The Eviction Economy
New York Times
March 5, 2016
I FIRST met Larraine when we both lived in a trailer park on the far South Side of Milwaukee. Fifty-four, with silvering brown hair, Larraine loved mystery novels, “So You Think You Can Dance” and doting on her grandson. Even though she lived in a mobile home park with so many code violations that city inspectors called it an “environmental biohazard,” she kept a tidy trailer and used a hand steamer on the curtains. But Larraine spent more than 70 percent of her income on housing — just as one in four of all renting families who live below the poverty line do. After paying the rent, she was left with $5 a day.
Under conditions like these, evictions have become routine. Larraine (whose name has been changed to protect her privacy) was evicted after she borrowed from her rent money to cover part of her gas bill. The eviction movers took her stuff to their storage unit; after Larraine was unable to make payments, they took it to the dump.
Those of us who don’t live in trailer parks or inner cities might think low-income families typically benefit from public housing or some other kind of government assistance. But the opposite is true. Three-quarters of families who qualify for housing assistance don’t get it because there simply isn’t enough to go around. This arrangement would be unthinkable with other social services that cover basic needs. What if food stamps only covered one in four families?
America stands alone among wealthy democracies in the depth and expanse of its poverty. Ask most politicians what we should do about this, and they will answer by calling for more and better jobs. Paul Ryan, the Republican speaker of the House, thinks we need to do more to “incentivize work.” Hillary Clinton, the front-runner for the Democratic presidential nomination, thinks we should raise the minimum wage. But jobs are only part of the solution because poverty is not just a product of joblessness and low wages. It is also a product of exploitation.
Throughout our history, wage gains won by workers through organized protest were quickly absorbed by rising rents. As industrial capitalists tried to put down the strikes, landlords cheered workers on. It is no different today. When incomes rise, the housing market takes its cut, which is why a two-bedroom apartment in the oil boomtown Williston, N.D., was going last year for $2,800 a month and why entire capital-rich cities like San Francisco are becoming unaffordable to the middle class. If rents rise alongside incomes, what progress is made?
Poverty is no accident, an unintended consequence from which no one benefits. Larraine’s rent money went to Tobin (also a pseudonym). A second-generation landlord, Tobin was 71, unsmiling and fit. His tenants waited tables at diners or worked as nursing assistants. Some received disability like Larraine or other forms of welfare, sometimes supplementing their checks by collecting aluminum cans.
Running one of the poorest trailer parks in the city had its challenges, like dealing with mental illness, addiction and domestic violence. Every so often, tenants wrecked their trailer the night before being evicted. Tobin had a way of dealing with that. He’d pay one of his tenants $20 to clean up the mess, then offer prospective new families the “Handyman Special,” a free mobile home as long as they paid “lot rent.” Lot rent was the same amount as rent, except the new “owners” would be responsible for maintenance. A family could move their trailer elsewhere, but in reality no one could afford to. When families fell behind in lot rent and were evicted, they inevitably left their trailer behind. Tobin would reclaim it as “abandoned property” and give it to someone else.
Tobin bought the mobile home park, 131 trailers parked on asphalt, for $2.1 million in 1995, paying off the mortgage nine years later. After reviewing Tobin’s books and expenses (property taxes, utility bills, missed payments), I estimated that he netted roughly $447,000 a year. Some of Tobin’s tenants called him “greedy,” but others called him “fair” and “a good man,” especially those he had spared from homelessness when they fell on hard times. He bailed tenants out of jail, lent money for funerals and let some missed payments slide. In a year, he also made 30 times what his tenants getting minimum wage earned.
Landlords like Tobin aren’t making money in trailer parks or ghettos in spite of their poverty but because of it. Depressed property values offer lower mortgage payments and tax bills. In poor areas of the cities, rents are lower, too — but not by much. In 2010, the average monthly rent in Milwaukee’s poorest neighborhoods was only $50 less than the citywide median.
Landlords renting to poor families can charge slightly reduced rents but, owing to far lower expenses, still command handsome profits. As a landlord with 114 inner-city units once told me, speaking of an affluent suburb near Milwaukee: “In Brookfield, I lost money. But if you do low-income, you get a steady monthly income.”
Poor families are stuck. Because they are already at the bottom of the market, they can’t get cheaper housing unless they uproot their lives, quit their jobs and leave the city. Those with eviction records are pushed into substandard private housing in high-crime neighborhoods because many landlords and public housing authorities turn them away. When poor families finally find a new place to rent, they often start off owing their landlord because they simply can’t pay the first and last month’s rent and a security deposit.
When tenants are behind, protections designed to keep housing safe and decent dissolve. Tenants in arrears tempt eviction if they report housing problems. It’s not that low-income renters don’t know their rights. They know that exercising those rights could cost them. So many go on paying most of what they have to live with lead paint, exposed wires and broken plumbing. Saving and stability become wishes, and some days children go hungry because the rent eats first.
Expanding our current housing voucher program to cover all low-income families would rebalance landlords’ desire to make a living and tenants’ desire to have a home. Eligible families would dedicate 30 percent of their income to rent, allowing them to pursue education, start a savings account and buy enough food.
When families finally receive housing vouchers after years on the waiting list, the first place many take their freed-up income is to the grocery store. Their children become healthier in the process.
A universal housing voucher program would fundamentally change the face of poverty in the United States. Evictions would plummet, and so would the other social problems they cause, like family and community instability, homelessness, job loss and depression. Suicides attributed to evictions and foreclosures doubled between 2005 and 2010. A universal housing voucher program would help reverse this disturbing trend.
Exploitation is not confined to the housing sector alone. It thrives when it comes to other essentials, like food. Inner-city bodegas take advantage of families’ lack of transportation to increase grocery prices, effectively reducing the value of food stamps. The payday lending industry exploits poor people’s lack of access to credit by offering high-interest loans and collecting over $7 billion a year in fees.
Most Americans who take out high-interest payday loans do so not to buy luxury items or cover unexpected expenses but to meet regular bills like rent or gas. When James Baldwin observed how “expensive it is to be poor,” this is what he meant.
Payday loans are but one of many financial techniques — from overdraft fees to student loans subsidizing for-profit colleges — specifically designed to pull money from the pockets of the poor. This problem generally goes unrecognized by policy makers. But until we confront the fact that people make a lot of money off the poor, our efforts to reduce inequality will always come up short.
WE can start with housing, the sturdiest of footholds for economic mobility. A national affordable housing program would be an anti-poverty effort, human capital investment, community improvement plan and public health initiative all rolled into one. It would especially benefit mothers and children, the face of today’s eviction epidemic.
This solution is not as expensive as we might think. If we did nothing to make the voucher program more cost-effective — and there is much we could do on this score — expanding housing vouchers to all renting families below the 30th percentile in median income for their area would likely require an additional $22.5 billion a year. The actual figure is likely to be somewhat less, as this estimate does not account for potential savings in the form of reducing homelessness, lowering health care costs and curbing other costly consequences of the affordable-housing crisis.
We have the money. We’ve just made choices about how to spend it. In 2008, the year Larraine was evicted, federal expenditures for direct housing assistance totaled more than $40 billion, but homeowner tax benefits exceeded $171 billion, a figure equivalent to the budgets for the Departments of Veterans Affairs, Homeland Security, Justice and Agriculture combined.
If we are going to spend the bulk of our public dollars on the affluent — at least when it comes to housing — we should own up to that decision and stop repeating the canard about this rich country being unable to afford more. If poverty persists in America, it is not for lack of resources. We lack something else.
Matthew Desmond, a sociologist at Harvard, is the author, most recently, of “Evicted: Poverty and Profit in the American City.”