expenditures (e.g. food, health care) and foregoing altogether long-term investments (e.g. childrens' college education, retirement). Housing costs also, of course, cut into the average household's ability to sustain aggregate demand.

But when a crisis comes a knocking, so too does opportunity. The two-fer logic of short-term employment and long-term productivity that investments in rebuilding infrastructure and developing alternative energy technologies applies equally here. Details await sorting out, perhaps in another post here, but in a nutshell, an investment in affordable housing on the order of a few tens of billions of dollars accomplishes the following:

it helps reinvigorate the moribund construction industry by giving developers and builders something to build.
it creates jobs refurbishing existing affordable housing and building new affordable housing.
it increases the supply of affordable housing, thereby making housing more affordable to more households.
it lowers the cost of housing for more households, leaving a larger share of income to boost aggregate demand, which is good for everyone.

In short, addressing the longstanding affordable housing crisis would go a long way toward addressing a lot more than the longstanding affordable housing crisis.

The Frayed Social Safety Net

2008-11-17T00:55:27Z

Today's New York Times takes a look at the state of the social safety net as the economy enters what is certain to be a serious recession. Unsurprisingly, unemployment insurance, welfare, Medicaid, and other forms of public assistance are harder to come by these days than during past recessions. For example:

According to the report [by the Center for American Progress and the National Employment Law Project], tighter rules mean that just 37 percent of unemployed Americans are receiving jobless benefits today, down from 42 percent during the 1981-82 recession and 50 percent during the 1974-75 downturn. Americans today receive a maximum of 39 weeks of unemployment benefits, down from 65 weeks in the 1970s. The average weekly benefit is $293. And low-income workers -- a category that tends to include women and those in part-time employment -- are one-third as likely to receive unemployment insurance as higher-income workers.

Another liberal group, the Center for Budget Policy and Priorities, said that as states have imposed tougher restrictions on welfare, just 40 percent of very poor families who qualify for public assistance today actually end up receiving it, compared with 80 percent in the recessions of 1981-82 and 1990-91.

Downturns like this one are a good reason to have a sturdy and adequately funded social safety net. Unfortunately, apart from extending unemployment insurance, it's not likely that any meaningful spending increases for public assistance programs will come until the the FY 2010 budget passes, many months (or even a year) from now. It could happen sooner--the FY 2009 budget is still on ice thanks to a continuing resolution that expires in March--but Obama and Congress will have bigger things to worry about in their first 100 days than, say, expanding low-income housing assistance.

One other thing about the NYT piece, incidentally. Toward the end, there is some rather curious phrasing of the relationship between social programs and the economy:

Economists say that it is sometimes hard to determine whether certain social programs fuel recessions or fight them. As 1.2 million workers have lost their job this year, for instance, many have turned to Medicaid, causing some states to spend more on health care, boosting the economy in the process. At the same time, some cash-strapped states have cut Medicaid, losing federal matching funds and slowing down the economy.

Some see a similar effect with the Earned Income Tax Credit. "The E.I.T.C. is a fantastic wage subsidy program that's been hugely effective in reducing poverty, but when jobs disappear, the E.I.T.C. doesn't help you," said Jared Bernstein of the Economic Policy Institute, a liberal research group. He was one of the economists invited to a meeting of President-elect Barack Obama's top economic advisers on Nov. 7. "When people lose their jobs, they often stop receiving E.I.T.C., and I fear that the program becomes less countercyclical and more pro-cyclical, meaning it reinforces recessionary forces," he said.

Perhaps I'm misunderstanding here, but this doesn't make sense. It's not that Medicaid or the E.I.T.C. themselves run the risk of fueling a recession. In Medicaid's case, the problem is that states are "cash-strapped", and in the E.I.T.C.'s case, the problem is higher unemployment. Medicaid cuts and reduced E.I.T.C. benefits are symptomatic of a recession, but just because they're less available doesn't mean they're pro-cyclical.

Obama's Office of Urban Policy

2008-11-16T04:10:32Z

At face value alone, this is a welcome and long overdue gesture. Consider the array of means-tested programs and policies that currently have bearing upon the circumstances of low-income households in America's cities:

Housing assistance, the Community Development Block Grant, and numerous other urban programs are administered by the U.S. Department of Housing and Urban Development.
TANF (formerly AFDC, aka "welfare"), Medicaid, SCHIP, and other related programs are administered by the U.S. Department of Health and Human Services.
The Supplemental Nutrition Assistance Program (aka food stamps) is administered by U.S. Department of Agriculture.
Supplemental Security Income is administered by the Social Security Administration.
The Earned Income Tax Credit is administered by the Internal Revenue Service.

Grover Norquist's of the world notwithstanding, none of these social "safety nets" are inherently flawed. They each do more good than harm, to varying degrees and with varying effects, no doubt, but the net effect is a positive one. There is also of course room for improvement, from one program to the next, from one policy to the next. But now there appears to be an opportunity to put forth a more comprehensive urban policy agenda that not only seeks to improve each element of urban policy, but also seeks to make the interaction of the parts work more efficiently to create a better whole.

Whether it is even feasible to coordinate such a diversity of programs and policies in a meaningful and beneficial way remains to be seen, but I do know that it has been over three decades since we've seen a president with any inclination to create an opportunity for a comprehensive urban policy agenda. Reagan sure didn't do so. Bush I and II sure didn't either. And Clinton's urban policy was, at best, haphazard and riven with compromise. So there is an opportunity here, under an Obama administration, for much greater cohesion and efficiency with respect to urban policy than anything we have seen in more than a generation.

There is also an opportunity here to once and for all dissociate the Democratic party from the worn-out but still lingering stereotypes regarding "welfare" and racially hued "redistributionist" policies. We all saw that ugly head rear itself once again this time around. But that's another topic for another day.

Election Geography, Southern-Style

2008-11-08T03:55:43Z

I found this map, which has been making the rounds, rather striking. It shows where the country shifted more republican relative to 2004:

http://www.dailykos.com/images/user/28416/map2.jpg

Here's why I find it striking. Compare that map with this one:

http://i35.tinypic.com/1o6d5f.jpg
(original source: http://www.cdc.gov/pcd/issues/2006/jan/05_0055.htm)

The second map depicts what those familiar with the South often refer to as the "black belt", which is (unsurprisingly) bluer in the first map. But then what the red-shaded areas on the first map seem to depict is what might be called the southern "white belt".

This stands in rather stark contrast to other mostly rural, mostly white areas of the country such as North Dakota or Indiana. The latter, if you don't know this already, has a history of being a northern stronghold of the KKK. Obviously, not so much anymore. Elsewhere, however, Obama was decidedly not regarded as a viable candidate.

A History Lesson

2008-11-06T08:02:36Z

I teach for a living. And this is how I began my classes today.

The Content of History

2008-11-06T05:19:46Z

I originally posted this as a comment, in response to Bernard Avishai's article, The Content of His Character.

I appreciate the pragmatism in this piece by Avishai. I understand the sentiment that, while it's great we finally got around to electing a minority to high office, there are much larger immediate issues at stake, and there were countless better reasons to vote Obama into the White House than anything to do with the color of his skin. I do appreciate that.

But, look. There will be plenty of time for such pragmatism.

Quite frankly, the "well it's about time" attitude, and the notion that if Cosby and Oprah and Tiger can win popularity contests, it only stands to reason that, ho hum, we're bound to elect a black president one of these days too, are a deep and profound insult to the moment at hand.

Fifty years from now, a hundred years from now, there will have been many mundane details already filled in. But what will stand out, what our children, our grandchildren, our great-grandchildren, will highlight in their history lessons and commit to memory, is what happened yesterday.

I'm white and privileged, born and raised in a comfortable middle-class suburban setting. But I do know a little about the historical weight of this moment in the story of America. I have not borne its often iniquitous burdens and legacies. But I do know enough of it to know that this moment in that story is nothing to be diminished, for any reason.

Witness the streaming tears of ecstatic disbelief, the joyous celebrations all across the country. The last eight years notwithstanding, this is not the stuff of presidential election results. This is something different. This is something momentous, in a much broader scheme of things than whatever the next presidential term or two will bear witness to.

Yes, of course it was bound to happen sooner or later. But it happened now. Right now. We should not make haste to lose sight of this moment and what it means.