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OCR Page 1 of 68Bruce Katz and Nicolas Retsinas
May 19, 2000
Where is Housing?
This Presidential campaign has been notable for the bipartisan rhetoric
directed at the plight of the working poor. Vice President Gore and Governor
Bush have both offered detailed proposals for expanding health care coverage,
investing in children and rewarding work. There is, at least rhetorically, a
growing consensus for the proposition that if you work you should not be poor.
Yet the candidates have offered only mini steps to alleviate the housing
burden faced by working families. Housing is, by far, the most expensive item in
the monthly budget of American households. The average household in the
United States spends 33 percent of its income on housing, 18.6 percent on
transportation and 5.4 percent on health care. In a cruel correlation, as family
income drops, the percentage spent on housing rises. Some 5.4 million poor
households spend more than 50 percent of their income for rent or live in
substandard housing, up from 4.8 million a decade ago when this unprecedented
era of prosperity began. More than four in ten very low-income households in
the Northeast and the West pay in excess of half their income for rent.
In many metropolitan areas, the affordable housing crisis has reached far
beyond the working poor. In some cities, teachers and police officers - as well
as millions of workers in the low-paying service and retail sectors - are hard-
pressed to find an affordable home. Companies located in the finance and
technology hubs -- Silicon Valley, Northern Virginia, Chicago, New York City -
struggle to retain and recruit employees who earn $50,000 and less.
Despite laudable efforts in Silicon Valley and elsewhere, solving the
affordable housing crisis is beyond the capacity of local corporate and political
leaders. The
problem is simple to explain, if difficult to solve: the incomes of low wage workers
have not kept pace with the costs of daily living. In many cities and suburbs, a
wage equal to double the poverty level is just not enough. In most communities,
we cannot expect the private market to construct affordable rental housing
without a government subsidy. Only 6 percent of all new apartments in 1998
rented for less than $450/month, considered affordable to families earning
$18,000.
This is a national challenge, requiring federal investments.
We recommend that Congress and the Administration consider three
policies. First, the federal government needs to close the gap between the
incomes of the poor (particularly those who work) and rents in the private market.
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