I finally read Barbara Ehrenreich’s Nickel and Dimed, and was pleasantly surprised. Her runaway best-seller is what researchers call “radical ethnography”; to study low-skilled workers in America, Ehrenreich became a low-skilled worker in America. Ehrenreich mostly just walks us through her experiment: how she found work, where she lived, what the jobs were like, how she made ends meet. While there’s ideological commentary throughout, she’s less preachy than most of her competition. My favorite part, though, comes in the final chapter. Instead of simply complaining about low wages, Ehrenreich talks about the painful pairing of low pay with high housing costs:
Something is wrong, very wrong, when a single person in good health, a person who in addition possesses a working car, can barely support herself by the sweat of her brow. You don’t need a degree in economics to see that wages are too low and rents too high.
The problem of rents is easy for a non-economist, even a sparsely educated low-wage worker, to grasp: it’s the market, stupid.
Confession:
For a second, I was filled with hope that Ehrenreich was going to go full Yglesias and start denouncing our insanely strict housing regulation. And as I read the next paragraph, the same hope returned:
If there seems to be general complacency about the low-income housing crisis, this is partly because it is in no way reflected in the official poverty rate, which has remained for the past several years at a soothingly low 13 percent or so. The reason for the disconnect between the actual housing nightmare of the poor and “poverty,” as officially defined, is simple: the official poverty level is still calculated by the archaic method of taking the bare-bones cost of food for a family of a given size and multiplying this number by three. Yet food is relatively inflation-proof, at least compared with rent. In the early 1960s, when this method of calculating poverty was devised, food accounted for 24 percent of the average family budget (not 33 percent even then, it should be noted) and housing 29 percent. In 1999, food took up only 16 percent of the family budget, while housing had soared to 37 percent.
Wise observations. Housing costs have exploded – especially in high-wage areas of the country. It is very hard for low-skilled workers to afford nice housing. And superficially, the problem is “the market.” Prices are high because developers produce so little housing.
Why, though, do developers produce so little housing? Regardless of their political views, almost any economist these days will blame government regulation. The physical cost of erecting buildings hasn’t changed much, but the political cost of erecting buildings has skyrocketed. Serious deregulation would dramatically increase the supply of housing, and sharply reduce its price. And don’t say, “Only for the rich.” Much of the regulation on the books – such as minimum lot sizes, height restrictions, and bans on multi-family construction – is consciously designed to zone out the poor.
So when Ehrenreich was decrying housing costs, she could have segued to, “Despite decades of free-market rhetoric, hardly anyone wants to see a real free market in housing. Yet almost nothing else would do more for the working poor.” Furthermore, she could have so segued without breaking character. There is no good reason why Ehrenreich couldn’t think everything else she thinks and advocate the abolition of a bunch of laws that deprive the poor of affordable housing.
Alas, she said this instead:
When the rich and the poor compete for housing on the open market, the poor don’t stand a chance. The rich can always outbid them, buy up their tenements or trailer parks, and replace them with condos, McMansions, golf courses, or whatever they like. Since the rich have become more numerous, thanks largely to rising stock prices and executive salaries, the poor have necessarily been forced into housing that is more expensive, more dilapidated, or more distant from their places of work.
This is plainly false. In a free market, the poor totally “stand a chance.” Given current prices and twenty acres of land, developers would much rather erect a massive apartment complex than twenty single-family homes. In desirable areas, however, getting such permission is almost impossible. And while developers will build in remote locations if they must, most would far prefer to build up in urban centers. Why don’t they? Because getting permission to make your building taller is like pulling teeth. For every skyscraper under construction in NYC, just picture all the landlords who would build a skyscraper of their own if the zoning authorities handed them permission.
What then is Ehrenreich’s solution? More government spending:
When the market fails to distribute some vital commodity, such as housing, to all who require it, the usual liberal-to-moderate expectation is that the government will step in and help. We accept this principle-at least in a halfhearted and faltering way-in the case of health care, where government offers Medicare to the elderly, Medicaid to the desperately poor, and various state programs to the children of the merely very poor. But in the case of housing, the extreme upward skewing of the market has been accompanied by a cowardly public sector retreat from responsibility. Expenditures on public housing have fallen since the 1980s, and the expansion of public rental subsidies came to a halt in the mid-1990s.
I can understand someone saying, “Deregulation isn’t enough.” But you could double the supply of public housing without making a noticeable dent in the housing shortage. Rent subsidies are much easier to scale up, but subsidizing demand without increasing supply is almost the definition of crazy policy. Furthermore, if you want to create high-paid job opportunities for non-college workers, a rapidly growing construction sector is a dream come true.
You could interpret all this as a “gotcha,” but I strive to be positive. Yes, Nickel and Dimed overlooked the fact that government grossly deprives the working poor of affordable housing. As far as Google knows, Ehrenreich’s continued to overlook this fact. What’s important now, though, is that she could and should join the long list of left-leaning thinkers who champion deregulation of housing.
So how about it, Barbara?
READER COMMENTS
Mark Z
Oct 14 2019 at 1:55pm
I had to read this book in college was unimpressed, both because it’s mostly just anecdotal, and because I’ve lived comfortably on a small income and still managed to have a decent savings rate. I’m certain I could get by on a full time minimum wage job. Simply put, she overstates how hard it is to be poor. Most of the people in tough situations she describes could drastically improve their situation by moving to a cheaper city, but most poor people in expensive cities choose not to. It’s hard to sympathize with a poor person struggling to make ends meet while living in Manhattan (or even Brooklyn or Queens) just as with someone struggling to make ends meet while leasing a Maserati. First step: get rid of the Maserati.
KevinDC
Oct 14 2019 at 4:51pm
I have to echo Mark in both his reception of the book and also with general life experience. I worked full time while going through college. I had no financial support from my family. We weren’t well off – my mom didn’t work much and didn’t graduate high school, and my father didn’t hold down job for longer than a two year stretch until he was in his mid to late 40’s. I worked at Barnes and Noble, making a little more than minimum wage but not much. Some of the people there were in my situation – working there as a step towards something better. But many of the employees there were constantly making choices that made no sense to me – and invariably, these were also people who would frequently complain about the low pay and being “trapped” in their situation. Of this group, virtually all of them smoked – and smoking is expensive. I had been a heavy smoker (around two packs a day) before then, and quit to save money. (I resumed smoking after finishing college, but quit again a few years later for health reasons, this time for good.) After almost every closing shift, they’d go drinking at the TGIF’s across the parking lot. They apparently all had cable TV service plus Netflix and Hulu, at least judging from conversation. But whenever I would suggest that they could help their long term situation by trimming back along any of these margins in the short term, they would be outraged and would tell me that even saying that is “unfair” and “judgmental.”
Steve
Oct 14 2019 at 5:58pm
There’s…a lot to unpack there.
Alan Goldhammer
Oct 15 2019 at 8:07am
Washington DC mayor, Muriel Bowser, is supporting affordable housing according to today’s Washington Post. The key point in the article is getting such housing into the more affluent areas of DC which are mainly existing single family housing and not new construction. Old housing stock which ‘might’ be amenable to a voucher approach tends to be purchased by builders who knock down the old home and build a new one that can be sold for upwards of $1M. This is what we see happening in our area of Bethesda. Our 1955 split level is not desirable because of it’s floor plan, lack of ‘modern’ amenities, and flaky heating/cooling system. When the time comes, we plan to sell to a builder for cash and avoid a real estate commission.
Nobody builds affordable housing these days. Downtown Bethesda, MD (two miles away from where we live) is a sea of building cranes constructing office buildings, and high end condos and apartments. the county has some kind of regulation requiring a certain number of ‘affordable’ units in apartment buildings but it’s unclear whether that is working. The same goes for new housing developments. I think the regulation is that one ‘affordable’ unit must be built for every 20 ‘regular’ homes. Builders get around this by only putting up 19 units. ‘Affordable’ unit prices are regulated by the county and cannot be resold on the open real estate market.
NIMBYism is a major force as long as folks have a lot of equity in their homes. They don’t want to see affordable units, whether high, moderate, or low rise come into their neighborhoods.
Thaomas
Oct 15 2019 at 8:12am
The political problem for advocating more less regulation for more housing is that more than any other policy its strictly redistribution from the upper middle class, their core supporters, downward. Restrictive zoning is very popular with the people of the zoned areas. Until someone figures out a way to buy off the opposition, not much will be done. Better transit between low housing cost areas and high income generating ares will help.
Mark Z
Oct 15 2019 at 11:02pm
I think there’s something of a perfect storm on this issue. In the handful of cities I’ve lived in a remarkable number of poor renters favor NIMBY policies (call it a case of false consciousness I guess) to preserve the ‘character of the neighborhood.’ Even the renters in ‘historic neighborhoods’ like Greenwich Village tend to be critical of new development. Maybe after enough of the workforce just gives up and moves to Houston or Indianapolis it’ll stimulate a reconsideration of the status quo.
John Alcorn
Oct 15 2019 at 11:54am
If researchers in “radical ethnography” believe that they stand in the shoes of their subjects, they should think again. A radical ethnographer knows that she will return to her own life after going native. And she can’t shed her human capital from her own life while going native. For these two reasons, a truly poor person’s psychology will differ greatly from the radical ethnographer’s.
IronSig
Oct 15 2019 at 7:46pm
Ehrenreich emulated a set of ‘subjects’ in one respect; she didn’t economize. I first heard of her book when John Stossel interviewed her for 20/20. Stossel and his producers built a counterargument within the piece by interviewing a younger man who started (maybe even stooped to; I forget his background) a similar experiment at a minimum wage labor job. However, he stretched his resources: rice & beans, roommates, low luxeries and the rest of the Dave Ramsey boilerplate. Within months, he had enough set aside to buy a used pick-up, a raise and plenty more.
Sure, the young man ended the experiment after a year or so, but I doubt the results of his success at slumming it disappeared. Even if he never mentioned this escapade to an employer- and the employer never found it in a background check- I’ll bet this reinforced his conscientiousness.
Since the likes of Timothy Carney and Kevin Williamson’s differing diagnoses of the receding social capital in places like where I grew up, I’ve wondered if there were pieces of this story that Stossel & co. overlooked: did the young man find roommates though his church and social connections? Note that this possibility doesn’t disconfirm either Tim Carney concerns that “work teaches the responsibility that parents need” or Bryan’s diagnosis of low conscientiousness as a cause of poverty.
Michael Moran
Oct 16 2019 at 9:06pm
I think Mark Z ‘s comment is spot on. Living in NYC or San Fran or numerous other expensive cities is a luxury that the poor can ill afford. They need to move. Oklahoma City, Tulsa, Little Rock, Kansas City, Dayton, Sherman, and dozens of other mid sized cities in fly over country have low housing costs. The working poor need to move. No more wailing about government spending on affordable housing or market solutions by easing restrictions. Move, period, end of story. Then when the upper class in the coastal enclaves cannot get anyone to mow their lawn or do the other working poor jobs, they can find a solution.
Aderonke
Oct 18 2019 at 4:56am
Perhaps there are economic spillovers the poor enjoy living in such cities, just not enough to offset their rents.
There are lots of perks to city life, you know? So moving might not come as easily but I agree with Mark Z. They should cut the extras and live within reasonable means until they are sufficiently able to afford more. Does IQ play any role in this? Just asking.
Michael Pettengill
Oct 17 2019 at 10:26am
Housing is a problem only in Blue America where too much opportunity draws in too many people seeking detached single family starter homes.
The only way to have a steady supply of detached single family starter homes if higher taxes to build more roads, water and sewer, and schools.
Rezoning old mature single family to multistory multifamily will not increase the supply of detached single family starter homes.
In Red America, housing is generally in excess with housing being abandoned. This is due to lack of opportunity driving young people out.
The lack of opportunity is too low taxes funding creating what businesses need, skilled workers and access to markets and complement businesses.
I grew up in the 50s and 60s when what is now Red America want creating opportunity and taxing to pay to support new businesses and also build roads, water and sewer, and schools. Then, in Indiana, taxes became evil, and the town I grew up in my teen years shrank in the 70s, 80s, 90s. That town has cheap housing, but not much opportunity.
Note, there is Blue America in Indiana with housing costs “too high”, but the problem is affordable detached single family starter homes, which depends on building roads, water and sewer, and schools.
Water and sewer are critical to cut lot sizes to make the land cheap. Without, you need lots of area for a well, and then a distance away a large leach field, which are highly regulated for public safety. In some rural areas a dug well, outhouse, and a grey water pipe to the garden are allowed, if away from a lake.
Couples want houses for kids. When they can’t find houses, they take away apartments for singles, but delay kids.
But singles should be helping out old people whose kids are gone by boarding/rooming with them like when I was growing up in the 50s/60s, and before. One of my grandmothers took in boarders, and the other roomed with older people who generally needed a companion.
Aretae
Oct 19 2019 at 11:21am
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