Free Liberal

Coordinating towards higher values

Getting Serious About Helping the Poor in the U.S.

By Michael Strong

Call her Ishmael.

She is on the margins of homelessness. Every month she begs friends and family for money to pay her rent. If she doesn’t get enough, she will be kicked out. If she gets kicked out, she has no place to go. Her most likely option would probably be to find a man who would let her sleep with him. She might be able to turn such a situation into a relationship, or she might be able to fake a relationship for a while, or he might kick her out after he’s had all the sex out of her that he wants. In either case, she has to start out all over again. At some point, she could easily end up on the street or working more or less as a prostitute.

She could hitch a ride out of L.A. and go live with a family member. She took in her niece a few years ago; perhaps her sister would take her in? Of course, her niece had run away from home because her father beat her regularly with a belt until she bled; he is not a nice man. Her sister, who had been sexually abused by their father (whom she accurately describes as having been “evil”), is out of her mind on a good day. Thus staying in that home would mean living with a physically abusive man who might well, given the state of her sister, decide that she is “lookin’ good” some night after a few beers. Once again, “moving in with family” may mean having a roof over her head at the cost of being prey to a physically abusive sexual predator. If she is going to do that, she is better off picking up a stranger in a bar to whom she is at least somewhat attracted and who might not be abusive.

She has been looking for a job for eighteen months. She is signed up with a temp agency and has had various contract jobs. She has superb secretarial skills but a poor work history with frequent job changes. Despite her skills, she looks like a high risk to an employer. She has had a few brief temp assignments but not nearly enough to live on. At $10 per hour, she would net about $1300 per month if she got full time work. Her rent, however, in the L.A. area, is $800 per month, almost 62% of her projected income. At the California minimum wage of $6.75 per hour, she would net about $900 per month, in which case rent would take 89% of her income. When middle class families seek mortgages, they are told to budget no more than 30% of their income for the mortgage. For low wage earners, housing is the budget killer.

There are places advertised in the L.A. area in the $400-500 per month range. She has bad credit, no steady work, and no money for a deposit, so she is not eligible for a real apartment. Most of the super low-end rents are either in dangerous neighborhoods or are apartment share situations. As a single woman, she is not eager to live in a dangerous neighborhood. At some point, rooming with another person may be again a necessity for her. Someone with a nice room they are renting cheaply is apt to be picky about who they choose. They may not want to pick an uneducated middle-aged woman with a poor work history.

If she is able to find a rental for $400, and is able to keep a job that pays $10 per hour, she will then have gotten her housing budget down to 31% of her income. Those of us not worried about where to sleep next week can cheerily say “Well I hope she gets it!” and go on with our lives.

Conservatives might say: “Well, she shouldn’t have left so many jobs! She should try harder!” These exhortations do nothing to help her.

Progressives want to pass living wage laws to force employers to pay more and rent control laws to force landlords to charge less. As a high-risk employee and prospective tenant with no steady income, Ishmael is precisely the kind of person who would be most seriously harmed by such policies. Any employer, for profit or non-profit, will become even more cautious about hiring high-risk employees if they have to pay higher wages. And rental units in a rent controlled market will most certainly go only to those prospective tenants with a good credit history. Thus such so-called “progressive” policies are more likely to leave her homeless or in the bed of an abusive man.

Up until the 1970s, Single Room Occupancy (SRO) hotels provided cheap housing to those who could not obtain an apartment, either due to a lack of income or a bad credit history. They were often merely a room, with a shared bathroom down the hallway, but they were cheap. The waves of homelessness that began in the 1980s are the direct result of “urban renewal” movements that eliminated the “unsightly” SROs. Zoning laws, passed by self-righteous advocates for the poor, required a bathroom (and various other improvements) in every living unit. (1) The residential hotel, at a much more costly $800 per month in L.A., is the new result.

Harvard economists estimate that at least 40% of increased housing costs since the 1970s are due directly to regulation and another 50% may be due to increased housing quality (in the case of housing for the poor, much of this increase may also have been a by-product of regulation). Only 10% of increased housing costs appear to be due to increased land values, and construction costs have actually decreased. Housing costs on the whole have increased 72% since the 1970s. Ishmael’s $800 room might have cost less than $500 were it not for increased housing regulation. But we can do better than that, and for the sake of the American poor we must do better than that.

In many states and municipalities, labor unions and contractors alike have supported specific codes that required specific (and costly) building practices to be followed; in Chicago, for instance, the plumbers union supported a building code that required that lead pipe be used long after it had been shown to cause brain damage in children because they made more money than they did by installing plastic pipe. Many European building codes are more open-ended, and stipulate performance standards rather than specific materials and building practices. This allows for greater innovation.

Manufactured housing, where allowed, provides for dramatically cheaper construction than is usually possible through site-built housing. Migrant agricultural workers in Florida pay $15 per month for lodging in trailers. The median family income of renters of manufactured homes decreased in constant dollars from $19,000 in 1974 to $15,000 in 1993 (again in constant 1993 dollars). (2) The median family income of owners of such housing is $20,000. This is the range at which minimum wage earners can afford housing. At present such options are often only available in rural areas.

What if manufactured housing techniques were allowed for high-rise apartments, using cheap materials, with units manufactured in Mexico or China? What if we had a Wal-mart of housing producing millions of affordable units and bringing prices down industry-wide? The price decreases caused by Wal-Mart alone have saved the average individual consumer almost $900 per year since 1985. (3) If we allowed for innovative design using new materials costs might dramatically decrease.

We don’t know what such an industry would look like or what kinds of cheap housing could be created. Chicago’s Field Museum had an exhibit last year titled “Out of the Box: Design Innovations in Affordable Housing” in which some of the world’s top designers created elegant models for manufactured housing. As Roberta Feldman, the curator of the exhibit points out:

“It would be very expensive to produce a prototype of many of [the innovative home designs]. At this point they read like boutique housing, but it doesn't have to be boutique if it were produced in large numbers. The Model T Ford, if they only produced one or a hundred, would have cost a fortune. . . . Maybe we should be questioning why we're not building houses the way we build cars . . ."

And then she acknowledges that unnecessary regulation prevents the economical mass production of these units.

I realize that regulatory analysis doesn’t have the visceral moral satisfaction that people seem to get from shouting about living wages and rent control, but for Ishmael the implications of intelligent housing policy might just come down to whether or not she gets to keep her body to herself so that she doesn’t have to sleep on the street. Maybe some of us will have to use our minds so that others don’t have to let their bodies be used.

(1) William Tucker, The Excluded Americans: Homelessness and Housing Policies (Washington: Regnery Gateway Press, 1990).

(2) Vermeer and Louie, “The Future of Manufactured Housing,” Harvard Joint Center for Housing Studies.

(3) Global Insight, 2005, The Economic Impact of Wal-Mart.

Michael Strong is the CEO of Flow, Inc., the founder of several innovative high-performance schools, and the author of The Habit of Thought: From Socratic Seminars to Socratic Practice. He has a related article titled “Taking the Left out of Liberalism” currently posted on the FLOW website.

Copyright FLOW, Inc. 2006