America’s Eviction Problem

A trivial incident — kids throwing snowballs at a car. Next thing you know, Arleen, a single Milwaukee mother, is evicted. Sheriff guys give her a choice: all her stuff dumped on the sidewalk, or taken to storage, where she can pay $350 to reclaim it.

Arleen doesn’t have $350.

So begins Matthew Desmond’s book, Evicted: Poverty and Profit in the American City.

Words like “profit” and (on the cover flap) “economic exploitation” set a tone. “Landlord” has always been a dirty word too. Landlords are way outnumbered by renters, so the politics, and the common narrative, are against them. Stalin and Mao demonized them to justify their murder. Desmond doesn’t go so far, but does think landlords “exploit” poor tenants and make excessive profits.

There seems to be an idea that housing is somehow “out there,” like handed down from God, with landlords sort of leeching onto it to suck profit. Not that housing is a good that landlords provide to tenants, earning some just compensation for their investment and efforts.

But a few pages into the book we meet Sherrena — a black woman of middle years and Arleen’s landlord. And just as Desmond does depict the trials and tribulations of renters, so too does he show those of landlords. “Profit?” Maybe — if they can manage to overcome all those things that can and do constantly go wrong. (I’m thankful to have my own different and very smooth business.) In the landlord-tenant relationship, it was often arguable who was “exploiting” whom. The “system” has a lot of aspects hostile to landlords. In Milwaukee, if there are more than three 911 calls in a month, the landlord faces fines, property forfeiture, and even jail. She has to file a plan for “abating the nuisance.” Usually that means eviction.

And what was Sherrena earning? Desmond estimates her net at about $10,000 a month, on three dozen inner city units. A nice income, yes, but not much above middle class par. Which she really worked hard to earn, negotiating hurricanes of hassles and headaches. (Desmond does profile another guy making about half a million running a trailer park with 131 units.)

New York has actually had a “Rent is Too Damn High Party.” And that theme seemed to pervade Desmond’s book, with poor people paying high proportions of their incomes in rent. Implying this contravenes social justice. The author even notes that rents for wretched slum dwellings are not greatly lower than for nice one ones in better neighborhoods.

So are the poor being gouged to subsidize better-off tenants? Of course not. As the book shows, slum apartments actually entail a lot of operating costs landlords don’t face in nicer areas. Like apartments constantly being trashed. (One flat incurred repeated plumber visits because the tenants kept throwing crap down the drain.) All the court costs for frequent evictions. The mentioned 911 problems. The constant hassle of chasing after overdue payments. Et cetera. Excessive profits? Considering what landlords have to put into the business? If rents were lower, who’d want to supply tenants with apartments?

In the final analysis, this is a highly competitive free market, with multitudes of suppliers, and rents determined by supply and demand. I kept wondering: if profits are so great, why aren’t guys rushing to build more apartments? (Expanding the supply, which would drive down rents. That’s how markets work.)

But again, being a slumlord is actually a fraught business. A lot of it is due to the life dysfunctionality rampant among lower income renters. The picture is sadly familiar from books like Hillbilly Elegy and Our Kids. Drugs, alcohol, lack of education, casual violence, marital/family/relationship chaos, and much involvement with the criminal justice system. It’s wrong to blame the poor for their poverty. Anyone born into such an environment is greatly handicapped in life from the start. Yet in so many of Desmond’s stories, folks make some really bad choices. He offers the psychologically understandable explanation that, with lives full of difficulty and uncertainty, poor people tend to prioritize the “now” over the future, while also withholding their full energies from today’s problems, to keep some in reserve for tomorrow’s.

Yet there’s actually a simple, almost foolproof formula for avoiding poverty: finish high school (at least), don’t have kids before you do, and stay sober. Easy to say, hard to do, if you’re born into poverty.

Desmond makes a good case that the eviction problem is huge: poor Americans just cannot afford market rents. They juggle rent bills with utility bills, unable to keep their heads above water. In all the book’s many stories, the main income sources were government benefits of one kind or another; very little earned by working. Many people are just not realistically employable in today’s economy. Government hand-outs aren’t enough to keep their heads above water. The result is rampant evictions, which devastate their lives, psychologically as well as materially. They often lose their possessions. An eviction makes it much harder to find new digs. Landlords don’t like to rent to people with evictions on their records. It even disqualifies them from government housing assistance programs!

I am no “bleeding heart” liberal. In reading a book like this it’s hard to project myself into the skins of the people portrayed. For me a big hassle is when the DVR doesn’t work. What can it feel like to be evicted, made homeless, all your stuff dumped at the curb? With small children no less. Yet I can imagine it at least a little bit; and it’s really really bad. These are human beings, like you or me. I’ve been lucky. The cosmic lottery could just as easily have given me a life like theirs. And don’t say with all my brains and character I’d have surmounted it. That’s nonsense. Born into such circumstances, I would not be the me I know.

One seemingly obvious answer to the mess that is the housing picture for poor people is for the government to step in and, instead of trying to regulate the market, to simply provide housing itself. In fact, we tried that; it proved a massive disaster. So nowadays the government’s intervention largely takes the form of “Section 8” vouchers, paying part of some poor tenants’ rent. Though Desmond notes the voucher amounts are calculated by reference to average rents in an area — including both slums and nice districts. Thus they’re above the average for slum housing — seemingly a windfall for landlords. (On the other hand, many landlords refuse to accept “Section 8” tenants.)

The book doesn’t mention rent control. It’s been said that the two most effective ways to destroy a city are carpet bombing and rent control. Because it disincentivizes landlords from maintaining properties and developing new ones, so the housing supply doesn’t meet demand. Googling, I found that Milwaukee does have some rent controls, but couldn’t readily find details. I stumbled upon the Milwaukee Housing Authority’s web page, which mentions providing some public housing. Also that the waiting list for Section 8 vouchers is currently closed!

Desmond doesn’t mention this either, but for all the chatter about “affordable housing,” cities typically defeat that by also restricting supply through zoning rules, height and density limits, etc. A study by economists Tang-Tai Hsieh and Enrico Moretti estimates that removing such restrictions in just three cities (NY, SF, San Jose) could boost U.S. GDP by 9% by enabling more people to live in them. Some cities have made a “grand bargain,” removing building restrictions in exchange for requiring developers to offer some units at below-market rents.

Desmond’s main recommendation is to expand the voucher program to simply cover all families below the 30th income percentile. He cites a 2013 estimate that this would cost $22.5 billion nationwide, even without changing the averaging formula that he says favors landlords, and without considering offsets like less homelessness with its associated public costs. That $22.5 billion is hardly more than a rounding error in a federal budget with trillion dollar annual deficits.

The book shows government programs for the poor are a convoluted cat’s cradle with highly arbitrary results. Desmond’s proposal for a simplified and widely available housing voucher program might be a step in the right direction. However, it’s become obvious that federal college tuition help has had the perverse effect of enabling colleges to ramp up their fees. I’d fear that expanded housing subsidies would similarly push rents up.

A better approach would actually go further: ditch all the Rube Goldberg welfare programs (and all the huge bureaucratic costs they entail), supplanting the whole mess with one simplified program: a guaranteed annual income.

This would face up to a growing reality. Increasing technological sophistication makes the world richer, but many people are left behind. Simple humanity demands sharing with them a part of those riches. We can afford it. The cost would be a fraction of what’s spent for far less compelling purposes.