Category Archives: Poverty & income gap

Stay Put, Young Man, Stay Put

Posted on August 17, 2018 by | 18 comments

Source: Commonwealth Institute for Fiscal Analysis

The Commonwealth Institute for Fiscal Analysis has published a useful reminder of how job and wage growth has bifurcated in Virginia — jobs and wages have increased smartly in Virginia’s major metro areas since the recession but have lagged markedly in non-metro Virginia.

The trends, which reflect the larger urban-rural divide nationally cannot be reversed, notes CI, but they can be ameliorated. “State lawmakers have some specific options on the table that could offer an economic development boost to rural Virginia.”

What do all of those options entail? Tax breaks and rural subsidies targeted to helping lower- and middle-income households. Expanding Medicaid. Eliminating the work requirement for receiving Medicaid. A bigger state Earned Income Tax Credit (EITC). State investment in roads, bridges, and broadband. CI doesn’t advocate showing infrastructure money indiscriminately on localities — investments should be “placed based” reflecting the needs of local communities — but the approach is all about subsidies and wealth transfers.

Virginia already has an entity — the Virginia Tobacco Region Revitalization Commission — that has been helicoptering money all over Southside and Southwestern Virginia for a couple of decades now with little discernible effect. The Institute doesn’t articulate what criteria should be applied for dispensing the cash any differently. 

What CI does says forthrightly is that “asking rural Virginians to move to jobs isn’t a solution.” 

Why not?

Americans throughout their history have been moving to areas of greater opportunity. As Horace Greeley famously proclaimed in the 19th century, “Go west, young man.” In the early 20th century thousands of farmers and immigrants migrated to the Central Appalachian coalfields, and when the coal industry withered, they moved on. African-American sharecroppers migrated from Southern rural areas to greater opportunity in the urbanizing North. In the 1930s, Okies choking on the Dust Bowl moved to California. And so it has gone. But for some reason, CI has ruled out moving from rural areas whose mill-town manufacturing economies have been devastated by globalism and automation.”

I have penned innumerable posts on this blog suggesting strategies on how rural Virginia communities can revitalize themselves by selling access to mountains and the Chesapeake Bay, and investing in the kind of amenities that will attract retirees, nature lovers, resort-goers and small entrepreneurs. Are the Virginia mountains any less picturesque than North Carolina’s? Is Virginia’s portion of the Bay any less beautiful than Maryland’s? Why can’t we replicate the economic  success of western N.C. and Maryland’s Eastern Shore?

But even if Abingdon could become another Blowing Rock and Deltaville another St. Michael’s, there is a limit to how many jobs a tourism/resort/retiree economy can support. If our goal is helping people rather than helping regions, then we should encourage people to move to where the jobs are. The single biggest barrier to moving isn’t the lack of Medicaid or insufficient EITC, it’s the lack of affordable housing in Virginia’s major metros.

If we want to build a society around redistribution and the amelioration of poverty, fine, go with the Commonwealth Institute plan. If we want to build a society around jobs, opportunity, and upward mobility then our focus should be on mobility and affordable housing.

18 Comments

Posted in Economic development, Poverty & income gap

Tagged ,

The Social Cost of Domestic Violence

Posted on August 16, 2018 by | 9 comments

Intimate Partner Violence (IPV) accounts for more than one in seven violent crimes in the United States. Between 16% and 23% of American women experience IPV while pregnant. Social science researchers have suggested that domestic abuse affects not only the mother-to-be but her unborn children, but the social cost of the problem has been difficult to measure.

A new study by three women, two economists and a health policy researcher, have found a way to compare the outcomes of women subjected to assault while pregnant versus those suffering violence up to 10 months after the estimated due date. They estimate the social cost per assault during pregnancy of nearly $42,000, implying a total annual cost to society of more than $4.25 billion.

“We find that prenatal exposure to assault is associated with an increased likelihood of induced labor, which is likely a response of the healthcare system to injuries sustained by pregnant victims of abuse,” write the authors of “Violence While in Utero: The Impact of Assaults During Pregnancy on Birth Outcomes,” a working paper published by the National Bureau of Economic Research.

There’s something in this study for everyone. For law-and-order types, the study shifts the prevalent preoccupation with the injustices of mass incarceration to the victims to crime. In addition to the obvious victims, the women subjected to assault, there are invisible victims: the lower birth-rate babies. Oh, and let’s not forget the general public, which winds up paying the medical bills to treat those  babies.

For social justice warriors, the authors remind us that “violence in utero is an important potential channel for intergenerational transmission of poverty.” Indirect costs come from increased childhood disability, decreased in adult income, increased medical costs associated with adult disability, and reductions in life expectancy. “Our results imply that interventions that can reduce violence against pregnant women can have meaningful consequences not just for the women (and their children), but also for the next generation and society as a whole.”

The authors don’t address the oft-noted observation that the American medical system has higher infant mortality rates than other developed countries. But their research sheds light on that phenomenon. The implication is that the higher incidence of infant mortality represents a failure of the U.S. health care system. But perhaps it really represents a higher rate of domestic violence than in other countries.

9 Comments

Posted in Children and families, Health Care, Poverty & income gap

Tagged

Who Are These Guys, and Where Do They Get All Their Money?

Posted on August 15, 2018 by | 4 comments

Shenandoah Valley Juvenile Center

The report issued by the Northam administration investigating charges of abuse at the Shenandoah Valley Juvenile Center has come under withering criticism by nonprofit groups that filed a lawsuit last year bringing attention to the treatment of unaccompanied immigrant children held there. The Virginia Mercury has the story here.

While I used the Department of Juvenile Justice report as the basis for a blog post yesterday arguing that people were making much ado about a non-scandal, I have to concede that the criticisms of the report are substantive. By substantive, I don’t presume them to be valid. But they are are not frivolous. If I were reporting the story, I would deem them worth probing to see if they were valid.

An interesting sidebar to the controversy is the revelation of the existence of two nonprofit groups that revealed (or, depending upon your viewpoint, concocted) the abuses the first place. One is the Washington, D.C.-based Washington Lawyers Committee for Civil Rights and Urban Affairs. The other is the Henrico County-based disAbility Law Center of Virginia. Both pursue social-justice work. One hews to high standards of transparency; the other does not. 

The Washington Lawyer’s Committee (WLC) is forthright about its commitment to social justice — or at least a leftist perspective on social justice. States the organization’s Guidestar profile: “While we fight discrimination against all people, we recognize the central role that current and historic race discrimination plays in sustaining inequity and recognize the critical importance of identifying, exposing, combating and dismantling the systems that sustain racial oppression.”

The organization reported more than $5 million in revenue in its 2016 990 form, makes the forms accessible on its website, and lists 27 employees on its website. Unlike many nonprofits, the WLC is open about where its money comes from. in 2016 about $3 million came from “contributions and grants,” $830,000 from fund-raising events, and $1.8 million from “legal fees and court awards.”

Most impressively (from a transparency perspective), WLC lists many of its major donors, which include Wiley, Rein & Fielding, a K Street law firm ($414,000); Dentons US LLP, also a K Street Law firm ($173,000), and the Morrison & Foerster Foundation, a San Francisco-based foundation ($215,000); the D.C. Bar Association ($80,000); and Kirkland and Ellis, a Chicago law firm ($153,000), among others. WLC reported another $1.7 million in contributions from unnamed individuals who contributed less than 2% of total revenue.

What emerges is a picture of a well-funded activist group funded mainly by wealthy lawyers, which supplements its income by collecting legal fees and awards from the lawsuits its files. This is not a grassroots organization. It reflects the views of the nation’s liberal legal elite.

In describing what it does, WLC notes a special concern for “people of color, women, children and persons with disabilities [who] are disproportionately forced to live in poverty” (my italics). That may explain the connection with the disAbility Law Center of Virginia. which provides advocacy services across Virginia for people with disabilities.

The disAbilities Law Center is not nearly as transparent. Its 2015 990 form reported $2.9 million in revenue, and its website lists 34 employees. But the nonprofit did not reveal who its major contributors are. More than $2.6 million was classified as “Government grants (contributions),” another $109,000 was described as “National Disability Rights,” $61,000 came from “other attorneys fees,” and $4,000 from settlement fees. The nonprofit reported no revenue from membership dues or fundraising events. As with the WLC, it is safe to say that the disAbilities Law Center is not a grassroots organization, but rather relies upon generous benefactors. I would conjecture that the group’s priorities reflect the preoccupations of liberal elites, but further research is required to document the suspicion.

How does a nonprofit focused on disabilities get mixed up with a center holding illegal unaccompanied-minor immigrants? In its own description, the disAbilities Law Center is part of a “nationwide network of organizations known as ‘Protection and Advocacy systems,’ designed to offer an array of education and legal representation services to people with disabilities and to combat abuse and neglect in both governmentally operated and privately operated facilities.”

The federal government officially recognized the disAbilities Law Center in July 2018 as a group with “authority to monitor conditions and treatment in immigration facilities if those facilities have residents with disabilities.”

So, what does all this mean? The Virginia Mercury was the only media outlet to report today on the follow-up criticism to the report. Reporter Ned Oliver describes the groups as “advocates for the immigrant teens,” never mentioning their social-justice mission or the fact that they are part of a larger constellation of organizations seeking to influence public policy.

Now, this network may be totally benign and above-board. Or it may be part of a larger coalition of nonprofit and advocacy groups intent upon undermining the Trump administration immigration policy by filing lawsuits and generating publicity. I don’t know the truth of the matter. My point here is not to criticize either group, for I have no tangible basis for doing so, but to raise the kind of questions that the media should be asking when they report on the Shenandoah Valley Juvenile Center controversy. If a right-wing legal advocacy group were filing a lawsuit, the ideological orientation of the group surely would be noted in any story. The same rule should apply to liberal-progressive groups and their causes.

4 Comments

Posted in Money in politics, Not-for-profits, Poverty & income gap, Race and race relations

Tagged

Moneysaurus and the Trumpenproletariat

Posted on August 7, 2018 by | 22 comments

Since the end of World War II, the nonprofit sector has consumed an increasing share of the United States economy. Health care, which is dominated by nonprofit hospitals, now hogs an 18% share. The growth of higher education, an overwhelmingly nonprofit industry, continues to outpace the general economy. Millionaires and billionaires are converting wealth into non-taxable foundations on an unprecedented scale, supporting the proliferation of tax-exempt foundations and nonprofit enterprises.

There are now some 1.6 million nonprofit institutions in the U.S. employing 11.4 million people and comprising the third largest employer in the country after retail and manufacturing, according to the Independent Sector website. In 2016 the PHP Staffing Group reported that employment over the previous 10 years had grown 20%  for non-profits compared to 2% to 3% for the for-profit sector.

Americans typically think of the U.S. economy as divided between the government sector and the private sector. But that view grossly oversimplifies the modern American economy. The nonprofit sector, which comprises 10% of the economy, belongs in category by itself. Nonprofit entities are private in the sense that they are not government organizations. But they behave very differently from for-profit enterprises. Most importantly, they aren’t accountable to the public in the same way that government and corporations are.

Americans have a U.S. Constitution and 50 state constitutions with checks and balances. We hold elections to throw out politicians we don’t like. We have the right to attend public meetings and to petition the government. We have transparency rules governing access to information. We have a fourth estate which, though diminished in size and capacity, views its central mission as acting as a watchdog over government. Governance leaves much to be desired — gerrymandering is a travesty of democracy — but the public is acutely aware of the inadequacies, and people are working to fix them.

We have a different set of mechanisms to hold corporations accountable. Executives of U.S. corporations answer to boards of directors, to equity investors, to bond holders, to banks and other financiers, and, most dramatically, to the marketplace. Unlike failed governments, failed corporations go out of business. Their corporate DNA exits the economic gene pool. Government functions as an additional backstop against corporate abuses against the public health and safety.

To whom do nonprofits answer in exchange for the massive benefit of being exempt from taxes? Nonprofits do have boards of directors (or trustees) but they don’t have investors capable of overthrowing them in a shareholder revolt or otherwise enforcing accountability. Most nonprofit boards are docile; they rubber stamp management’s vision for institutional advancement. While nonprofits aren’t as immune to catastrophic failure as governments are, they don’t pay the same price that corporations do for failure. Indeed, nonprofits with large endowments can be immune to outside pressure. Not that anyone notices. Transparency standards are minimal compared to those for government and publicly traded companies. Billions of dollars of so-called “dark money” slosh through the nonprofit system with almost no oversight and accountability. Except when scandals erupt, the fourth estate considers nonprofit activities of secondary interest. 

The political economy of nonprofits. Nonprofit entities have fundamentally changed the nature of American society, the economy. and the political system. Americans have been astonishingly sanguine about the creation of a new set of winners and losers.

Who are the winners? There are two sets of clear-cut winners — the millionaires and billionaires who get to shelter their wealth, and the nonprofit managerial class that gets to administer it. Insofar as the nonprofit managerial class is comprised of university-educated progressives who prioritize social justice issues, poor people and minorities are intended beneficiaries. However, insofar as the therapeutic ministrations of social-justice minions are counter-productive — a point I have argued repeatedly on this blog — the poor and minorities may be in actuality more victims than beneficiaries.

Whatever may be the case in that particular regard, the priorities of millionaires, billionaires and nonprofit administrators rarely extend to the well-being of working-class and middle-class Americans — especially the alienated, white Trump-voting segment of the electorate whom some have labeled the Trumpenproletariat.

These biases are most clearly visible in the higher education sector. The number one goal of the managerial class at colleges and universities is institutional advancement: building edifices, programs, and bureaucratic empires that maximize the prestige of the institution. In the pursuit of this goal, the managerial class is responsive to two main constituencies: (1) affluent alumni and their offspring (commonly referred to as legacies) whose good will they cultivate for gifts and benefactions, and (2)  lower-income and minority Americans in alignment with the leftist, politically correct value system of academe. The Trumpenproletariat, representing some 40% or so of the nation’s population, has zero influence. Continue reading →

22 Comments

Posted in Not-for-profits, Poverty & income gap

Tagged

Graph of the Day: Virginia’s Declining Fertility Rate

Posted on August 6, 2018 by | 17 comments

Source: StatChat blog

The number of births in Virginia continues declining, reaching the lowest level in years in 2017 — only 100,248. A decade before, births had numbered 108,884.

Demographers Savannah Quick and Shonel Sen at the Demographics Research Group at the University of Virginia attribute the overall dip in fertility decline to a dramatic decline for 15- to 19-year-olds and 20- to 24-year-olds and a slight increase for 30- to 24-year-olds and 35- to 39-year-olds. In other words, many women are postponing childbirth, not choosing not to have children.

This is a classic good news/bad news story. The good news is that more women are taking control of their fertility in order to pursue education and improve their job prospects before having a child. Modern-day child-raising is an exhausting, all-consuming activity. It is all but impossible for women to hold down a full-time job, raise a child (or children), and continue their education — especially if there’s no father in the picture. The persistence of poverty in a society characterized by abundant avenues for upward mobility is, at its heart, a demographic issue. If lower-income women are having fewer children, fewer children will be raised in poverty.

The bad news is that the United States needs more citizens to enter the workforce and pay payroll taxes to help support a Medicare and Social Security system that is careening toward fiscal insolvency. But incremental changes in fertility are unlikely to make much difference. The Medicare and Social Security trust funds will dissipate before children born today can enter the workforce.

17 Comments

Posted in Demographics, Poverty & income gap

Tagged ,

Working? A Republican Anti-Poverty Plan Works?

Posted on August 1, 2018 by | 6 comments

Source: IRS.gov

“The federal EITC, together with the Child Tax Credit, lifted nearly 200,000 Virginians out of poverty each year from 2011 to 2013, including nearly 100,000 children.”

Lifted out of poverty.  Let that sink in a minute.  The writer of that sentence is admitting that the federal Earned Income Tax Credit lifts people out of poverty.  And it wasn’t even part of President Lyndon Johnsons’ Great Society but was enacted in the era of GOP Presidents Richard Nixon and Gerald Ford.

I lifted the sentence out of a report on the website of the Commonwealth Institute for Fiscal Analysis, which was called to my attention by a piece  distributed this morning by Virginia Mercury.  The people at the Commonwealth Institute also recognize that Virginia is poised for a long-needed discussion on tax policy, thanks to the opportunity provided by the major changes at the federal level.   It would be a perfect time to discuss again a refundable state version of the EITC, which the state has resisted because of the cost.

The federal EITC is refundable, meaning if the taxpayer has not paid in as much in taxes as the credit, the unused balance of the credit is paid out in cash just like a refund.  Virginia’s EITC is just a credit, and if the credit is larger than the tax owed the tax bill goes to zero but there is no cash-back refund.

The 2018 General Assembly defeated the most recent effort to convert the credit, House Bill 716.  The fiscal impact statement put on an incredibly high quarter-billion dollar price tag, which I suspect is wrong.  If it is not inflated, Virginia should be ashamed it is taking that much tax away from low-income families.

The Commonwealth Institute report noted that just over 80 percent of eligible Virginia taxpayers are claiming the federal credit, meaning almost 20 percent are ignoring it.  Even without converting it, it probably makes sense to get more people to file.  The size of the credit is tied to income and family size, and it’s possible many of the people taking a pass wouldn’t have much of a credit anyway.

When it suits some advocates for low-income programs, they ignore the real value of existing efforts that do provide cash or services to that population.  Note that the child tax credit is also mentioned as important, and other programs not listed keep people above abject poverty abound, supplemented by private efforts. Do the poor have it easy in this country?  Hardly.  But the entire picture needs to be seen.

As Virginia stumbles quietly toward a tax debate over whether and how to conform to the new IRS rules, a state refundable EITC deserves to be one of the big ideas.

6 Comments

Posted in Poverty & income gap, Taxes

Tagged

More Proof that Higher-Ed Sticks It to the Middle Class

Posted on July 18, 2018 by | 9 comments

Source: American Enterprise Institute

As the cost of attending top four-year college marches relentlessly higher, students from higher-income households are doing just fine: Their family incomes are matching the increase in tuition, fees, room and board. And lower-income students are faring pretty well, too: Scholarships and financial aid cover most of the rising costs. So, if the affluent and the poor aren’t suffering, who is feeling the pain? The middle class.

A new report by the American Enterprise Institute shows that the big losers from the higher-education business model for leading four-year institutions — aggressive increases in tuition and other expenses offset by generous financial aid for lower-income students — has suppressed college attendance by the middle class.

“We find that, contrary to popular perceptions, the share of students at the 200 more selective colleges who are from low-income families did not decline over the period we studied,” write Jason D. Delisle and Preston Cooper in “Low-Income Students at Selective Colleges: Disappearing or Holding Steady?”

After factoring in grant and scholarship aid, annual net tuition prices at selective colleges have increased by only $11,358 for low-income students since 1999-2000, after adjusting for inflation. For high-income students, the increase was $8,162. …

The strongest trend in the data is a decline in the share of students in the middle two income quartiles. In other words, the enrollment gains of high-income students in the mid-2000s came at the expense of middle-income students.

This trend has received relatively little attention from the education community and the national media. It suggests that the narrative regarding income stratification at selective colleges is only half right. Enrollment at selective colleges has changed over time, but it is middle-income students, not low-income students, are becoming less represented on these campuses.

In the 1999-2000 academic year, 39% of the students enrolled at the top 200 institutions came from the second and third income quartiles. By the 2015-16 academic year, the percentage had fallen to 29%.

 

Bacon’s bottom line: If you wonder why the American middle class is feeling all cranky and out of sorts, is voting for crazy candidates, and seems immune to the what’s-the-matter-with-Kansas narratives peddled by the intellectual elites, it’s because of things like this. Upper-income Americans are paying more for tuition than ever — but they can afford it. Their incomes are increasing, too. Lower-income Americans are treated with great solicitude by college administrations and boards of trustees (comprised overwhelmingly by handsomely paid elites) and given huge breaks on their tuition. The middle class, especially the second quartile (as can be seen in the graph above) is left sucking hind teat.

Combine what’s happening in higher ed with what’s happening in health care, another sector where costs are running out of control. Affluent Americans are insulated from rising medical costs because their incomes are rising. Meanwhile, the political class extends its solicitude to lower-income Americans by expanding Medicaid. What does the middle class get? Not much of anything.

Similar arguments can be advanced for the effects of energy policy, foreign trade, immigration policy and more. Then toss in the insufferable smugness, arrogance and moral condescension of elite opinion makers, and it’s no wonder so many working- and middle-class Americans feel alienated from the political status quo. It explains a lot about what’s happening in the country today.

9 Comments

Posted in Education (higher ed), Poverty & income gap

Tagged

Tennessee License Suspension For Unpaid Debts Ruled Unconstitutionally Unfair to Indigent

Posted on July 5, 2018 by | 13 comments

Image credit: novacriminalattorney.com.

A federal judge in the Middle District of Tennessee has ruled that Tennessee’s practice of suspending a driving license to compel the collection of delinquent court debts is unconstitutionally unfair to poor people.  She has ordered Tennessee to stop and to start restoring the licenses of people who simply could not pay, but an appeal is likely.

Similar cases are pending elsewhere including one in Virginia which was dismissed but is going back on remand. More than 40 states use the method in some form.  I have not yet been able to find the judge’s written opinion on line, but back in March she issued a memorandum laying out her likely reasoning for a summary judgement in favor of the debtors.

“The fact that it is difficult to collect debts from very poor debtors is a reality faced by people and entities, both public and private, in a wide array of circumstances; indeed, it is a problem as old, presumably, as debt itself,” she wrote.

Also: “Tennessee’s system has the actual effect of imposing a harsher punishment on indigent defendants than on non-indigent defendants based solely on their economic circumstances. A non-indigent defendant has a choice: pay or lose his license. Drivers like (plaintiffs) Thomas and Hixson, they argue, have no such choice. The plaintiffs challenge this differential treatment as unconstitutional pursuant to 42 U.S.C. § 1983.”

The plaintiffs also argued that license suspension is not an option for the collection of private debts, only court debts, 1s further evidence it was not fair.

My introduction to this issue came as the lobbyist for several Virginia law firms doing collection work for various local courts. About five years ago, in budget language that simply appeared in a final state budget document, an additional 17% fee was tacked on to all accounts sent out for collection. The attorney who initially contacted me wanted to know where that anonymous proposal came from, in part because he knew it made it harder for debtors to pay up.

In response to the pending Virginia case, the Virginia Supreme Court directed local courts to allow payment plans that took the defendant’s ability to pay into account. It is not clear whether that was the case in Tennessee or if that is a solution it may propose. It is also not clear yet if that has allowed more Virginians to get their licenses back. It is estimated that one in six Virginians have lost their license over unpaid fines and fees (which do not have to be driving-related at all).

The harsh reality is that state and local governments love this revenue. More than $470 million in fines and fees were assessed in Virginia’s courts in 2017, and more than $200 million were judged delinquent. As high as the basic fines have become, the processing fees and interest magnify the problem in delinquent cases. An annual state report tracks the collection of delinquent fines by the clerks, local commonwealth’s attorneys, local treasurers and a small group of private collectors. It does not appear that collections dropped off in 2017 because of the payment plans.

The even harsher reality is the opponents of this system are right that it ultimately is counterproductive to expect somebody who cannot afford to pay to dig themselves out of debt without basic transportation, which for most means a car. The end of this approach may be in sight, although the judge in her initial memorandum didn’t believe the system was unfair in the case of people who did have the ability to pay. Who decides what, and who is poor enough to be protected from that collection method? It will probably just go away.

13 Comments

Posted in Courts and law, Poverty & income gap

Tagged

A Partial Defense of RRHA Eviction Policies

Posted on June 21, 2018 by | 6 comments

Creighton Court, a public housing project run by the Richmond Redevelopment and Housing Authority. Photo credit: Richmond Magazine.

I never thought I’d find myself defending the Richmond Redevelopment and Housing Authority (RRHA), which I criticized last year for running up a $150 million maintenance backlog on its 4,000 public housing units. But the wheel of public policy debate turns in unexpected ways. Now, RRHA is being dinged for its high eviction rates.

Here’s the background courtesy of the Richmond Times-Dispatch:

Evictions in Virginia drew national attention earlier this year after a New York Times report on a nationwide study done by Princeton University’s Eviction Lab showing Richmond as having the second-highest eviction rate in the country, with Hampton, Newport News, Norfolk and Chesapeake also in the top 10.

How the agency chooses to pursue those who do not pay rent on time was the subject of a Richmond Times-Dispatch analysis, which determined no landlord in Virginia threatened to kick out more of their tenants last year than RRHA.

Needless to say, many if not most residents of Richmond’s public housing projects are living on the edge. They’re the poorest of the poor, subsisting on minimum wage jobs if they work at all. Sure, some may qualify for food stamps, earned income tax credits, Medicaid, the Children’s Health Insurance Program, Temporary Assistance for Needy Families, energy assistance, free cell phones, housing subsidies, legal aid, and other government-welfare benefits, not to mention soup kitchens, toys for tots, private-school scholarships, and a panoply of charitable programs, but their lives tend to be chaotic and they live paycheck to paycheck. All it takes is one financial setback, and they can’t find money for rent.

As the housing provider of last resort, RRHA arguably has the least credit-worthy customer base of any landlord in Virginia. I’m not the least bit surprised that it has the highest eviction rate.

Let’s ask ourselves, what would happen if RRHA adopted practices, either voluntarily or under compulsion of state law, to curtail evictions by means advocated by tenant-rights groups? What if RRHA extended the length of time for tenants to come up with the cash?

First, would late payments and eviction rates noticeably decline, or would tenants just adjust expectations push up against the new limits like they pushed up against the old?

Second, would RRHA suffer a diminution of cash flow?

And, third, if it did, what would be the consequences? Would RRHA have less money to pay for desperately-needed repairs? Put another way, to what extent would showing clemency to those who fail to pay their rent on time impact negatively those who do?

My problem with social justice warriors is not that they have compassion for poor people (some of whom deserve compassion and some of whom don’t), but that they propose remedies without taking into account the unintended consequences. No one knows the answers to the questions raised here. Some unintended consequences are entirely foreseeable, but no one seems to care.

6 Comments

Posted in Housing, Poverty & income gap

Tagged

Tenant-Rights Activists, Meet the Housing Shortage

Posted on June 20, 2018 by | 6 comments

Source: Joint Center for Housing Studies

The debate over tenant evictions is gaining traction now that the Virginia Housing Commission has taken up the issue. Two concrete proposals were put before the Commission during a Tuesday hearing. One would extend the time from five days to two weeks before rent is declared to be late. A second would give tenants more time to pay late rent before they are evicted.

Advocates for tenants rights and landlords differed over the wisdom of these proposals, and discussion bogged down when it became evident that there was insufficient data to determine what impact the proposals would have, reports the Daily Press.

Apparently, a critical question was never asked — why are rents rising and making housing so unaffordable for the poor and near poor?

Hopefully, members of the Virginia Housing Commission will pay heed to a new report issued by the Joint Center for Housing Studies at Harvard University, which illuminates how supply and demand are driving up housing prices and making rent increasingly unaffordable for lower-income Americans across the country. While the housing crisis is most acute on the West Coast and in the Northeast, the problem is getting worse almost everywhere, including Virginia.

As can be seen (if you squint) in the map above, the ratio of housing prices to incomes in the Hampton Roads, Richmond, Lynchburg, Roanoke, Blacksburg and Bristol metropolitan areas is between 3.0 and 3.9 — less oppressive than in many other metros. But in the Washington (Northern Virginia), Winchester, Charlottesville, and Staunton MSAs, the ratio is between 4.0 and 4.9 — on the high side.

Digging deeper, the Harvard study shows that the percentage of renting households experience a significant “cost burden.” Virginia metros aren’t the worst in the country by this measure, but they’re far from the best, as can be eyeballed below.


The root cause of unaffordability is that home building is not keeping up with population growth. Given widespread zoning barriers to new construction, developers focus their efforts on projects with the highest profit margins — housing that can be sold for higher prices to higher-income households. But the problem runs even deeper. Most localities have zoned entire categories of affordable housing out of existence. Single Room Occupancy buildings are outlawed almost everywhere. Boarding houses are illegal. Granny flats and garage apartments are discouraged in many localities. It is exceedingly difficult to get permission to build new trailer parks. Middle-class voters don’t want poor people living near them, and they wield the power of the state to protect their property values.

Tenant-rights activists are targeting the wrong problem. If they make it more difficult for landlords to collect their rent, landlords will convert their rental properties to more profitable uses — thus aggravating the housing shortage for the poor. Activists moved by the plight of the poor need to stop attacking symptoms and address the root problem: zoning restrictions that cause the housing shortage. Otherwise, they’re really helping no one.

6 Comments

Posted in Housing, Poverty & income gap

Tagged