Wednesday, July 8, 2020

Three moves equal one fire: In these troubled times, shelter should be the first priority.

In the early 20th century, a lot of Americans in the rural South were tenant farmers; and they often moved from farm to farm to remain employed. "Three moves are as bad as a fire," was a common observation because the disruption, property loss, and cost of moving could be devastating. Three such moves caused as much damage as one fire.

According to the Aspen Institute, as reported by Steve Rhode, "One in five of the 110 million Americans who live in renter households are at risk of eviction by September." Most of these people live in urban areas, but the trauma and loss caused by eviction are just as devastating for them as for the Southern tenant farmers who lost their homes a hundred years ago.

Being evicted often means that parents have to pull their children out of school in midyear, which disrupts their kids' education. Renting another apartment usually requires the new tenant to come up with a security deposit, which may be impossible for people who have no savings and no credit cards. Moving to a new apartment also means having to open a new account for electricity and water, and often the utility companies require a deposit.

Three moves equal one fire in modern America. And people who can't scramble successfully from one rented apartment to another become homeless.

Our federal government has distributed massive infusions of cash into the American economy to offset the economic calamity caused by COVID-19. Still, a lot of that money went to people who don't need it. More than 600,000 businesses benefited from the Payroll Protection Program, including 1,400 investment advisors.

Poor people, on the other hand, have received scant relief.  The government mailed out  $1,200 one-time checks a few months ago, but that amount may not cover a month's rent.  Congress fattened people's unemployment checks by $600 a month--a significant benefit, to be sure, but this aid is temporary.

We already see the disruption in housing caused by the coronavirus. The number of adults living with their parents has spiked upward to 24.8 million, with the most significant increases among people in their early twenties.  Sixty percent of young Black men are living with their parents or grandparents.

Matthew Desmond called for radical changes in housing policy in his 2016 book titled Evicted: Poverty and Profit in the American City. He argues for universal housing vouchers to guarantee that every American would live in a home that is "decent, modest, and fairly priced."

In the short term, I don't see significant changes in national housing policy.  But this much seems clear. The federal government needs to devote a substantial amount of its coronavirus-relief money to making sure unemployed, and low-income Americans can stay in their rented homes.

Shanty housing during the Great Depression






2 comments:

  1. Thanks for the summary.

    I address the eviction issue in my recommendations for national debt forgiveness...


    Government can help pay your rent and utilities

    Renters are going to be hit hard when the CARES Act benefits expire. They have lower income, have less savings and assets to draw on, and are more likely to be working in the industries that were affected by the virus.
    The federal HEROES act --which passed only the House in May -- would have had the government pay for 90% of missed rents for up to seven months, if renters can demonstrate that they had been financially impacted by COVID-19. (Several blue states like Oregon, California and Michgan are considering extended eviction limits – but their bills have very little real money behind them.)

    If a landlord accepts payments from the state, they would give up pursuing the remaining 10% of missed rents, and agree not to charge late fees or raise the rent for a year. 

    Landlords would then have the cash flow to cover their own debts, and evictions would be minimized.

    • Landlords need rental income to pay their maintenance bills, taxes and mortgages.
    • Municipalities need tax income to pay workers and fund essential services.
    This subsidy would be retroactive to April 1.

    On a national basis, this would cost about $100 billion if it stayed in force for one year.

    This would not create a new constitutional powers to eliminate rents. The government would simply be paying the bills during a terrible economy.

    As James Galbraith states in New York magazine: “There is a very clear case against evictions, because people have been doing what they were told to do. They’re foot soldiers in the war effort. And so now are we gonna say, ‘You still owe your missed rental payments, even though your income was cut off by a shutdown we were all ordered to observe’? You don’t do that to people. It’s a very basic question of fairness.”

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  2. Thanks for writing, Bob. A knowledgeable friend of mine pointed out the folly of boosting people's unemployment checks while allowing them to skip rent payments. Eventually, people are going forced to catch up on back rent. It might have been better to give people vouchers to help cover their rent but not give people an incentive not to go back to work. My friend thinks hardship lies ahead for people who skipped their rent payments while spending their enhanced unemployment checks.

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