This month we are talking about poverty in America. We will be discussing homelessness and that crisis as well as how the American middle class has been squeezed nearly to non-existence. We’ve compiled facts, figures, videos, and stories that explain how we got into the crisis and how we might go about solving it.
Let’s dive in!
America is a very different place that the place anyone over 35 grew up in. Modern America is a country of temporary jobs, tent cities, working poor, and people with multiple jobs trying to stitch together an income. While some of these things are not new, the homeless have always been with us and working multiple jobs is not new, especially for young people, it has never been on this scale before. No one in this country is used to driving by tent cities alongside interstates. We aren’t used to cities that are dying before our very eyes and we aren’t used to seeing these problems right in front of our faces.
This week, we’re going to discuss poverty, the death of the middle class and how this all started.
The Problem with Poverty Begins at the Top
Since the Great Recession, the rich have gotten much richer. The stock market has risen consistently over the past decade and even housing has recovered sending home prices in an upward direction.
Dow Jones Industrial Average
Much of the wealth gained since the Great Recession has gone in one direction: to the wealthy. The wealthy were more likely to have investments benefitting from the rise in the stock market and the wealthy were more likely to be able to hang onto their houses and make investments in real estate. This is especially true in the real estate bonanza that occurred right after the recession as people went through foreclosure and houses were available for very low prices.
This has a real effect is the greater economy because wealthy people do not spend nearly as much as poorer people. Wealthy people are likely to continue to push their wealth towards investments and savings meaning that the bulk of the money that has flowed upwards is sitting in banks in one form or another. Much of that money isn’t out working in the economy and if it is, it is wealthy generating instruments. It’s not being passed around from businesses to employees and back to businesses in the form of spending. This is how wealth has increasingly concentrated at the top. A recent Federal Reserve studymaking the rounds right now states that since 1989, the wealthy have gained 21 Trillion dollars while the bottom 80% have grown 900 billion dollars poorer.
So where did the money go? How do millions of people lose that much money? The answer is simple: wages have not grown since 1977 in real terms and that means that people are essentially losing money every year through an increase in the cost of living and inflation. Think of this in a personal way, when was the last time you received a raise from your employer that was greater than inflation?
This is hitting younger workers especially because they are faced with little savings and high costs for everything from housing to food. This means that their wages may not support a regular life. Many Millennials spent their 20s underemployed, earning much less money than they needed to survive and bunking up with parents and roommates. While the numbers never were terribly high, the rate of people living with families longer had not been as high since before World War II. A recent report statedthat Millennials are also continuing to rely on family help for everything from basic expenses to buying a home. Financial independence is a priority for them but the money is not there in their employment to make that possible. Combine this with a job market where job listings are simply out of controlwith skills requirements and education and you get a perfect economic storm. This economic storm has had great political consequences.
The current labor participation rate for prime-age workers is the lowest it’s been in decades. While the economy has added jobs to the economy, workers continue to fall out of the economy. Just last month in May, 200,000 jobs were created and as a footnote, 500,000 dropped out of the regular workforce. When analyzing the U6 unemployment number published by the Department of Labor, it’s easy to see that while the recovery has created jobs, it has not created jobs fast enough to really employ everyone. It has created jobs to employ fewer people leaving some without a job and working under the table, relying on friends and family, or simply out in the cold.
America’s Homeless Problem
Homelessness increased in the years after the recession. Since then, homelessness has dropped by several thousand. If you want to see a year by year analysis then head over to this interactive graph. Increases in housing cost have made finding housing far more difficult for many. One of the biggest changes in the last decade is the visibility of homelessness, especially in certain large cities. In years past, to find homeless people and their tents took going to specific, usually run-down, parts of town. Now, in coastal cities, you can see homeless camps alongside interstates. You can find RV camping lots and streets all over, even in the better places oftown.
Another area where homeless hastaken a different turn is how many people may end up as having a job but not being able to afford housingand end up living in their cars. This some of the truly tragic cases becausemy logic, if they are working, they don’t describe the typical homeless person who is lazy and depending on society to support them. They are working and earning more and paying taxes but are still unable to afford reasonable housing. As it stands, a minimum wage job does not allow minimum wage workers to afford a 1 bedroom apartment anywhere in the country. This means that minimum wage workers must seek other housing arrangements or simply end up homelessness. If simply having a job is the pathway out of homelessness, then the fact that we are creating jobs that cannot provide basic shelter is a terrible indictment on that statement and how our society handles homelessness, shelter, and our overall economy.
Being homeless often means that you don’t have a form of ID. Getting a form of ID is expensive and for many homeless people, personal belongings are stolen so often that often, even if they have identification, they may not have it for very long. Getting an ID is the first step on the process togetting services and becoming part of society again.
Everydayhomeless people must move their entire lives from place to place to make small amounts of money, try to get to places where services are available or simply stay safe from unsavory people who will attack them, abuse them or worse.
Staying clean is a struggle too. With no home and money, getting a shower or getting laundry done is difficult. Even going to the bathroom can be a struggle as there are few truly public restrooms available anymore. Staying out of the weather is a constant struggle as well. Simply by waking up and having nowhere to go, homeless people must face these struggles every day. Every day, it can take hours to do what much of the rest of us can do in a matter of minutes. Every day they have to face survival under difficult circumstances with no money and often no hope. Many more face medical struggles as well which make surviving almost impossible.
Why Should Anyone Be Homeless?
That brings us of course to the much bigger question of why anyone in the United States should be homeless. The US economy produces $17 trillion per year. The US is the largest single nation economy on the planet. It stands to reason that its citizens would be able to live and do so very well. On global metrics, Americans livebetter than anyone except the Australians. However, to look at the streets of America today that would be hard to believe. America is plagued by public infrastructure that is falling apart, a complete lack of housing policy, an uneven education system, and a lack of economic opportunity. If America is the land of the free, home of the brave, and a place where hard work and grit can lead to success than the country is simply not living up to those promises anymore.
What Caused the Current Housing Crisis?
The current housing crisis has been a 30 year, slow roll of factors. When President Reagan decided to defund public housing and mental institutions in 1981 as they readjusted the federal budget, it had profound consequences. Housing became entirely open to the free market and the current housing voucher system (Section 8) was created to give people money to rent housing on the open market. However, due to underfunding, those lists can stretch on for years and the ability to find an apartment willing to accept your voucher (barring local laws that force them) can also be difficult. It’s like finding a doctor that takes Medicaid or Medicare. The free market does not work for all housing. America now finds itself in an affordable housing crisis where even those with jobs are unable to find jobs.
A Quick History of Public Housing
After World War II, large scale public housing projects were built in and around America’s largest cities. City planners reasoned that since the industrial revolution, people had concentrated in cities for the plentiful job opportunities in those cities. With the millions of men returning from World War II, they reasoned that there would be a large housing crunch and much more housing would be needed. Developments like Pruitt-Igoe in St.Louis were planned to be the type of cheap, accessible housing that America’s cities would require. Other countries took a similar path. The grey Soviet housing blocks that popped up in Moscow and St. Petersburg fulfilled a similar need for housing. Throughout Western Europe, much of the housing stock was simply rubble and countries built cheap-to-construct but simple housing blocks to provide shelter for the millions of displaced people. However, in the United States, while we built some public housing, the popularity of suburbs made the public housing unsustainable. Buildings went empty, they were often violent places filled with poverty from people who were scraping by as America’s cities were hollowed out. Public housing was populated increasingly by those simply left out of the housing market. Suburbs in the early days discriminated against many minorities leaving decaying cities as the chief place for them to live. Local states and cities resisted investing money into public housing and soon public housing became a cesspool of poverty and violence. This would become the reputation public housing would have. When President Reagan wanted to shut down most public housing in 1981, there was little objection to ending a program that had simply not worked. The buildings would stand, empty for decades after until local cities finally began to redevelop them.
Deaths of Despair
Poverty can be deadly. Doctors have recently coined a new term for many of the health problems facing Americans: shit life disease. It’s not an official disease of any kind but it is symbolic of what is facing Americans. Difficult lives in poverty that result in catastrophic health problems that then cause debt and yet more despair. This is even beginning to hit younger Americans. Rates for drug and alcohol abuse for Millennialsis on the rise and the suicide rate has increased as well. The cause? Economic anxiety.
This is especially true in an economy where simply having a job is not enough to lift oneself out of poverty. It is a grind of constant worry about bills and basic survival way out and no way to advance to a place where that is not a daily worry. There is obvious poverty like homeless and then there is this kind of precarious poverty. It doesn’t look like poverty but it is just as deadly. This is the reality for millions of Americans and there is no hope in sight.
America is in a housing crisis built on a crisis of poverty. The current administration isn’t doing much to solve the problem. However, the latest crop of Democrat presidential candidates haveproposed some bold ideas to create some change on poverty. These include:
- Universal Basic Income
- Universal Healthcare
- Affordable Housing
- Raising the Minimum Wage
- Funding Social Security
Any combination of these things would dramatically change the lives of Americans. Raising the national minimum wage to $15 an hour would raise many workers up to a wage far closer to a survivable salary. The minimum wage has not increased since 1994. More controversial proposals like UBI will be difficult to gain support but Andrew Yang’s proposal to give each adult $1,000 a month no questions asked would give each person a guaranteed $12,000 a year with which to survive however they choose. Funding housing at the federal level would incentive states and cities to create affordable housing solutions for citizens who cannot afford housingon the open market. Funding social security would give retirement peace of mind to millions of people. The solutions to poverty are at hand. Simply funding existing programs would go a long way to helping people lift themselves out of poverty. They would be able to contribute to the economy and they would be fund local tax bases through sales tax. Businesswould improve as well.
It’s time that we raise all boats instead of just talking about raising all boats. Over the past 40 years, politicians have made much of the idea that by increasing the number of jobs through trade deals and other policies would raise all boats. The reality is that all boats have not been raised and most boats have been left behind. In this series on Poverty, Rouges will be telling the story of people in poverty, homeless, and those struggling in the Middle Class.