Jennifer E. Cooper
Homelessness can strike at any time. For many of us, it is only a layoff or an unexpected illness away. Homelessness in America has multiple causes and requires multiple responses from policymakers. As I walk across the country I will be meeting with politicians along the way in an attempt to draw attention to the growing problem. And I urge both politicians and communities to work together and create solutions that address the underlying causes of homelessness–poverty, lack of affordable housing, low wages, rising healthcare costs, skyrocketing education costs, and the debt trap.
“If action to decrease poverty is to be successful, increasing the housing supply across the globe is essential. Adequate housing is vitally important to the health of the world’s economies, communities, and populations, yet the percentage of people without access to decent, stable housing is rising. The United Nations projects that by the year 2030 an additional 3 billion people, about 40 percent of the world’s population, will need access to housing. If we are to prevent such a dramatic escalation of the housing crisis, and if we are to succeed in the fight against poverty, we must support the expansion of housing both as policy and as practice.”
— Habitat for Humanity.
One of the most direct and obvious causes of homelessness in the United States is the crisis in affordability of housing.
According to the United Nations, 95 million Americans (or one in three), struggle with housing problems, including payments that represent too large a share of their income, overcrowding, poor quality shelter, and homelessness. One third of U.S. households spend more than the recommended 30 percent of their income on housing, while nearly 16 million Americans (one in seven) pay 50 percent or more of their income for accommodation. As a result, more than 3.5 million people each year in the United States—many of whom are employed but working at minimum-wage jobs—“experience some form of homelessness” every year, according to Bart Harvey, CEO of Enterprise Community Partners.
There is an urgent need to increase the stock of affordable housing in America. When people become homeless it makes it substantially more difficult to deal with other related problems. This means that we need to address HOUSING FIRST before dealing with other concerns such as substance abuse or mental illness. Having a roof over one’s head is a basic human need and provides the only stable basis from which to move forward. Housing First programs like the one operating in San Francisco have met with moderate success. Unfortunately there is resistance from those who do not want to provide housing until mental health or substance abuse problems are first addressed.
In any case, most people find themselves homeless not because of substance abuse or mental illness but simply because housing is too expensive compared to wages. Harvard University’s Joint Center for Housing Studies, in their State of the Nation’s Housing 2008 report, found a rising number of middle-income home-owners are facing cost pressures. By 2006, middle-income homeowners were twice as likely as middle-income renters to pay more than half their incomes for housing. Sadly, 12.7 million children—more than one out of six—in the United States live in households paying more than half their incomes for housing. The 13.8 million children in low-income households—and particularly those headed by minorities and single parents—are especially likely to live in these circumstances. For many families, overpriced housing means cutting other expenditures to the bone. In 2006, severely housing cost-burdened households with children in the bottom quartile of earners, had on average only $548 per month for all their other needs. As a result, these families spent 32 percent less on food, 56 percent less on clothes, and 79 percent less on healthcare than families with low housing costs.
“[A]lmost 15 million American households earning median incomes or less … pay 50 percent of income for housing. … This group includes nurses, police officers, janitors, firefighters and teachers.”
— Joint Center for Housing Studies, Harvard University.
Compounding the unaffordability of housing is the problem of stagnant and declining real wages in America. According to the National Low Income Housing Coalition, if one wage-earner holds a job paying the federal minimum wage, that household can afford to spend up to $341 in monthly rent. But there is not a single county in the whole country where a full-time minimum wage worker can afford even a one-bedroom apartment at what HUD determines to be the Fair Market Rent.
The Harvard State of the Nation’s Housing 2008 report concurs: nowhere in America does a full-time minimum-wage job cover the cost of a modest two-bedroom rental at 30 percent of income. In the least affordable areas of the country, the so-called “housing wage”—the income necessary to afford the fair market rent on a modest apartment, working 40 hours a week for 50 weeks a year—is now five times the current federal minimum wage.
Meanwhile, housing assistance represents a small and shrinking share of the federal budget. From 1997 to 2007, housing assistance programs fell from 10 percent to 8 percent of the nation’s dwindling domestic discretionary outlays. Today, there are only about 6 million rentals affordable to the nearly 9 million households with incomes below 30 percent of the median. Some families cannot afford even poor-quality housing in distressed neighborhoods, and many of them, lacking anywhere else to turn, end up in shelters or on the streets. It is estimated that families make up about half of the homeless population, and more than a third of the homeless are children.
To address homelessness it is imperative that we support a living wage. Wages must be increased such that they keep pace with the rising cost of housing and other basic necessities.
Health problems and health care can be both cause and effect of homelessness, and there are feedback loops from each to the other. Unexpected medical bills and lack of medical insurance in the face of illness can unexpectedly push families into bankruptcy and homelessness. Further, homelessness and poor housing can themselves create poor health.
Inadequate housing conditions expose children to health and safety risks. According to the above-cited Harvard report, homes built before 1970 may contain lead paint, while those built before 1940 may not meet current building codes. Some 46 percent of children in low-income households live in pre-1970 housing, and 16 percent live in pre-1940 units. By comparison, only 32 percent of children in high-income households live in pre-1970 housing and just 10 percent in pre-1940 housing.
If a household with children in the bottom expenditure quartile has only $548 per month to spend on non-housing-related needs, that household may not be able to afford to eat properly and nutritiously or to provide health care for children.
America spends proportionally more on healthcare as a share of GDP than many other OECD countries, but with a massive shortfall in comparative coverage. It is imperative that policymakers finally address this longstanding crisis in healthcare provision in the United States.
The exposure of shocking conditions in some of the institutions for people with mental disabilities—most notably following Robert F. Kennedy’s 1965 visit to the infamous Willowbrook School on Staten Island in New York—led to sweeping reform and ultimately the closure of many of these facilities. While this was a welcome development, it has also indirectly fed the problem of homelessness when combined with budget cuts that prevent states from providing other forms of care for those with mental illnesses.
There needs to be adequate funding for treatment of mental illness in America. But we also need to change the way we look at mental illness itself. There is a stigma attached to mental health problems that is not the case with physical illness. We wouldn’t ignore someone with cancer and expect them to live on the street, but this happens to people with mental illnesses all the time.
Economic Stimulus and Mortgage Lending
Mortgage lending and federal support for home ownership does not adequately support the aspiration of families to own their own homes on affordable land near jobs and other basic services. Even middle-income families are feeling the squeeze in this regard, and the problem is chronic for the poor. The role of “sub-prime” lending in triggering the recent financial crisis is only likely to make the problem worse.
Foreclosure rates are the highest they have been since recordkeeping began in 1974, but even with widespread price declines, affordability for would-be homeowners has not improved significantly. Assuming a 10 percent down payment and a 30-year fixed-rate loan, the real monthly mortgage costs for principal and interest on a median-priced single-family home bought in 2007 was only $76 lower, and the down payment $1,000 lower, than on a home bought in 2006. At current interest rates, the national median price would have to fall another 12 percent from the end of 2007 to bring the monthly payments on a newly purchased median-priced home to 2003 levels.
Heavily targeted toward renter households, federal housing assistance currently does next to nothing for owners that have severe housing cost burdens and are at risk of losing their homes. Stemming the tide on the current wave of foreclosures and offering a path to refinancing should be a priority for policymakers looking to stimulate the economy.
Education costs have also been spiraling beyond the reach of many low-income families and placing a strain on the finances of middle-income families. This feeds into homelessness when students emerge from college carrying an enormous burden of debt. Not only is it difficult to pay for housing when faced with massive loan repayments (particularly in a period of economic downturn and rising unemployment, when jobs are hard to come by) but this also encourages the use of credit cards as people struggle with living paycheck to paycheck.
Policymakers must find a way to make college more affordable or—more difficult—to revalorize the high school diploma as a meaningful qualification.