Sunday, April 4, 2021

Biden's infrastructure plan does not come close to tackling the vast extent of America's new housing crisis [feedly]

Biden's infrastructure plan does not come close to tackling the vast extent of America's new housing crisis
https://www.businessinsider.com/bidens-infrastructure-plan-not-enough-tackle-new-american-housing-crisis-2021-4?utm_source=feedly&utm_medium=webfeeds

Activists outside a homeless camp in Philadelphia on September 9, 2020.

Cory Clark/NurPhoto via Getty Images

  • The pandemic has exacerbated the existing housing crisis, and Biden's plan does not go far enough.
  • There is no safety net for housing, making any assistance during economic recessions difficult to deliver.
  • The crisis was built by poor government policy. The current administration must take steps to ensure housing as a basic human right.
  • Lindsay Owens is the interim Executive Director of the Groundwork Collaborative.
  • Sammi Aibinder is Special Assistant at the Groundwork Collaborative.
  • This is an opinion column. The thoughts expressed are those of the authors.
  • See more stories on Insider's business page.

The spending plans that the Biden administration released this week laid out substantial investments into our nation's housing system, including $213 billion for building and retrofitting affordable housing units, $40 billion for public housing capital repairs, and grant funding to address zoning laws rooted in racial and economic exclusion. These proposals are a welcome first step to ensuring safe, affordable, sustainable shelter - and Congress should move swiftly to enact them - but they do not come close to meeting the scale of the housing crisis that has been underway in the United States for decades.

The reality is that although the failures in our housing system were exacerbated by the pandemic - to the tune of 10 million people at risk of eviction and more than $57 billion owed in back rent - the pandemic didn't cause them. Rents have been soaring for decades, consuming an ever larger share of the incomes of the lowest-income Americans (and during the pandemic, the divergence in rent for low-income tenants versus higher-income tenants has worsened).

While renter incomes grew by 0.5% from 2001 to 2018, rents increased by 13%. Median asking rent has more than doubled over the last 20 years, and in 95% of counties, a full-time minimum-wage worker cannot afford to rent a one-bedroom apartment. Black and brown people are particularly vulnerable to the extreme instability renters face. With a housing market this fragile during boom times, Americans never stood a chance when a crisis inevitably hit.

No housing safety net

It doesn't have to be this way. The economic impact of recessions, such as job losses and income declines, are largely predictable, and policymakers have put in place a number of programs to offset them. When Americans lose their jobs, they can apply for unemployment insurance; when their income and assets drop below a certain threshold, they qualify for nutritional assistance.

But when it comes to housing, there's no comparable safety net. The federal government currently offers no guaranteed form of housing assistance, and there are no countercyclical housing programs that expand during downturns or are triggered by economic indicators. This makes it almost impossible to quickly and effectively deliver any assistance that Congress does allocate during a disaster like this one. Variations in application and eligibility requirements across states and cities have led to backlogs in distribution of federal aid money, all while thousands upon thousands of applicants have been denied assistance.

The fragility of our housing market is not an accident; policy choices have led to a two-tiered housing market in which relatively well-off, mostly white consumers can achieve the American dream of homeownership - with the help of considerable federal subsidies like the mortgage interest tax deduction - while renters, who are disproportionately Black, brown, and low-income, transfer an increasingly large share of their income to landlords in the private market. Ultimately, the scarcity of affordable and accessible housing in our economy is not reflective of national resources - it is reflective of a centuries-long political debate about who is deserving of public investment, and therefore economic dignity and security.

Consider the federal budget for housing programs geared toward those with the lowest incomes. Federal spending on housing assistance relative to gross domestic product has fallen by 30% since the mid-1990s. Funding for public housing in particular has suffered profound losses: in the last 20 years the annual federal budget has only met operations needs for public housing across the country three times. On top of that, funding for repairs has been cut in half - a trend that can't be divorced from the long-standing political tradition of pathologizing poor and low-income Black communities. This continued disinvestment has resulted in the share of households receiving housing assistance declining to just one in five today. As the rental affordability crisis has worsened, the federal response has shrunk.

Meanwhile, recent estimates have shown that more than two-thirds of the government's total spending on housing is allocated toward subsidizing homeowners through tax deductions. The vast majority of benefits from this "entitlement" go to the wealthiest of households, and most Black and brown families are excluded entirely. By structuring housing policy and housing markets so that Americans' homes are their most valuable asset and source of equity, this country has essentially transferred safety net functions to private homeowners (and enabled white families to maintain wealth by passing down the homes they own over generations).

Calling on the Biden administration

Our government can make different choices. Housing policies that rely on the private market to develop, administer, or maintain housing stock for those who are housing insecure have not come close to meeting the need for millions of people, because genuinely affordable housing is not profitable. If the Biden administration wants to truly "Build Back Better" and deliver on the promise of stable housing for all, it must commit to massive, sustained public investments, and a significant shift in our narrative around who is deserving of those investments.

There is no one silver-bullet solution: a number of approaches must be taken at the federal, state, and local levels (both regulatory and budgetary) to put us on the path toward an equitable and resilient housing system. Experts across the field, including grassroots leaders, researchers, and policymakers, have laid out extensive agendas for these actions. The Biden campaign previously committed to fully funding rental assistance for all who qualify - another important start, but one that does not adequately address permanent solutions to housing unaffordability.

In addition to advancing legislation that, at an absolute minimum, meets the Biden administration's priorities for housing, Congress must move to repeal the Faircloth Amendment, which has prohibited any increase to public housing stock since its passage over 20 years ago. Congress and the White House must also enact policies and fund programs that prioritize rehabilitation and preservation - not demolition - of homes in disinvested neighborhoods. Keeping new and revitalized homes affordable will also mean a strong commitment to rent control policies that place strict limits on rent increases, as well as exploration of alternative social and collective ownership models that empower tenants and grant them the dignity and security of stable housing.

The path forward isn't easy, but the lessons from history are clear. We are long past due for a major course correction in our federal housing policy: not just to patch things up in case of emergency, but to remedy longstanding inequities and recognize shelter as a basic right in the wealthiest country in the world.

Read the original article on Business Insider

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Friday, April 2, 2021

Enlighten Radio:Talkin Socialism: The Muddy Road

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Blog: Enlighten Radio
Post: Talkin Socialism: The Muddy Road
Link: https://www.enlightenradio.org/2021/04/talkin-socialism-muddy-road.html

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The Spread in Labor Costs Across the European Union [feedly]

A fascinating dive from Tim Taylor on the spread of labor costs across the EU, and the institutional (including political) and economic reasons.

The Spread in Labor Costs Across the European Union
https://conversableeconomist.blogspot.com/2021/03/the-spread-in-labor-costs-across.html

In a common market, labor costs will look fairly similar across areas. Sure, there will be some places with differing skill levels, different mixes of industry, and different levels of urbanization, thus leading to somewhat higher or lower labor costs. But over time, workers from lower-pay areas will tend to relocate to higher-pay areas and employers in higher-pay areas will tend to relocate to lower-pay areas. Thus, it's interesting that the European Union continues to show large gaps in hourly labor costs. 

Here are some figures just released by Eurostat (March 31, 2021) on labor costs across countries. As you can see, hourly labor costs are up around €40/hour in Denmark, Luxembourg, and Belgium, but €10/hour or below in some countries of eastern Europe like Poland or the Baltic states like Lithuania. (For comparison, a euro is at present worth about $1.17 in US dollars. Norway and Iceland are not part of the European Union, but they are part of a broader grouping called the European Economic Area.)

Another major difference across EU countries is in what share of the labor costs paid by employers represent non-wage costs--that is, payments made by employers directly to the government for pensions and other social programs. In France and Sweden, these non-wage costs are about one-third of total hourly labor costs. It's interesting that in Denmark, commonly thought of as a Scandinavian high social-spending country, non-wage costs are only about 15% of total labor costs--because Denmark chooses not to finance its social spending by loading up the costs on employers to the same extent. 

These differences suggest some of the underlying stresses on the European Union. Given these wage gaps across countries, tensions in high-wage countries about migration from lower-wage countries and competition from firms in lower-wage countries will remain high. The large differences in non-wage costs as part of what employers pay for labor represents some of the dramatic differences across EU countries in levels of social benefits and how those benefits are financed. Proposals for European-wide spending and taxing programs, along with the desire of higher-income EU countries not to pay perpetual subsidies to lower-income countries, run into these realities every day. 

For comparison, here are some recent figures from the US Census Bureau on average employer costs per hour  across the 10 Census "divisions."  Yes, there are substantial differences between, say, the Pacific or New England divisions and the East South Central or West South Central divisions. But the United States is much more of a unified market than the European Union, both in wage levels and in the way non-wage labor costs are structured, and so the gaps are much smaller. 



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