When I was in high school I took a class my senior year that followed the secular personal financial management course from Dave Ramsey. Ramsey provides many practical lessons about money management and financial well-being. One area that he focuses on is how much of your income you should spend on different areas, such as on housing, groceries, and other necessities. Ramsey follows the standard recommendation that you don’t spend more than 30% of your income on housing, a great goal, but one that really isn’t a possibility for many Americans.
Kathryn Edin and H. Luke Shaefer examine the high cost of rent and how it impacts the lives of those living in poverty in their book $2.00 A Day, originally published in 2015. “Between 1990 and 2013, rents rose faster than inflation in virtually every region of the country,” the authors write. This has serious impacts for the lives of those living in poverty. One impact discussed by the authors, that I had not considered, was child custody. In some cities and states there are limitations on how many children can share a single room. At a certain point, too many children, especially of mixed gender, are not allowed to share a room and doing so could constitute neglect and lead to parents losing custody of their children.
Edin and Shaefer continue, “between 200 and 2012 alone, rents rose by 6 percent. During that same period, the real income of the middling renter in the United States fell by 13 percent.” While wages had stagnated and real incomes had fallen for lower class workers, rents across the country were rising. The increase in rent was particularly high in large cities where most of the economic output and job creation in the country has taken place. Renters faced a choice, live where rents are cheap, but where there are no jobs, or live where rents are high, and where jobs can be found. Living in a cheap place may mean an unreasonably long and expensive commute, but living where the jobs are might mean sharing a place with non-familial renters and crowding into living conditions that put renters at risk.
I haven’t studied affordable housing, and I don’t know the solution to rising rents for low income individuals and families. But I think it is important to know the statistics shared by Edin and Shaefer. I live in a city where rents and home prices have skyrocketed (Reno, NV). One consequence of the rising rents is an increase in homelessness, particularly in short term homelessness. We all see people on the streets and notice when there are more people on the street, but we don’t always notice the short term homeless. The chronic homeless overshadow what is sometimes a larger, yet less visible form of homelessness. Understanding the rise in rents, the stagnation of income (which we might hopefully be getting out of as we recover from COVID) and the impact on short-term homelessness helps us think more clearly and accurately about the challenges that renters face, and about ways to help those who are unable to keep up with rising rents. It is important that we think about the obvious consequences of increased rents, like homelessness, and also the less obvious consequences, such as families potentially losing custody of their children. As rents have risen, Dave Ramsey’s advice to keep your housing costs below 30% of your income just isn’t possible for many Americans, and the consequences have been dire for many individuals and communities.