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TinotopiaLog → Homelessness and Markets (30 Oct 2002)
Wednesday 30 October 2002

Homelessness and Markets

Today’s Post has an article, on the front page no less, headlined Exasperated Cities Move to Curb or Expel the Homeless. The immediate problem, it seems, is that the homeless population is now a serious threat to the quality of life in places like San Francisco, Santa Monica, and Madison.

It is interesting that nearly every one of the places mentioned in the article are cities known for their liberal politics.

Now, it might be — is, actually — the case that bums flock to places like these. It’s certainly more pleasant and easier to be homeless in Santa Monica than in Buffalo. And while in Madison the weather tries to kill you with predictable regularity in the winter, it’s a college town, and thus has a lot of cheap things to do, a radical-left tradition that results in lots of social services, and a deep vein of middle-class guilt to mine by panhandling.

But it goes beyond that. In much of America today, and particularly in the most liberal areas, it’s impossible to be poor. Well-meaning laws designed to replace poverty with relative prosperity have instead replaced poverty with destitution.

In San Francisco, the minimum (“living”) wage is $10 an hour. In Madison, it’s $9.34, but it only applies to certain city contracts. Voters in Santa Monica will vote on November 5 on a $12.25 minimum “living” wage.

Now, I’m not exactly arguing against paying people that much; it’s not like these are princely sums. Living in San Francisco on $10 an hour is not luxury. But I’m confused by the government’s reasoning.

The problem: City X is too expensive to live in on the minimum wage, because everything costs too much.

The solution: Raise the minimum wage, making janitors and grocery clerks more expensive to hire, thus eventually causing a rents and grocery prices to rise. Whereupon, presumably, we raise the minimum wage again, et cetera. Eventually the city gets too expensive for anyone to live in, and they all move away — except for the low-wage people with few skills, who wind up living among the ruins in some kind of post-apocalyptic quasi-urban state of nature.

Wouldn’t it be a better idea, if the government is going to meddle in this matter at all, for them to find ways to make the city more affordable? Not by doing things like building shelters and public housing — San Francisco spent $200 million last year — that’s $20,000 for each of their estimated homeless population — and homeless people famously don’t like shelters anyway. A city that simply allowed developers to build low-cost housing would see most of its homeless problem — in as much as the problem is that people don’t have homes — disappear.

But then we have to consider what low-cost housing means. ‘Low-cost housing’ isn’t even a term that’s used in the United States much. Instead, we say ‘affordable housing’, which is the first problem. If you’re Bill Gates, just about anything is ‘affordable’ housing. If you make your living by collecting tin cans, busking, and occasionally doing some manual labor, very little is affordable.

As near as I can tell, ‘affordable housing’ today means ‘housing that forty years ago would have been considered middle-class, and which is today just a cut-down version of modern middle-class housing’. The smallest house on the National Affordable Housing Network website is this one :a 900 square-foot, two-bedroom, one-bath house with a good-sized eat-in kitchen and a living room.

At Affordable Housing Online, we find apartments like this one in Washington, DC: $817 a month for a 500-square-foot, one-bedroom, one-bath apartment with full kitchen and wall-to-wall carpet.

Here’s a shocker: maybe poor people should not expect or be expected to live like middle-class people. Gasp! Maybe the reason poor people spend so great a chunk of their income on housing is that there’s generally no “poor” housing available, and they generally wind up in middle-class housing that they can’t really afford. You’d see the same problems with cars, if the cheapest car commonly available was a late-model Honda Accord.

The SRO (single-room-occupancy) hotel, which used to be the housing of choice for the very poor, has disappeared in most places. Cities that still have SROs generally have ordinances in place making it illegal to tear them down to convert them to other uses. Another well-intentioned plan, but one that really just ensures that nobody will ever again enter the SRO business in those cities with an idea of making a profit — even as it encourages current SRO operators to get out of that business, now a roach motel, using any loophole they can exploit.

And even if it weren’t for that, it’d probably be impossible to operate an SRO profitably these days anyway. Very few Americans with any choice will choose to live in a place where they have to share a bathroom. This means that the SRO market is pretty much limited to the poorest of the poor. But these wretches are priced out of the SRO market by zoning laws and building codes in a lot of cities. Check out these requirements for SRO housing in San Jose:

- The Single Room Occupancy (SRO) unit shall have a living room of not less than 150 square feet (13.9 m2) of superficial floor area
- The SRO unit shall be provided with a separate closet
- Every SRO unit shall be provided with a kitchen equipped with a kitchen sink; however, that single room occupancy living unit facilities and single room occupancy residential hotels may contain partial kitchen facilities so long as a sink is provided and laundry facilities and kitchen facilities are provided on each floor accessible from a public hallway

This is all apart from a bunch of other requirements that the place has to meet, like accessibility and number of bathrooms and such. All these are also high-minded ideas that result in less housing being available, but I’ve tried to focus here solely on things that go toward making the SRO more comfortable for the residents — since the point I’m trying to make is that for people who can’t afford comfort, maybe some degree of discomfort is preferable to sleeping in the rain.

But in any case an SRO room in San Jose has to be at least 10’ x 15’, it has to have a separate closet, and it has to either have a kitchen or have kitchen and laundry facilities on the same floor. I give you ‘affordable’, ladies and gentlemen.

Nobody who is in a position where an SRO looks like an attractive option is going to be able to afford to live in such a palace; and very few people who can afford it will want to live there. This is why there are no such places. The city can pass all the ordinances it likes, but it cannot will a market into being.

(See this article for a rundown of how the government tries (and fails) to deal with the problems that are the result of the market distortion caused by their initial involvement. It’s a story about the tendency of immigrants to crowd into ‘affordable’ houses, doing the only thing they can to remove those quotation marks from around ‘affordable’.)

So here’s my point, the wisdom all of this has been leading up to: poor people need someplace to live. And more to the point, they need someplace to live that they can afford.

What poor people can afford is not, generally, as nice as what middle-class or rich people can afford. This is why most poor people have some plan to stop being poor at some point, and why rich people have a plan to avoid ever being poor. Poverty is personally undesirable and societally, in too great a dose, destabilizing.

But it’s impossible to eliminate poverty by simply making the manifestations of poverty illegal. In fact, if you make the manifestations of poverty illegal — I’m thinking here mainly of SRO hotels and the like — you’re likely to perpetuate poverty The would-be-SRO-residents and eker-outers become dependent on a complicated government framework in order to keep body and soul together, a framework that actually penalizes achievement (i.e. as your wages rise, so does your rent, automatically — but you’re still living in the same crappy place).

To solve the homeless problem, it’s necessary to stop believing the fiction that the market will not provide adequate housing for all but those totally incapable of earning any money, if left to its own devices. Housing for someone whose main source of income is redeeming Pepsi cans would not be pretty, it’s true. But this non-pretty housing would be preferable, to the can-redeemer as well as to society at large, to having the guy sleeping on park benches.

Or maybe not. As long as the culture forbids appropriate accomodation to the poor, it can speak of them as having “fallen through the cracks”, i.e. that they have slipped so far down the ladder that they’re no longer even members of society. Far better for society’s conscience, then, that a bum should fall through the cracks and freeze to death on a park bench, than that he should live an unpicturesque life in an SRO, within the bounds of society.

Posted by tino at 17:51 30.10.02
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I don’t understand why SRO hotels have been zoned out of existence in many large cities while college/university dorms have not. They are in essence the same thing. Only their clients/tennants differ.

Posted by: RRP at November 1, 2002 07:04 PM

Amen, brother.

I’ve had many a friendly chat with a friend of mine who works for the St. Louis Metropolitan Police Department. He used to be a beat cop; now he works in an administrative function due to an injury.

The interesting thing to note about St. Louis, which is itself a very cheap place to live, is that the modus operandi of the police department is to solve the crime problem by slowly sweeping the poor population OUT of the city. You do this by condemning housing for “drug activity,” and it has nothing to do with whether drugs are actually being sold on the premises.

If you don’t like what’s happening in a low-rent neighborhood, you condemn the buildings, until whole neighborhoods are burned-out shells. The point is that they’re VACANT burned-out shells. The people don’t disappear; they simply move on.

We could go on and on trying to divine the motives of the police department or what motivates these policies. Drug laws have a lot to do with it, as do business interests that would rather magically have nothing but middle-class 18-to-35-year-old tenants living in their properties. But the reality is that NIMBY is the social policy of this metropolitan area, and you’re right on track having noted that low-income housing has been made unavailable as a matter of policy.

Government, not market situations and not the great unwashed non-voting public, is the problem.

(grumble grumble)


Posted by: Ken at November 4, 2002 01:20 AM

I’m having trouble articulating what I want to ask, here.

I enjoyed this. It certainly makes a lot of sense to allow SROs to exist as an additional option for low-income folks, especially the working poor. Good stuff. Anyone who cares enough to get off the street should have that sort of option.

What I am wondering is this: While the existence of SROs will definitely fill a market void, will it really help diminish the “homeless” problem? Is this so much a “homeless” problem as it is a “inconsiderate individuals” problem (i.e., panhandlers, public urinaters, etc.)? I guess I’m wondering who those pesky homeless people really are that SF is trying to discourage, and whether the mere existence of SROs would change their behavior. My thought is that if you have a severe alcoholic who has $100, he’s gonna spend it on alcohol and sleep on a park bench, not spend it on a room in an SRO. If the police start kicking them off park benches, though, maybe they’d go to an SRO after all. Seems to me that both policies (allowing SROs and kicking people off park benches) won’t do much good on their own, but would work better in tandem. Unless there are any other ways to encourage people to use SROs?

Uh, I think I’m sort of veering off-topic and rambling.

Posted by: Evelynne at November 6, 2002 02:20 PM

Excellent post. Thanks!

Posted by: Chris Rasch at November 8, 2002 11:41 AM