Why America's Workers Can't Pay the Rent
Dreier, Peter
HECTOR CUATEPOTZO, a waiter at the upscale Miramar Hotel in Santa Monica, California, and an active member of the Hotel Employees and Restaurant Employees (HERE) union, lives in a tiny...
...Last year this cost Uncle Sam more than $63 billion in lost revenues...
...and H. Peter Oberlander and Eva Newbrun, Houser: The Life and Work of Catherine Bauer, University of British Columbia Press, 1999...
...and community organizing groups and community development organizations...
...Bryan's crib is nestled in one corner, Ashley's bed sits in another, and the parents' bed in another...
...THE HIGH COST of rental housing makes it difficult, if not impossible, for many families to save enough money for a down payment on a home...
...Unionized black males earn 15.1 percent more than black people in comparable nonunion jobs...
...Only 15 percent of families earning $30,000 to $40,000, and only 25 percent of families earning $40,00 to $50,000 received part of this homeowner subsidy...
...In its next contract negotiations, the union won a "housing trust fund," which required employers to pay seven cents per hour into a fund that would be used to meet members' housing needs...
...Wherever they live, working fami38 n DISSENT / Summer 2000 WHY AMERICA'S WORKERS CAN'T PAY THE RENT lies—even those such as the Cuatepotzos who make far more than the minimum wage—face a housing squeeze...
...Additionally, pressure from unions could also push for a revision of federal tax laws to enact a progressive homeownership tax credit...
...In general, union members have better housing conditions than nonunionized workers...
...But he can't imagine how he'll ever get there when his family lives paycheck to paycheck and can't put anything away for savings...
...In the 1920s, the Amalgamated Clothing and Textile Workers Union sponsored cooperative housing projects for its garment-worker members in New York City...
...The homeowner tax break hardly affects a wealthy family's decision to purchase a home...
...Hector also painted the walls and cleaned the carpet himself because the landlord refused to do so...
...The family has received several eviction notices for late payment, though each time Hector persuaded the landlord to let them remain after they borrowed money and paid...
...Warning about the specter of "socialism," the homebuilders, realtors, and banks fought vigorously against any public housing program at all...
...HECTOR CUATEPOTZO, a waiter at the upscale Miramar Hotel in Santa Monica, California, and an active member of the Hotel Employees and Restaurant Employees (HERE) union, lives in a tiny one-bedroom apartment with his wife, Maria, six-year-old daughter, Ashley, and infant, Bryan, who was born last October...
...The 40 n DISSENT / Summer 2000 nation's tax system allows homeowners to deduct both mortgage interest and property tax payments from their federal taxes...
...Unions can also join housing groups to push for municipal housing trust funds and state housing bonds that provide resources for developing affordable housing...
...But contrary to conventional wisdom, federal housing programs are not geared toward assisting the poor or toward average working families...
...Canada's cities have no slums and far fewer homeless people...
...Today, it represents only about 1 percent of the nation's housing stock...
...For example, about 75 percent of current union members own their own homes, compared with the national average of almost 67 percent...
...Those who did received an average of about $700 per year...
...Today, the gap has reached a record level of 4.4 million units-10.5 million poor renters and 6.1 million low-income units...
...This erosion is a major reason for the nation's declining wages and widening economic disparities...
...He serves on the boards of the National Housing Institute and the Southern California Association for Non-Profit Housing, as an editor of Shelteiforce magazine, and on the editorial board of Housing Studies, an international journal...
...The wealthiest 1.5 percent of all taxpayers (those with incomes over $200,000) received more than one-fifth of the $63 billion in homeowner tax breaks...
...They earn slightly too much to be eligible for many HUD programs for the poor, but they don't earn enough to take advantage of FHA mortgages or homeowner tax breaks...
...The shortage of affordable housing undermines the local business climate and makes it difficult to attract and retain an adequate workforce...
...The average annual income for families living in public housing is $9,500...
...for whites, the union "wage premium" is 14.9 percent...
...Hector, who has worked at the Miramar since he arrived from Mexico ten years ago, would like to own his own home someday...
...Today, these two programs reduce the cost of homeownership so that families earning about $40,000 can purchase a home in some parts of the country...
...He declared that the Republicans should update their slogan of "two cars in every garage" to "two families in every garage...
...This situation shows that a "rising tide" not only doesn't lift all boats, instead it raises rents and home prices...
...There is nothing more un-American than a slum," he proclaimed in a typical campaign speech...
...These homes—which still exist—were spacious and well designed, with playgrounds for children, art and education programs for tenants, and lots of political activity...
...The Cuatepotzos are eligible for federal housing subsidies, but the wait to get a unit in Los Angeles is typically five years or more...
...According to a recent report by the Citizens Task Force on Slum Housing, in Los Angeles at least 150,000 apartments—one in nine—is substandard...
...NOW THAT organized labor is on the rebound, it should play an important role in reshaping the nation's housing policies and improving the housing standards of America's working families...
...In recent years, local unioncommunityclergy coalitions have worked successfully to enact living wage laws in more than thirty cities...
...The most telling indicator of the housing shortage is the gap between the number of lowincome households and the number of rental units affordable by the poor...
...PETER DREIER is professor of politics and director of the Urban & Environmental Policy program at Occidental College...
...During the 1950s and 1960s, the FHA practiced redlining, refusing to insure mortgages in many cities, which helped to fuel the middle-class exodus to the suburbs and contributed to the decline of many cities and urban neighborhoods...
...Moreover, if income disparities continue to widen, disparities in housing conditions will widen too...
...Federal housing assistance for the poor is not an entitlement, as is the case with food stamps or Medicaid...
...Until the depression, however, most American opinion leaders believed that the private market—with a helping hand from private philanthropy—could meet the nation's housing needs...
...Few unions, however, have utilized this provision to bargain for housing benefits—whether employer-sponsored mortgage assistance or rent subsidies...
...The lobby also pressured Congress to provide only enough funding for the design and building of unattractive, box-like structures...
...Thanks to Hector's union, the family has medical insurance, but it doesn't include dental coverage...
...This undermines the economic health of local businesses and neighborhoods...
...Millions of Americans live in overcrowded buildings with serious health and safety problems...
...Finally, unions can push for a strengthening of the Community Reinvestment Act (CRA), the federal anti-redlining law that has primarily been used by community groups to pressure banks to provide more home mortgage DISSENT / Summer 2000 • 43 WHY AMERICA'S WORKERS CAN'T PAY THE RENT loans to working-class families...
...Although the nation's overall homeownership rate is now at an all-time high, this is primarily because people over age fifty-five—the pre-baby boom generation—purchased their homes when housing was more affordable...
...More important, the real estate lobby pressured Congress to limit public housing to the poor (so it wouldn't compete with private builders) and to give local governments discretion over where the housing would be located...
...Working families need help paying the rent—or buying a home...
...In fact, according to a new study prepared by the National Low-Income Housing Coalition, there's no city in the entire country where a family living on the minimum wage can afford a typical apartment...
...According to Housing and Urban Development (HUD), about 2.4 million working renter households with incomes under $25,000 spend more than half of their incomes on housing or live in severely substandard housing...
...Most middleclass families received little or nothing...
...They have to fend for themselves in the private marketplace...
...and 1.5 million households reDISSENT / Summer 2000 n 39 WHY AMERICA'S WORKERS CAN'T PAY THE RENT ceive tenant-based rental certificates or vouchers that allow them to pay for private rental units...
...Unions are also a force for greater economic and racial equality...
...DURING THE postwar boom years, organized labor continued to support federal assistance for low-income housing but also pushed for government-backed lowcost mortgages (through the Federal Housing Administration, now a branch of HUD) for the increasingly middle-class union members...
...Several times Hector has asked the manager not to yell at Ashley for running in the hallways...
...From 1984-1992 he served as senior policy adviser to Boston mayor Ray Flynn, focusing primarily on housing issues...
...All four sleep in the same small room...
...This leaves almost twelve million poor households eligible for federal housing subsidies who do not receive them...
...Organized labor has not only been a key supporter of these homeownership programs, but has helped lobby Congress to require FHA and Fannie Mae to target their programs to families and communities with modest incomes and minority areas redlined by major banks...
...By contrast, families with average incomes receive hardly enough government help to buy a modest bungalow...
...Even when Maria was working as a cashier for Polio Loco, before Bryan was born, the Cuatepotzos had problems paying the rent...
...Again...
...In 1948, President Harry Truman made addressing the postwar housing shortage a key part of his come-from-behind re-election campaign...
...Only the poorest of the poor—and few, if any, union members—now live in public housing...
...Many working families—even those with incomes above the official poverty line—have serious housing problems...
...Three-quarters of the wealthiest families received a tax break—an average of more than $8,000 per family...
...After paying for food, gas and car repairs, and other necessities, the family has no money left and is frequently in debt...
...Several unions established banks, credit unions, and building-and-loan societies to offer low-interest mortgages to members...
...Moreover, according to HUD, the housing situation of the working poor has been growing worse...
...Most depression-era unions had housing committees devoted to lobbying for government action...
...When the hotel owners' association claimed that the union had no legal authority to do so, Local 26 led a successful campaign to amend the nation's labor laws in 1990 to allow unions and employers to provide housing assistance to workers under collective bargaining agreements...
...The unions and housing reformers battled with the private real estate industry, which feared competition from welldesigned government-subsidized housing...
...It is WHY AMERICA'S WORKERS CAN'T PAY THE RENT 18.7 percent for Latinos...
...Housing policy lacks a coherent and well-organized political constituency...
...But unions could push to expand the CRA into new areas— for example, by looking at whether banks make loans to corporations that use sweatshops or export jobs overseas...
...Union strength, which reached a peak of 35 percent in the mid-1950s, allowed American workers, especially blue-collar workers, to share in the postwar prosperity and join the middle class...
...Federal housing assistance for the poor (administered primarily by HUD) reached a peak in the late 1970s, declined sharply during the Reagan and Bush years, and increased slightly during the Clinton years...
...At the federal level, there's a need for unions to push to expand the HUD budget, particularly to provide funding for construction of affordable housing and for more Section 8 housing vouchers...
...But we can't expect Truman's style of leadership without well-organized grassroots pressure...
...All these trends suggest that the Sweeney regime has already helped change the political culture of the union movement...
...The unions achieved their goal of a government-subsidized housing program, but the provision for union-sponsored housing cooperatives was eliminated...
...The federal budget for low-income housing was slashed from $54 billion in 1980 to $13 billion in 1988 in inflationadjusted 1999 dollars...
...As early as 1914, at the American Federation of Labor's annual convention, unions called for government action to provide workers with low-cost housing loans...
...And almost four million homeowners with comparable incomes face similar housing problems...
...From its inception, public housing was stigmatized as housing of last resort...
...Many of HIT's projects involve the growing number of non-profit community development corporations in cities around the country...
...Waiting lists for subsidized housing are huge and growing...
...Local unions can also help community-based nonprofit housing developers identify good union contractors so that they can get the most out of paying prevailing wages...
...In 1965, the United Auto Workers formed the Watts Labor Community Action Committee in Los Angeles's black community and the East Los Angeles Community Union in the city's DISSENT / Summer 2000 n 41 WHY AMERICA'S WORKERS CAN'T PAY THE RENT Latino neighborhood, which, along with a variety of other job-training and small business programs, sponsored several hundred units of housing for low- and moderate-income people...
...Currently, organized labor's biggest involvement in housing is through the AFL-CIO's Housing Investment Trust (HIT...
...Hector earns about $20,000 a year in salary and tips (about $10 an hour, almost twice the state minimum wage...
...Its average workers are better housed than their American counterparts south of the border...
...The law was sponsored by Senator Robert Wagner [D-N.Y.], a close friend of organized labor who had also sponsored the National Labor Relations Act, often called the Wagner Act, which gave workers the right to unionize...
...In recent years, union membership has grown slightly, although it has not increased as fast as the size of the workforce...
...The deepening housing problems among workers with modest incomes should push organized labor to make housing policy a priority WHY AMERICA'S WORKERS CAN'T PAY THE RENT once again...
...Since 1981, it has invested over $3 billion in union pension funds in a variety of housing developments...
...It's my dream," he says...
...How can we expect to sell democracy to Europe until we prove that within the democratic system we can provide decent homes for our people...
...Since then, things have gotten worse...
...BY FAR the most significant missing component in the political coalition for housing is organized labor, the one constituency with large membership, a progressive policy agenda, significant financial resources, and the potential to engage in effective mobilization...
...Unions can piggy-back on these programs to make sure that banks where they deposit union funds are not redlining working-class neighborhoods and are making loans to union members and nonprofit groups that build low-cost housing...
...It is revealing that Canada has no comparable tax breaks for homeowners and its homeownership rate is about the same as the United States...
...In fact, unions were once at the forefront of the fight for decent housing...
...Housing is the most expensive part of all working families' budgets...
...Los Angeles, Pittsburgh, Boston and other cities have adopted "linked deposit" policies that require the local government to issue a report card on local banks, identifying lenders that fail to invest in urban neighborhoods...
...The nation's housing program for the middle class involves government-backed mortgage insurance administered by the Federal Housing Administration (FHA) and the creation of a secondary mortgage market to buy mortgage loans from banks and replenish the supply of mortgage credit (administered by the Federal National Mortgage Association, known as Fannie Mae...
...to 2 p.m...
...Getting unions more engaged in housing must start at the grassroots level, with housing advocates building relationships with local unions, working on issues central to labor groups (such as local living wage laws and organizing drives) and housing groups alike...
...Like their European counterparts, these reformers envisioned home ownership for the middle class as well as the poor...
...Unionized workers continue to have higher wages, better pensions, longer vacations and maternity leaves, and better health insurance than their nonunion counterparts...
...The economic collapse of the depression provided reformers with a political opening to push the radical idea that the federal government should subsidize "social housing" and help create a noncommercial sector free from profit and speculation...
...Hector often has to fix leaky faucets and the toilet himself because the manager claims the handyman is unavailable...
...From the 1970s through the 1990s, union membership has declined precipitously, reaching 15 percent of the workforce in 1998, the lowest since the Great Depression...
...America's largest housing program, however, primarily benefits the wealthy...
...In some cities, of course, the "housing wage" is much higher...
...Hector's thinking about getting a second job, but that would mean he'd hardly ever see his children...
...Organized labor created the Union Summer program and gave key support to the burgeoning campus antisweatshop movement...
...In other words, many working families— with and without union contracts—fall between the cracks of federal housing policy...
...Working families that pay too much for housing have less disposable income to spend on other goods and services, including other basic necessities such as food and health care...
...To name a few: • Low-wage workers often find themselves paying more than half their household incomes in rent and still living in slum buildings...
...Fifty-nine percent of poor renters4.4 million households—spend more than half of their income just to keep a roof over their heads...
...And it is no coincidence that the decline of organized labor's membership and political clout during the past few decades has coincided with the sharp drop in federal housing assistance for low- and moderate-income families...
...Nationwide, more than 80 percent of poor renters—six million households—spend at least 30 percent of their income on rent and utilities...
...Indeed, it is unlikely that a renewal of progressive politics is possible in the United States without a stronger labor movement...
...Progressive housing advocates have such low expectations that token gains—such as an additional sixty thousand housing vouchers in the latest budget— are greeted as major victories...
...The program helped finance 3,123 housing units in seven projects, including the 284-unit Carl Mackley Houses in Philadelphia sponsored by the Hosiery Workers Union...
...For the most part, the key 42 n DISSENT / Summer 2000 constituencies for federal housing policy are big-city mayors and local government housing bureaucrats...
...During that period, HUD shouldered more cuts than any other domestic agency...
...But Canada has a much larger and more politically powerful labor movement, which has played a major role in improving the housing conditions of the Canadian population...
...The Public Housing Act of 1937 was a compromise...
...THIS SYSTEM is not only unfair, it's inefficient...
...One welcome sign was Sweeney's presence at the September 1999 press conference announcing the National Low-Income Housing Coalition's Out of Reach report, documenting the wide gap between minimum-wage incomes and housing costs...
...Union leaders and housing reformers (including Catherine Bauer, who led the Labor Housing Conference and is the subject of two *Gail Radford, Modern Housing for America: Policy Struggles in the New Deal Era, University of Chicago Press, 1996...
...Despite the strong economy and low unemployment rate, working families face a severe shortage of affordable housing...
...According to the U.S...
...This housing crisis has serious short- and long-term consequences...
...In the late 1980s, Boston's HERE Local 26 surveyed its members and found that their biggest problem was the city's skyrocketing housing costs...
...Today, housing is a serious problem but barely recognized as a political issue...
...A few other unions, including the American Federation of State, County and Municipal Employees, the Communications Workers of America, the International Brotherhood of Electrical Workers, and the Bricklayers, have also used a combination of union pension funds and government subsidies to create housing...
...A new cohort of labor leaders at both the national and local levels—reflected in John Sweeney's election as AFL-CIO president four years ago—is now seeking to rekindle the "movement" spirit of activist unionism, in part by focusing on the low-wage sectors, made up disproportionately of women, people of color, and immigrants...
...fascinating new books*) hoped to turn these prototype projects into a permanent, large-scale government housing program for working-class families that would both create jobs and provide decent housing...
...In fact, the United States provides fewer housing subsidies for the poor than any other major democratic nation...
...Hector works the 6 a.m...
...In 1970, there were 6.5 million low-cost units and 6.2 million low-income renter households-300,000 more low-cost rental units than low-income renters...
...Last year alone, the HIT invested more than $488 million in housing projects—both rental and homeownership—with over 4,500 units...
...Under the CRA, federal regulators can punish a bank that persists in mortgage discrimination...
...Organized labor has a crucial role in rebuilding the political coalition that can fight for decent housing for all Americans...
...Labor's efforts to successfully mobilize members for key congressional races in the 1996 and 1998 elections helped to narrow the GOP's grasp on Congress and helped turn back the Gingrich revolution...
...Reformers who wanted the government to play a major role in housing were rare...
...Wages are rising, but housing costs are spiraling upward even faster...
...The HERE/CCSM collaboration has helped union members find, apply for, and qualify for subsidized and market-rate rental housing...
...In San Francisco, for example, a typical two-bedroom costs $1,167 per month...
...Moreover, the problem is getting worse as the gap between the number of poor people and the number of low-cost private apartments has widened during the past three decades...
...Once again America faces a serious housing crisis...
...1.4 million households live in private, government-subsidized developments owned by private or nonprofit entities...
...Only one-quarter of the sixteen million lowincome renter households eligible for federal housing assistance receive any subsidies...
...This would help expand the good work of the AFL-CIO Housing Investment Trust, which formed a partnership with HUD to link union pension investments with federal housing assistance...
...For example, the homeownership rate among the thirty to thirty-four age group was 62.4 percent in 1978 and 53.6 percent twenty years later...
...In seventy metropolitan areas, minimum-wage workers would have to work more than a hundred hours a week to afford market rents in their area—that is, to pay no more than 30 percent of their income for housing...
...That's about three times the size of the entire HUD budget...
...At the same time, national housing and union organizations can begin working on common concerns, such as efforts to raise the minimum wage and fight for universal health insurance...
...The housing wage required to afford this typical apartment is more than $30 per hour...
...Rising housing costs require low- and middleincome workers to live farther and farther from their job sites, increasing traffic congestion and pollution...
...Even those who purchase homes find themselves overextended...
...Poor homeowners don't qualify for a tax break, and poor renters are shut out of this system altogether...
...Unlike the current approach, this credit would provide a tax break to working-class families who need help with down payments and monthly mortgage payments...
...But with $625 a month in rent and another $80 monthly for gas and electricity, the Cuatepotzo family spends more than 40 percent of its income on housing...
...It provides a referral system for members to get homeownership assistance and an information network to educate members about their rights as tenants...
...In late 1999, American households had an unprecedented level of debt, according to the Federal Reserve Survey of Consumer Finance...
...In the Los Angeles area, for example, HERE Local 814 is working closely with the Community Corporation of Santa Monica (CCSM), a local nonprofit community development group, to help members with their housing problems...
...But even the HIT typically needs federal government subsidies to make this housing affordable to families with modest incomes...
...It has since climbed back up to about $20 billion, but this is far below earlier levels...
...These constituencies are often at odds over major issues...
...HECTOR IS ONE of a growing number of American workers —even union members— who can't afford to pay the rent...
...These tax breaks disproportionately benefited those with the largest homes and the highest incomes...
...About 1.2 million households live in units owned by local public housing authorities...
...Census Bureau, among every age group under fifty-five, the homeownership rate has actually declined since the late 1970s...
...Based in part on the success of the garment workers housing cooperatives, unions pushed President Roosevelt and Congress to create a housing division within the Public Works Administration to make loans for housing cooperatives built by nonprofit groups and unions...
...private housing developers, landlords, and speculators...
...But this strategy is less effective in areas where home prices are high...
...shift and travels forty miles a day to work and back because rents are even higher in buildings closer to his job...
...It is also the one major political vehicle with the potential for organizing effectively across racial lines, across income groups from the very poor to the middle class, and across city and suburban boundaries...
...44 n DISSENT / Summer 2000...
...Union pay scales even helped boost the wages of nonunion workers...
...The available funds serve a small portion of those who meet eligibility criteria...
...Whites and blacks not only earn roughly the same wages, they both earn more than workers without union representation...
...The sixty-six-unit building, located in a rundown neighborhood in Los Angeles, has no place—inside or outside—for the children to play...
...The report compared the federal minimum wage ($5.15 per hour) to rents across the nation...
...In unionized firms, the wage gap between black and white workers is narrower than elsewhere...
...In the early 1950s, unions in New York formed the United Housing Foundation, which built thousands of cooperative apartments for moderateincome workers until the early 1970s...
Vol. 47 • July 2000 • No. 3
