Why Housing Affordability Needs To Be Reevaluated

Traditionally, academics and policymakers have determined whether an individual or family can afford to live somewhere by simply dividing their housing costs by their income. If at least 30 percent of a person’s or family’s income goes to housing and related expenses like utilities, then their household is said to be “cost burdened.” The ratio is not determined by economic or social analysis; rather, it is simply the number Congress chose in 1981, which has not been changed nor updated since. Although this approach is easy to understand, it falls short of accurately reflecting the financial burdens people actually experience. This is a problem because many federal housing programs rely on this 30 percent measure to determine rent.

Measuring Housing Affordability

This ratio-based approach breaks down for Americans with extremely low incomes. If wages decline, a middle-class family could potentially downsize its home or related expenses. When people live below the poverty line, however, they must spend above a minimum just to reside in a home that meets the local building codes and meets basic human needs.

“Shelter poverty” analysis provides an alternative to the traditional approach. Shelter poverty is a concept that was first developed by Michael Stone, a professor of community planning, in the 1970s. In this analysis, instead of comparing housing costs to income, housing costs are evaluated in the broader context of the household’s other basic needs, including food, clothing, and transportation. If housing costs are high enough that household’s residents cannot cover these basics from their income, then they are said to be experiencing shelter poverty. The challenge for this method lies in determining how much money must be spent to meet other needs, especially because the federal government no longer publishes such estimates for non-housing necessities.

The Self-Sufficiency Standard, created by University of Washington senior lecturer Diana Pearce in the 1990s, addresses this issue by compiling estimates of basic expenditures from various public and private sources, based on the county of residence, the number of persons in the household, and the age(s) of any children present. This information can be combined with anonymized responses to the American Community Survey, a nationally representative survey conducted annually by the U.S. Census Bureau. The combined data make it possible to determine whether each household in the sample is experiencing shelter poverty. This method also helps determine if, and by how much, households fall short in covering their expenses. That is called the “affordability gap.” Using estimates developed in this way, analysts can extrapolate out to the general U.S. population.

Housing Affordability in Ohio and South Carolina

A shelter poverty analysis was conducted for Ohio renters who responded to the American Community Survey, and for sampled South Carolina renters and homeowners (including both mortgage holders and those who own a home free and clear). In both states, the shelter poverty method generates substantially different results than a basic cost burden analysis. Although overall rates of economic distress are generally similar using the two different measures, the total affordability gap using the shelter poverty measure is substantially larger. Among Ohio renters, it would take over $3 billion annually to address cost burdens using the 30 percent metric, but nearly $15 billion per year to mitigate shelter poverty entirely. The disparity is somewhat narrower in South Carolina, but a similar gap exists.

There are differences in the areas of need as well. In both Ohio and South Carolina, the prevalence of a cost burden measured by the ratio system is higher than the burden of shelter poverty in suburban areas with the highest median household incomes. In economically distressed urban and rural areas in both states, far more households experience shelter poverty than excessive ratio cost burdens. In other words, it appears that current standards of housing affordability overstate the needs of families who are most able to pay and understate burdens for those least able to do so.

Improving Housing Affordability

Overall, experts may not be accurately describing the magnitude and nature of housing affordability challenges in the United States. Those experiencing shelter poverty are found in nearly every community nationwide. In South Carolina, which is not by national standards a particularly expensive state to live in, households experiencing shelter poverty (nearly one-third of all individuals and families statewide) have an average affordability gap of $14,330 per year, or about $275 per week.

Meanwhile, the geographic distribution of shelter poverty suggests that the 30 percent measure distorts the landscape of housing affordability. That distortion happens because there are households that choose to spend more than 30 percent of their income voluntarily and are thus inappropriately categorized as cost burdened. Meanwhile, others spend less than 30 percent on housing costs but still find they do not have enough to make ends meet. Taken together, failure to consider these issues leads decision-makers to understate the level of economic inequality among U.S. households.

It is worth noting that affordability gaps are not only measures of deprivation experienced by less fortunate Americans. These gaps also reflect economic activity that is lost due to the inability of many households to meet basic needs. Ohio renters have about $15 billion less to spend each year as consumers in the state’s economy because they lack access to affordable housing.

Although housing costs have become more politically salient in recent years, the scope and scale of the problem have not been fully articulated. Housing is the single largest expense for most individuals and families, and it is typically regulated at the county and municipal level through zoning codes and related ordinances. Local policymakers must consider whether their policies are harming the welfare of residents and businesses alike by artificially restricting housing supply or preventing construction of subsidized housing.

All Americans have a stake in better measurements of housing affordability – and better solutions to the shortfalls many people face in this vital area. A shortage of affordable homes can have numerous downstream effects. Employers may face high rates of labor turnover if employees cannot find places to live in the vicinity. Longer commuting distances increase the amount of traffic and contribute to urban sprawl, which has a variety of negative environmental, social, and economic consequences.

To find solutions, local officials must engage with homeowners, renters, business owners, and nonprofit groups, as well as housing policy experts in the public and private sectors. To ensure communities across the country have a path toward a prosperous and sustainable future, everyone must be able to find a suitably located and affordable place to call home.

Opinions expressed in this brief are those of the author alone, not the State of South Carolina or any other entity.

Read more in Bryan P. Grady, “Shelter Poverty in Ohio: An Alternative Analysis of Rental Housing Affordability,” Housing Policy Debate 29, no. 6 (November 2019): 977-989.

Why Social Workers Should Care About DACA

Photo Credit: Stephanie Keith/Reuters

The announcement made by Attorney General Jeff Sessions regarding the termination of the Deferred Action for Childhood Arrivals (DACA) program on September 5th should be a call to action for social workers. DACA is a program for youth that arrived in the United States before the age of 16 and have lived in the United States since June 15th, 2017.

DACA was enacted as an Executive Order under the Obama Administration to give these individuals who were brought illegally to the United States as children a chance to be a part of society. These young people are given the ability to apply for a driver’s license, to legally work in the United States, and increases educational opportunities. Most importantly it allows those individuals under the program to come out of the shadows.

DACA recipients are part of our country, and this is perhaps the only country they have ever really known. Many came to the United States as infants and have contributed to their communities in meaningful ways. A study from 2016 points to the economic benefits of the DACA program.

A reported 6% have started their own businesses and many business owners have reported wanting to hire more DACA recipients. Some are working as teachers. Many DACA recipients have reported increasing their civic participation as a result of the program and some DACA recipients even act as emergency responders. One recent example includes a DACA recipient in Texas who tragically died while rescuing those impacted by Hurricane Harvey.

DACA has been challenged by the Attorney Generals of nine states, spearheaded by Texas. Tennessee, however, has dropped out of the lawsuit as a result of negative pushback. Several prominent Republicans have denounced the ending of DACA and House Speaker Paul Ryan asked the Trump Administration to give Congress time to work on a legislative solution. Meanwhile, Attorney Generals in several other states are now suing to maintain the program.

As it stands, DACA recipients will lose the current benefits they have within six months and face possible deportation if a legislative solution is not reached. This will impact 800,000 individuals currently in the program. How does this impact social work? Social workers serve in many capacities in the social services and may likely encounter those who are under the DACA program, including the school system and in college settings.

Most importantly, as social justice is a core value of our profession it is evident that we must align with upholding this program. Social workers should be on the front lines to advocate for this population. Those who have been given the opportunity to show their potential under DACA have thrived. Even DACA, however, does not go far enough in that it creates no path for citizenship, which is why the Dream-Act is needed. Living under DACA gives its recipients many crucial benefits, but ultimately leaves them as second-class citizens.

What can we do now? We must continue to organize politically and let our opinions be known to our elected officials. As a professional organization, we should place pressure on our legislators. We must organize our local chapters and mobilize student social workers. We must continue to educate others. Finally, with so many domestic and international crises looming we must not lose our empathy or capacity for hope.

As former President Obama recently wrote in response to the DACA decision, “What makes us American is our fidelity to a set of ideals – that all of us are created equal; that all of us deserve the chance to make of our lives what we will; that all of us share an obligation to stand up, speak out, and secure our most cherished values for the next generation. That’s how America has traveled this far.”

World Day of Social Justice: Promoting Environmentally Sustainable Economies and Societies

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February 20th marks the World Day of Social Justice established by the United Nations (UN), and this year’s theme recognises environmentally sustainable economies and societies. The World Day of Social Justice brings together the fundamental values that all societies should have: equality, harmony, solidarity and social justice. The United Nations holds social justice at the core of its mission to promote development and human dignity.

Governments have made a commitment to the creation of a framework for action that promotes social justice not only a national level, but internationally. In addition, Governments around the world have also pledged to promote equal distributions of income and resources and have recognised that a society for all needs to be based on respect for all human rights.

The World Day of Social Justice places an emphasis on civic duty, engagement and solidarity which is a new politics that will bring a society defined by utilitarianism. That which is fair, moral and just is that which a civilization must decide in order to assure social justice. A day in which the General Assembly will recognise that social development and social justice are indispensable for the achievement and maintenance of peace and security amongst nations. Social development and social justice cannot be attained in the absence of peace and security, or in the absence of freedom.

Oxfam reported that 80% of the world’s richest people had the same amount of wealth as the poorest 3.6 billion people. The effects of economic inequality can have drastic results, even in the UK there is a growing divide between the life expectancy of the richest and poorest within society.

In 2008, the Declaration on Social Justice for a Fair Globalization was adopted by the International Labour Organization (ILO) in an effort to show its commitment to social justice. The Declaration posits that achieving improved and fair outcomes are necessary for the aspirations of a just society.

“In this crucial year for global development, as Member States work to craft a post-2015 agenda and a new set of sustainable development goals, let us do our utmost to eradicate all forms of human exploitation. Let us strive to build a world of social justice where all people can live and work in freedom, dignity and equality.”  Secretary-General Ban Ki-moon

Whilst globalization and interdependence are opening opportunities through trade, investment and capital flows which encourage the improvement of living standards around the world, there are still severe challenges such as insecurity, poverty and inequality amongst societies which places barriers to further integration and participation in the global economy.

In June 2014 the International Labour Conference voted overwhelmingly to adopt a Protocol and a Recommendation that provided specific guidance on effective measures to be taken that would help eliminate forms of forced labour. In 2015, the International Labour Organization held a panel discussion on modern forms of forced labour and human trafficking and the impact this had on national and global social and economic development.

In order to advance social justice, societal barriers must be removed. These include gender, age, race, religion, culture and disability. The 2015 theme for the World Day of Social Justice was ending human trafficking and forced labour. Forced labour takes different forms including trafficking and debt bondage. Victims of this are usually women, migrants or sweatshop workers.

Whilst unemployment has been falling in developed countries, the job crisis is not likely to end in the short term, especially in emerging countries. Unemployment rates are expected to rise by 2.3 million, reaching 199.4 million in 2016 with an additional 1.1 million forecasted to be added to the global tally by 2017.  This means that both males and females are likely to have to accept lower paid jobs, both in emerging and developing economies.

Urgent action should be taken to increase the number of work opportunities in order to alleviate tensions. Policies need to focus more on strengthening employment and tackling the inequalities. Furthermore, vulnerable employment is concerning high in developing economics with peaks in Southern Asia and sub-Saharan Africa.

Keep up to date with the World Day of Social Justice on Facebook and Twitter using the hashtag #WDSJ2016! Additionally, there are many resources online for teachers including lesson plans about social justice too!

Tax the Rich: Research Supports A More Progressive Taxation

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In an issue brief from the Washington Center for Equitable Growth, policy analyst Nick Bunker weighed in on the ongoing debate about marginal tax rates and economic growth. He points to research by economists Thomas Piketty of the Paris School of Economics, Emmanuel Saez at the University of California-Berkeley, and Stefanie Stantchava at Harvard University whose paper, “Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities,” concludes the optimal top tax rate on labor is 83 percent. There has been an ongoing debate about the effect of marginal tax rates on economic growth. Piketty and company argue that tax rates for upper income earners could be much higher without impacting economic growth and could result in higher wages for average workers.

According a report published by the Congress Research Service (CRS) in 2012, the top marginal tax rate throughout the 1940s and 1950s was above 90 percent. It had been lowered to 35 percent at the time of the report; it is now 39.6 percent. Also the tax rate for capital gains had been 25 percent during the 1950s and 1960s, 35 percent during the 1970s, and was 15 percent in 2012 at the time the report was published.

Thomas L. Hungerford, the public finance specialist at CRS who authored the report noted that GDP increased by an average of 4.2 percent during the 1950s, and real per capita growth increased annually at a rate of 2.4 percent compared to a GDP growth rate in the 2000s of 1.7 percent and annual real per capital growth of less than one percent following the Bush tax cuts.

Hungerford concluded there was no definitive evidence of an association between marginal tax rates and economic growth which angered congressional Republicans who suppressed the report contending it had methodological flaws. Hungerford’s findings were at odds with supply-side theories that tax cuts would result in increased economic growth.

Despite any real evidence that tax cuts for “job creators” are the remedies for our anemic economy, congressional Republicans continue to promote tax reforms that lower marginal rates for top income earners. In the meantime, the economy continues to sputter because most consumers do not have the disposable income needed to buy the goods and services that would put more people back to work or in fulltime positions with higher wages.

The fact that the country experienced solid economic growth when top marginal rates were much higher than they are today suggests that current Republican tax reform proposals are based more on ideology than fact. Yet we see few if any Democratic tax reform proposals that would significantly increase top marginal rates while providing tax relief for the middle class. Piketty and company say it is not only plausible but may help restore the economy.

Without going into great detail—you can read the original publication here—the researchers expanded their analysis beyond the conventional idea that high income earners respond to higher marginal rates by trading some of their working time for more leisure time. They looked at additional ways high earners behave in response to higher marginal rates.

Top wage earners may look to shift their wage income to capital income such as stock options in order to avoid higher income taxes, or reduce their rent-seeking behaviors because lower tax rates provide an incentive for pursuing greater compensation.

They found top earners do not tend to shift their income in response to tax rates and—using an international dataset—they found that lower tax rates are associated with higher income for corporate executives supporting the idea that higher tax rates are a disincentive for corporate executives to cannibalize corporate profits.

Piketty, Saez and Stantchava found that combining elasticities for labor supply, taxation avoidance, and bargaining, led to an optimal top tax rate on labor of 83 percent. If you only consider the effect of the overall elasticity of income to tax rates, the optimal top tax rate on labor would be 57 still much higher to today’s current rate of 39.6 percent.

The idea that income redistributive policies are a death knell for the economy has been preached so much that there is nearly universal acceptance of this as the gospel truth by the right and the left yet there is scant evidence to confirm this belief. Here Bunker showcases evidence that clearly disputes the contention.

Is My Child Safe Walking To School Alone?

Dangers of a Cross Walk
Dangers of a Cross Walk

Of course, the ideal situation would be for every mom to be able to personally drive their child to school, so all worries of what dangers lurk between home and school would cease to exist. Unfortunately, economic times have made this a luxury that only a few parents can afford. Most moms have to trust the bus drivers with their children or allow their children to walk to and from school.

It is a known fact that danger is everywhere at all times. Knowing this, mothers do tend to be overprotective at times. The following considerations should ease your mind and help you better prepare your child for a safe journey to school.

1) Planning the Route

If your schedule allows, it is always a good idea to walk with your child the first few times to ease any anxiety either of you may have. If this is not possible, consider doing a practice walk on a day that you do have time. This is important because it gives you a first person view of the potential dangers that your child may encounter on his way to school each day. As you detect obstacles or potential hazards, talk them over with your child. Give them guidance by providing solutions in advance should a problem arise. This will also provide an opportunity for them to ask questions, not to mention a great way to bond.

2) Cover the Basics

Whatever you do, don’t forget the basics. Most adults know that before crossing a street you are supposed to look left, right, then, left again. Sometimes, we forget that these were lessons that at some point were taught to us as well. So, do not assume that your child knows basic pedestrian safety protocol.

3) Crossing the Street

Now that you child knows the basics, it would be wise to get more in depth on road safety. If possible, plan to only cross where there are crossing lights or school crossing guards. Remind your child that not everyone follows the rules. So, even though the walk light may be lit, it is still better to check to make sure it is safe to cross. You may want to practice the school’s crossing guard hand signals so that he will know which one means it is safe to proceed.

It is imperative to stress the importance of yielding to traffic. Many children are killed each year in pedestrian and vehicular accidents. Some are even killed by their own school bus. According to Stokes & Kopitsky, “…motor vehicle injuries are the leading cause of death among children in the United States. Children also top the list of at-risk victims in accidents involving trucks, buses, and bikes.” So, please make sure your child is as prepared and protected as possible.

4) Emergency Plan

“Stranger Danger” is still as prevalent today as it was decades ago. Though, your child may be taught some precautions at school, it is a good idea to have your own emergency plan in place. This is the technology era, so you may want to consider giving your child a cell phone for such situations. Using code words is another way to safeguard your children. Decide on a word that only you and your child knows to use in case you have to send someone the child doesn’t know to pick them up from school. The “stranger” would tell the child the code word to let them know that they can be trusted.

5) Proper Outerwear

It is a “no brainer” that you would want your children to be warm in the winter and cool in spring. However, your child’s outerwear may need a little more consideration in certain regions. In some places, the sun rises late on winter mornings and it sets as early as 5pm. This means that it is not only cold outside, it is dark. You may want to consider providing your child with a reflective jacket or vest during these times. There are actually some fashionable footwear and backpacks that twinkle, which could be an option as well. A flashlight may also come in handy to avoid tripping as well as injuries. It would definitely be a bonus for the ones who are a little afraid of the dark.

Making sure that your child attends school each day is a must. Parents who have to trust their children to walk alone may be fearful of what will happen in their absence. The best option is to try to find other kids your child can walk with, because there is safety in numbers. There may also be another mother available to supervise them during their walk. As a last resort, you can call your child’s school to check in on them each morning until you feel confident in your child’s ability to walk alone safely.

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