History testifies to this point. When the American labor movement rose up in the 1830s to demand higher wages, landed capital did not lock arms with industrial capital. Instead landlords rooted for the workers because higher wages would allow them to collect higher rents. History repeated itself 100 years later, when wage gains that workers had made through labor strikes were quickly absorbed by rising rents. In the interwar years, the industrial job market expanded, but the housing market, especially for blacks, did not, allowing landlords to recoup workers’ income gains. Today, if evictions are lowest each February, it is because many members of the city’s working poor dedicate some or all of their Earned Income Tax Credit to pay back rent. In many cases, this annual benefit is as much a boost to landlords as to low-income working families.44 In fixating almost exclusively on what poor people and their communities lack—good jobs, a strong safety net, role models—we have neglected the critical ways that exploitation contributes to the persistence of poverty. We have overlooked a fact that landlords never have: there is a lot of money to be made off the poor.45 The ’hood is good.
Exploitation thrives when it comes to the essentials, like housing and food. Most of the 12 million Americans who take out high-interest payday loans do so not to buy luxury items or cover unexpected expenses but to pay the rent or gas bill, buy food, or meet other regular expenses. Payday loans are but one of many financial techniques—from overdraft fees to student loans for for-profit colleges—specifically designed to pull money from the pockets of the poor.46 If the poor pay more for their housing, food, durable goods, and credit, and if they get smaller returns on their educations and mortgages (if they get returns at all), then their incomes are even smaller than they appear. This is fundamentally unfair.
Those who profit from the current situation—and those indifferent to it—will say that the housing market should be left alone to regulate itself. They don’t really mean that. Exploitation within the housing market relies on government support. It is the government that legitimizes and defends landlords’ right to charge as much as they want; that subsidizes the construction of high-end apartments, bidding up rents and leaving the poor with even fewer options; that pays landlords when a family cannot, through onetime or ongoing housing assistance; that forcibly removes a family at landlords’ request by dispatching armed law enforcement officers; and that records and publicizes evictions, as a service to landlords and debt collection agencies. Just as the police and the prison have worked to triage the ill effects of rising joblessness in the inner city (like social unrest or the growth of the underground economy), civil courts, sheriff deputies, and homeless shelters manage the fallout of rising housing costs among the urban poor and the privatization of the low-income housing market.47
Landlords like to describe themselves as a special breed. But they are neither alone in making a living off the poor nor are they so different from the rest of us. Large-scale historical and structural changes have given urban landlords the opportunity to make good money, sometimes spectacular money, by providing housing to struggling families at a cost the law has deemed fair and just. If given the same opportunity, would any of us price an apartment at half of what it could fetch or simply forgive and forget losing thousands of dollars when the rent checks didn’t arrive? Emphasizing the importance of exploitation does not mean haranguing landlords as greedy or heartless. It means uncovering the ironies and inefficiencies that arise when policymakers try to help poor families without addressing the root causes of their poverty. It means trying to understand landlords’ and tenants’ acceptance of extreme inequality—and our own.
Regardless of how landlords came to own property—sweat, intelligence, or ingenuity for some; inheritance, luck, or fraud for others—rising rents mean more money for landlords and less for tenants. Their fates are bound and their interests opposed. If the profits of urban landlords were modest, that would be one thing. But often they are not. The annual income of the landlord of perhaps the worst trailer park in the fourth-poorest city in America is 30 times that of his tenants working full-time for minimum wage and 55 times the annual income of his tenants receiving welfare or SSI. There are two freedoms at odds with each other: the freedom to profit from rents and the freedom to live in a safe and affordable home.48
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There is a way we can rebalance these two freedoms: by significantly expanding our housing voucher program so that all low-income families could benefit from it. What we need most is a housing program for the unlucky majority—the millions of poor families struggling unassisted in the private market—that promotes the values most of us support: security, fairness, and equal opportunity. A universal housing voucher program would carve a middle path between the landlord’s desire to make a living and the tenant’s desire, simply, to live.
The idea is simple. Every family below a certain income level would be eligible for a housing voucher. They could use that voucher to live anywhere they wanted, just as families can use food stamps to buy groceries virtually anywhere, as long as their housing was neither too expensive, big, and luxurious nor too shabby and run-down. Their home would need to be decent, modest, and fairly priced. Program administrators could develop fine-grained analyses, borrowing from algorithms and other tools commonly used in the private market, to prevent landlords from charging too much and families from selecting more housing than they need. The family would dedicate 30 percent of their income to housing costs, with the voucher paying the rest.
A universal voucher program would change the face of poverty in this country. Evictions would plummet and become rare occurrences. Homelessness would almost disappear. Families would immediately feel the income gains and be able to buy enough food, invest in themselves and their children through schooling or job training, and start modest savings. They would find stability and have a sense of ownership over their home and community.
Universal housing programs have been successfully implemented all over the developed world. In countries that have such programs, every single family with an income below a certain level who meets basic program requirements has a right to housing assistance. Great Britain’s Housing Benefit is available to so many households that a journalist recently reporting on the program asked, “Perhaps it is easier to say who does not get it?” “Indeed,” came the answer. This benefit, transferred directly to landlords in most cases, ensures that paying rent does not plunge a family into poverty. The Netherlands’ Housing Allowance operates in a similar way and helps provide good homes to nearly one-third of all its tenants. It has been remarkably successful at housing the country’s poorest citizens.49
There is a reason why these countries have come to rely on vouchers. Although vouchers are not everywhere the most efficient option—particularly in expensive cities—they are the best way to deliver a national program. In theory, you could solve the problem by expanding public housing, tax credits, homeownership initiatives, or developer incentives. But each of these options quickly confronts the problem of scale. Vouchers are far more cost-effective than new construction, whether in the form of public housing or subsidized private development. We can’t build our way out. Given mounting regulatory and construction costs, offering each low-income family the opportunity to live in public housing would be prohibitively expensive. Even if it weren’t, building that much public housing risks repeating the failures of the past, by drawing the nation’s poorest citizens under the same roof and contributing to racial segregation and concentrated poverty.50