Today's Housing Crisis: The Vacant Issue

On an evening last autumn, a Seattle survey found that its area homeless shelters were all operating at over capacity serving over 2,500 individuals. But due to a lack of space and resources, they had to turn away over 900 homeless people needing help. Unfortunately, this mirrors what’s happening across the country. Nationwide, the U.S. Conference of Mayors reports that demand for emergency shelter has increased by over 10 percent, with 8 out of 10 cities reporting that their emergency shelters had to refuse people, including families, last year.

Based in Seattle, Washington's Low Income Housing Institute (LIHI) strives to break through the silence regarding this country's housing crisis and provide help to its victims. Echoing what much of today's tenants feel under President Clinton's "economic recovery," LIHI's Jon Gould states, "Washington's economy is considered one of this country's strongest, but the big question concerns who has a share in it, as there are lots of available jobs, but with wages that can't pay the rent. And the shortage of those jobs that can pay affordable rents is growing rapidly."

To get an idea about the subtle nature of today's housing crisis, consider the following scenario. Most people can find work in Seattle at $6 to $8 an hour and a single person can probably find an one-bedroom apartment, if they're lucky, at a monthly rent of $450. From what most of us experience, it seems more or less affordable, doesn't it? No, says the Department of Housing and Urban Development. According to HUD, total housing costs are considered affordable only if they fall below 30 percent of a household's income. LIHI's Gould observes, "Sure, someone can get a job, but most likely they're still an additional $5 to $6 an hour away from getting affordable housing in Seattle." It's not so much about being able to pay the rent, it's about paying an affordable rent.

But the above numbers could easily be worse. Since the Fair Market Rent (FMR) of any given locality is calculated by HUD as the 40th percentile of that area's rents, would-be renters searching for an apartment would find 40 percent of rents below Seattle's one-bedroom monthly FMR of $535, but more importantly, 60 percent of rents would be above it. Chances are that low-income renters would be paying at least another $80 or more monthly. Making things worse, the majority of U.S. cities have seen their single-room occupancy housing decline by more than 50 percent during the past 25 years, which only increases these rents. In most cities, it's not uncommon to find rooms in rooming-houses at $350 to $450 per month. If things look bleak for low-income single people, the situation looks downright grim for low-income families.

They are among the two out of every three low-income renters across the United States who do not receive any form of housing assistance. Without any housing help, low-income renters are continually confronted with difficult choices between food, utilities, clothing and rent, not to mention the ever-present threat of eviction and homelessness.

Housing Shortage

Contrary to popular belief, housing affordability is not just an urban issue or a "welfare" problem but extends to every geographical region and affects both working and nonworking households, and it encompasses all racial and ethnic groups.

Nationwide in 1970 there were 7.4 million low-rent units with 6.5 million poor renters (with incomes of $12,000 or less), making a surplus of 900,000 low-rent units. But by 1993 there were only 6.5 million low-rent units for 11.2 million low-income renters. That means a shortage of 4.7 million affordable rental units. And this figure has no doubt increased since then.

The West and the Northeast suffer the widest affordability gaps. There, almost three low-income renters vie for each affordable unit. The Midwest and the South fare better but still have two renters to every affordable apartment. In Chicago, 260,000 low-income renters compete for 142,400 low-cost rental units. Again, nearly two low-income renters for every affordable unit.

This shortage reflects what low-income people already know: that rent increasingly consumes more and more of their income. At present, 82 percent of low-income households spend at least 30 percent of their income on housing costs while 60 percent of low-income households spend at least 50 percent of their income on housing. Breaking it down further, 83 percent of low-income renters in central cities, 87 percent in suburban areas and 74 percent in rural areas pay at least 30 percent of their income to housing.

Obviously the housing crisis is both a housing and an economic issue. Since 1977, the percentage of people living in poverty has increased from 11.6 percent to 15.1 percent in 1995, reflecting in part the declining power of the minimum wage and welfare cash assistance. At the same time as people living in or near poverty has been increasing, affordable housing stock has been decreasing due to decreasing governmental housing assistance, rising rents, high-end new construction, condominium conversion, neighborhood gentrification, and demolition of deteriorating existing units.

Housing Assistance

With the dawn of the current housing crisis in early the 1970s, Congress increased funding for housing assistance. From 1977 to 1980 HUD provided funds for 290,000 additional low-income units per year. But after 1980 assistance fell at an alarming rate, falling down to only 15,000 additional units in 1995. Worse still, the 1996 budget eliminated funding for any new additional units and for the first time since 1974 Congress allocated zero funding in both the 1995 and 1996 budgets for new, additional Section 8 certificates. These certificates allow low-income renters to pay 30 percent of their income to rent in unsubsidized units on the private market. Due to the fact that the "one-for-one" rule has been suspended, the federal government no longer has to provide a new, additional unit or Section certificate for every unit demolished. In short, the federal government has abdicated any responsibility for the creation of new, additional affordable housing.

That the private market refuses to provide low-cost units can be seen in the growing proportion of low-cost units dependent on federal aid: in the early 1970s subsidized units made up 20 percent of all low-cost units, but by the 1990s the share of government supported housing grew to half of all low-cost units. Overall, government assistance has not been increasing, but the affordable private market shrinking, resulting in a severe loss of affordable units. As the private market becomes increasingly unwilling to create and sustain affordable apartments, support and funding for governmental assistance should be increasing, not decreasing. If not for governmental assistance over the last 20 years the affordable housing gap would be 7 million instead of the current shortage of almost 5 million units. LIHI's Gould agrees, "Without government help, there would be more many more people living on the edge and in the streets than already are."

The Safety Net Delivers, a study recently released by the Center on Budget and Policy Priorities (CBPP), confirms the effectiveness of government programs, when properly supported and adequately funded, in helping people with low-incomes. Before government help, nearly 57 million people in 1995 fell below the poverty line. But after government assistance, the number of people living in poverty dropped to 30 million. In other words, government programs lifted almost 50 percent, or 27 million people, above the official poverty line. And as the study states, "those who remained poor were significantly less poor than they would have been without government assistance." If the safety net was stronger, more would escape poverty and more could pay the rent.

Unfortunately, as another recent CBPP study, Bearing Most of the Burden, highlights, the deficit reduction craze of the 104th Congress hit hardest programs for low-income people. Government funding for low-income entitlements will suffer an estimated $61 billion worth of cuts from 1996-2002, while non low-income entitlement programs will be reduced by only $4.1 billion. Though they count for only 23 percent of entitlement spending, low-income entitlements suffered 93 percent of entitlement reductions.

Due to this decreased government spending, the simultaneous increase of households living in poverty combined with the decrease of both affordable apartments on the private market and government-funded subsidized units means that eligible low-income households may have to spend years on waiting lists, if the lists are open at all.

Since only those that qualify for a federal preference have a chance on the waiting list, many eligible low-income families do not meet the federal preferences. If they are not paying more than 50 percent of their income towards housing costs, living in severe substandard housing or subject to involuntary displacement, they do not have a realistic chance of ever attaining housing assistance. In other words, those who pay over 40 percent of their income towards rent but are not living in substandard housing or were not involuntarily displaced will not receive housing help in the foreseeable future. And as it now stands, only 30 percent of low-income people receive housing help, which condemns most to live one paycheck away from the streets.

Declining Wages

To further demonstrate the essential role of governmental intervention, consider the power of the minimum wage. A legitimate consideration given the results of two recent studies. The Underbelly of the U.S. Economy, by the Council on International and Public Affairs, documents the "pauperization" process at work within the economy. According to the study, from 1979 to 1995 a net loss of 2.2 million jobs occurred within manufacturing while the service sector generated 29 million jobs. It confirms what most workers already know: that manufacturing jobs that pay higher wages are being replaced by service sector jobs that pay below or near the poverty line. For example, the average weekly income, says the report, in the retail industry would generate a yearly income of $11,532; which falls below the official poverty line for a family of three. Given the fact that "since 1989 the retail trade sector accounts for more employment than manufacturing," minimum wage level employment will unfortunately be increasingly more common, especially for workers with lack of experience, training or with limited education. More ominous still, a study conducted by the Economic Policy Institute projects that if one million welfare recipients enter the labor market, wages for the bottom 30 million workers, or those making less than $7.19 an hour will fall by 12 percent.

The soon-to-be implemented minimum wage of $5.15 cannot pay affordable rents. In 45 states the minimum wage would have to be doubled, and tripled in many metropolitan areas, to pay the rent. For example, in Seattle workers would have to earn at least $10 an hour to pay at an affordable level Seattle's one-bedroom FMR of $535 and over $13 an hour to pay its two-bedroom FMR of $690. Nationwide employees would have to receive roughly $10.44 an hour to cover the national median rent for a two-bedroom unit. The minimum wage increase is too little, too late.

Weakening Welfare

Unfortunately, it only gets worse for welfare recipients in the Transitional Assistance to Needy Families (TANF) and Supplemental Security Income (SSI) programs. In Washington state, for example, the maximum monthly TANF check of $546 for a family of three falls $82 short of Washington's two-bedroom FMR of $630. Not too bad considering Mississippi's maximum three-person monthly grant of $120 and Alabama's $164 maximum three-person monthly grant covers only 29 percent and 38 percent of their respective FMRs. And with the average 3-person family food stamp allotment only $175 per month, it doesn't make much of a dent. In only Alaska and Vermont does welfare assistance come anywhere close to paying the rent.

Under the new TANF regulations, the monthly TANF grant will remain fixed until year 2002, and now states are under no obligations to provide assistance to anyone or to provide more in times of recession or need. The new welfare bill, that went into effect October 1, 1996, also reduces food stamp benefits by 20 percent for all food stamp recipients, including low-income working people, the elderly and the disabled. Also, education and job-training no longer count as fulfilling the "workfare" requirement, further inhibiting welfare recipients from getting proper paying employment. And given the fact that four out of five welfare recipients don't receive any form of housing assistance, the housing crisis facing most welfare recipients will only intensify.

The Supplemental Security Income program (SSI) provides monthly cash assistance to elders in severe need, and to handicapped and disabled people. On average, SSI recipients will spend 87 percent of their monthly grant on housing costs. For example, New Jersey's monthly one-person SSI grant of $477 is supposed to pay its Fair Market Rent of $644. But even these meager grants will be short-lived for potentially new recipients. The new welfare bill, the Personal Responsibility and Work Opportunity Act, severely reduces the number of those (including children) who may receive SSI benefits by restricting the types of disabilities for eligibility. Under the new bill, those suffering from multiple disabilities that do not meet the new eligibility criteria, but prevent them from getting and maintaining employment, may not receive any financial help, and so will most likely be left to fend for themselves in ever tightening housing markets. Most will unfortunately fall through the cracks. According to the National Coalition for the Homeless, around 25 percent of the single homeless population suffer from some form of mental illness. But low-income families, with disabled or handicapped family members, will be especially hard hit.

The decrease in government funding of low-income programs combined with the current trend towards jobs that pay inadequate wages has forced many with low-incomes to live in substandard, overcrowded, or unsafe conditions. It's the norm, not the exception. As LIHI's Gould confirms, "Let's face it, if it's affordable, it's probably of inferior quality." Take California, for example, where over 80 percent of low-income renters pay too much rent or live in inappropriate conditions. Nationwide, 65 percent of low-income renters live in dwellings that are unaffordable, overcrowded or substandard. In many instances, it's not about paying an unaffordable rent, but about children living in dilapidated units with not enough heat or with too many people or with walls saturated with lead paint.

Solutions

LIHI attacks the housing crisis from multiple angles. They have set-up a state-wide trust fund that acts as a renewable source of funding to purchase and build affordable housing, as well to renovate and weatherize existing affordable housing stock. Under a self-help model, LIHI encourages the self-management of these units by low-income tenants that occupy them.

Their political advocacy, which emphasizes organizing low-income tenants, helped to win a referendum that levied a local property tax that resulted in the creation of 1,000 affordable units. They also support the growing number of "living wage" campaigns across the country that seek to raise the minimum wage scale to livable standards. And though Washington state law prohibits the implementation of any form of rent control, LIHI keeps fighting for it. "For if we don't somehow get a lid on housing costs through some form of rent control, there will always be a housing crisis," says LIHI's Gould, "and more housing must come under community control and out of the speculative market."

Though LIHI stresses the active role of the community, Jon Gould emphasizes, "There is no substitute for a federal role in housing. The federal resources are so much greater than state and local resources, we have to continually demand they play a role in affordable housing." For without the federal government, community groups can't keep up, and the demand for affordable housing will always be far greater than availability.

Outlook

With real incomes stagnating and home prices rising, home ownership rates for age groups below the age of 45 have declined. The increased demand that higher income renters bring into the renter pool only increases rents, which only aggravates the plight of low-income renters.

Further clouding the future, recent and further expected cuts in the Earned Income Tax Credit, Medicaid, welfare, food stamps and a variety of social services have only increased pressure on low-income tenants.

Until there is both public consensus and political commitment in this country regarding the necessity of safe, affordable and permanent housing as a prerequisite for the health of both family and community, short-range policies will only be inadequate. Until access to decent and affordable housing becomes recognized as a fundamental human right, community groups such as LIHI will only get overwhelmed in striving to meet growing demands with ever shrinking resources. And until the creation of jobs with "livable" wages becomes a priority, workers will continue to find their rent consuming more of their pay-checks. Until then, more and more individuals and families will face difficult choices between clothing, food, education, child care and the rent. And if any should slip, they will join the more than one million people who are homeless on any given night in the U.S., 40 percent of whom are families. <B><U>Z<D>