How are 80% of Americans susceptible to homelessness and poverty?
A growing number of the population is living in poverty and becoming homeless.
The estimation, in the first ever eviction database, is that the rate of evictions is 4 per minute, 240 per hour or about 5000 a day in the US.
This post attempts to answer questions looking at the data:
- How much does it cost to get out of homelessness?
- Why is a living wage important?
- Why are 80% of Americans living pay check to pay check?
- What causes homelessness and poverty?
- How is the job market insecure?
- What solutions can help solve poverty and homelessness?
This post was one of the most difficult to write but in my opinion one of the most important.
How much does it cost to get out of homelessness?
The cost to get “on your feet” is the required to rent cost. Many people do not know about this cost. It is the top line shown in the chart below.
In the chart above the minimum wage is listed at part time and full time at the bottom. Near that is the cost of rent for a 2 bedroom apartment in CA.
Above that is the cost of living. This is the sum total of rent, bills, loans and so on. This varies by location.
Above that is the required to rent cost. This is an amount based on a set of conditions that land lords or banks are putting on individuals or families to get into a home or apartment.
The Required to Rent cost involves the following:
- Income has to be the rent amount x 3. So to rent a $1000 apartment you need to earn at least $3000 a month. That’s an $18 an hour job (math in the summary).
- Have to have first months rent, last months rent and deposit. So for a $1000 apartment that’s $3000 up front. For a $2000 apartment that is $6000 up front.
- Have to have 6 months to 1 year of work history (have to show pay stubs for 6 months).
- Have to have a “good” credit score (depends on bank or location in. In two locations it was 700)
These requirements are are what I was required to have to rent my own place after one year of unemployment across 6 different locations including CA and FL and numerous places in the midwest.
It didn’t matter that I had a $10k a month job scoring a 110% on the aptitude test. I was denied apartment after apartment because I did not have a long enough work history and a break in employment.
At other jobs where I made less I was denied apartments because my income was not 3x the rent cost. This is even when I had enough to cover rent and expenses.
Besides the requirements listed above I’ve seen and talked openly with property managers that have confirmed this and will deny applications based on these issues.
In summary, having a job does not guarantee shelter. It does not guarantee a way out of poverty or homelessness. However having shelter is a prerequisite to maintain a job.
Why are 80% of Americans living pay check to paycheck?
The cost of rent has been increasing year after year but wages have stayed the same.
In other words, in the past you could work hard, save up, purchase things and get ahead. Now hard work at a median income does not cover the cost of living in many places.
General Summary
Detailed charts:
As the rent has gone up people have been priced out. They have been displaced.
A larger and larger amount of people at the ends have been cut off. That cut off margin is growing year after year from low income to median income. If you are in a higher income bracket you may not even be aware of it or feel the effects of it.
The chart shows where you need to be to rent an apartment versus the pay scale of most common jobs.
This is commonly called gentrification. Being priced out of an area. The median income in 1970 was around $30k a year. The median income in 2019 is around $30k a year. That is no progress in wages compared to productivity or inflation.
Why is a living and thriving wage important?
Why is a living and thriving wage important to a society beyond the ethical reasons?
There are economic reasons why a living and thriving wage is important.
A thriving wage provides disposable income.
Without disposable income businesses (and the economy) forgo that income. If all of an individuals income or all of the household income goes to rent and expenses there is none left for anything else. There is nothing left for goods or services.
This is illustrated in the difference between an economically healthy wage and an economically unhealthy wage:
With a $3000 a month income there is $1000 of disposable income to go into an economy and keep it running.
Now look at what happens when all of your income goes to expenses.
With a $2050 a month income ($11.80 an hour) there is $50 of disposable income to go into an economy and keep it running.
What are poverty wages, starvation wages, living wages, thriving wages and real wages?
These terms can be broken down into what are economically healthy wages and an unhealthy wages.
When the majority of people have living and thriving wages a large percent of that goes into an economy as shown above.
What does a society look like when 80% of a population has $1000 a month of disposable income versus a society where 80% of the population has $50 a month of disposable income?
Businesses need people to have money to spend on their products and services or the businesses fail. When those businesses fail, they go away. Imagine a country store that doesn’t have any customers. If the stores go away where will the people get their food?
When the majority of people are at poverty or starvation wages it’s economy and it’s people suffers. They have no upward mobility.
What the American Dream, which can be the dream for anyone anywhere was that,
“…life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement” regardless of social class or circumstances of birth.
What it was social promise that anyone who worked hard would be able to afford a decent life including a home, a car, food.
Without that opportunity, without that promise to get ahead, where you have to pay to live, where you are renting life, not able to move up or out of poverty, life becomes an oppressive thing. See below.
While it is stating the obvious poverty and homelessness is miserable. It is painful and stressful. No one in my life but one person chose to be homeless and their choice was partially based on economic reasons.
What causes homelessness and poverty?
Based on the data it comes down to a few things:
- High cost of living- A person has full time work but rent and bills are much higher than the average and not affordable. In other words expensive housing, utilities or food.
- Low pay- Cost of living is affordable but the pay of the job is too low. For example, waitresses in small towns being paid $2 an hour and told that’s fair.
- Low hours- Cost of living is affordable and pay is adequate but the amount of hours are too low.
- Resource blockade- Many people are homeless because the state blocks them from building homes. The state blocks people from building homes and growing food. In the past the right for all living beings to fend for their own survival was enshrined as the right of estover. In other words we, as a people, create homelessness by not allowing people to build homes on common lands (the commons). We collectively cause homelessness by being *s to poor people.
- Insecure job market. Today’s job market is a non-dependable resource for providing a stable income source. It excludes you if you don’t have the skills it needs when it needs it where it needs it. See section below.
- Evolution of Work — The work market has gone from full time, 40 year salary man model with pensions to part time, no benefits, contract or tasked based work where 94% of new jobs are impermanent work.
- Technological Unemployment — When a company automates an existing job or a new technology makes an existing job unnecessary or obsolete (digital cameras making film based work obsolete).
- Broken social safety net- The social safety net, while working for some, has failed to support many others. Our grand parents and great grandparents saw great suffering during the Great Depression and helped create a program to handle the insecurities of the economy. But today it is only a shell of what it was and is more similar to the workfare seen in the days of Charles Dickens. Some call the changes austerity.
- Disability or Mental Illness- Statistics show that a portion of homeless population have mental illness or a disability yet the social safety fails these individuals as well. Those with diagnosed are still made to be homeless for a year and have to avoid all jobs to receive any benefits. This is how the social safety net is broken. Even the people we agree without question should be supported are not. Lifesaving time sensitive medicine administered late is the same as negligence and reckless endangerment.
- Burnout- According to reports, “95 percent of human resource leaders admit employee burnout is sabotaging workforce retention”
- Lack of Community- Many lack a community and a support network to borrow from or to lend to during undue hardship. The lack of solidarity creates many social issues.
Insecure Job Market
How is the job market insecure?
- The job market is exclusive. If you don’t have the skills it needs it excludes you.
You can retrain but that takes 2–4 years. Student loans don’t cover the cost of it, any field you go into is not guaranteed when you graduate and the success rate of retraining is 0–13%. - The job market is temperamental. It doesn’t have a job when you need it, it has a job when it needs it.
- The market is indifferent to human needs. It is a mind without a heart. To make a profit it will redirect water from a river upstream destroying a community downstream. It will pour toxic waste into a river. It will pollute the air.
- The job market is saturated. With globalism billions of people entered the job market working at 1/100th of the rate. How can you compete with someone working 25 cents an hour in another country?
- The job market is vulnerable. Jobs are susceptible to being automated and outsourced.
We know that humans are time-sensitive beings who need food and shelter every day to survive. To function they need homeostasis (food, shelter, sleep, storage).
Without an income source people don’t have money for food or shelter.
The job market is insecure and incompatible with humans.
Are there solutions?
I don’t like to list issues without providing some suggestions.
- Restore the right of Estover. The right to procure necessities, food and shelter through your own means from the public domain, from the Earth.
- Restore The Commons and the awareness of it. The commons is the cultural and natural resources accessible to all members of a society, including natural materials such as air, water, and a habitable earth. These resources are held in common, not owned privately.
- Create self sustaining societies. Enjoy the free market of buying and selling but also create self sustaining environment. Separate basic necessities from other resources. Basic necessities are prerequisites to an economy.
- Reduce or abolish rent. Businesses and communities can thrive without rent costs. When all of your money goes to rent there is nothing left for the economy. History has shown revolutions and depressions are preceded by these inequalities.
- Provide a tax dividend to every citizen. Everyone, rich and poor pays taxes already. That money is sometimes spent wisely and sometimes wasted. As a citizen your survival has higher priority than a $400 haircut or a new park. Return a portion of taxes to citizens for them to see fit how best to use it in their own community. A bureaucrat behind a desk does not know how best to spend that money. Give every citizen an allowance and a portion of responsibility and freedom to improve their own lives or their own communities. Some call this a unconditional basic income. It must be unconditional because through out all of history people have been susceptible to an intrinsic flaw of being conditional to each other even on basic survival goods in societies of abundance.
- Switch to a VAT tax. A value-added tax (VAT), is a type of tax that is assessed incrementally at each stage of production or distribution. However, a VAT is collected by the end retailer and is usually a flat tax, and is therefore frequently compared to a sales tax.
This is a common form of tax all around the world except the US and is more progressive and simple than other forms of taxes. - If rents exist tie it to the minimum wage and 1/3rd of public tax dividend and make it rent to own per tenant or per all tenants
- Tie the minimum wage to inflation. If minimum wage is $7 an hour (that is $1256 a month) then rent would be 30% of that.
- Reduce the cost of living. Why is it as soon as a food or product enters the US it’s price is increased 10x? Hint: high cost of goods is related to high cost of living.
- Limit the number of properties people or businesses own
- Give the inflation balance to the citizens to spend rather than the banks
- Build tiny homes, flop houses, and single room occupancies
- Contact your local and state representatives. Show them the math.
- Share what you are going through with friends and family. Don’t suffer in isolation. Show them the math.
- Remove the required to rent limitations
- Allow street vendors again
The cost of living is much cheaper in many parts of the world. It’s possible.
Obligatory memes at the end.
This is an introductory post. Data can be found here. Please review.
Math
To determine the numbers the following was used:
$1000 rent * 3 x income = $3000 required to rent
$3000 required income * 12 months / 52 weeks / 40 hrs a week = $17.30 an hour
$2000 rent * 3 x income = $6000 required to rent
$6000 required income * 12 months / 52 weeks / 40 hrs a week = $34.61 an hour
That doesn’t include the $3000 or $6000 downpayment (first month, last month, & deposit), the minimum 6 months work history or credit score requirement.
That doesn’t include the cost of transportation, usually $3000 is the lowest for minimum reliable transportation required on the application of most jobs. This doesn’t include the car insurance, fuel or maintenance costs for transportation.
You can input your own rent in the chart provided in the link here.
