Disconnection Notices

Disconnection Notices

In the book Evicted, Matthew Desmond writes, “in a typical year, almost 1 in 5 poor renting families nationwide missed payments and received a disconnection notice from their utility company.” Life in the United States can be brutal for the poor. We operate under an economic system that helps push the middle class to work hard, strive for more, and be the driving force of our economic engine. Some individuals from the middle class do advance, some do fall, and some poor people do rise up to achieve the middle class American dream. However, this system that focuses so heavily on a productive middle class doesn’t always match the realities faced by our nation’s poor.
It is true that all of us have to make tough choices every day. We have to choose to show up to work, we have to choose to actually work rather than socialize and play games once we get there, and we have to make responsible decisions to use our money to pay our bills rather than buy air Jordan’s and sushi every night. However, what Desmond and other authors who have written about poverty and homelessness in America show, for many of the poorest among us, even making those smart decisions won’t help alleviate their poverty. Desmond argues that one reason why so many people fail to pay utility bills and receive disconnection notices is that many people are paying as much as 50% of their income on rent and as much as 70% of their income on rent plus utilities.
For people in poverty who face high rents and utilities, they may have only 30% of a minimum wage income to spend on the necessities. That’s a tiny amount of their income to use toward transportation to school, work, or childcare. A fraction of their income is available to put food on the table. A sliver of the 30% can be used for clothes, perhaps a religious tithe, cleaning supplies, and basic household goods to replace worn and broken items.
Two things happen to poor people living in these situations. First, one instance of bad luck can upend years of hard work and good decision-making. A child who breaks something, a roommate who steals something, an unexpected healthcare cost, or a product that goes bad prematurely can be a substantial cost that breaks the bank and throws the perfect balance of that remaining 30% of income out of whack. For many individuals working at the lowest wage jobs, one slip-up can mean losing a job, making it harder to get a job and climb toward a higher wage, and compounding the financial difficulties that an individual may face.
The second thing that happens is that the individual recognizes how little it matters if they save a lot or don’t save at all. If one spell of bad luck can ruin your plans for using your money wisely, then why try hard to keep things in balance? Everyone forgets a bill sometime, or overspends impulsively, or faces an unexpected cost that sets them back, but for rich and middle class people, its no problem. For lower class people, it is a major problem that they are blamed for and often punished for. If this is the reality of your life, then there are actually incentives to simply spend money in a seemingly irrational manner and to enjoy what you can of the 30% remaining after rent and utilities. If you are going to have to live with the consequences of not having enough money, then why not enjoy what you can until your water and power are shut off. When you live in a constant state of stress where your entire pay check is gone toward bills and necessities, no matter how much you try to cut down, then you don’t really have an incentive to make smart decisions and continue to strive for better financial stability. Blowing your money on QVC items or a steak (something middle and upper class people also do) doesn’t seem like a bad idea, after all, you may have your power shut off regardless of how wisely you spend.
A Double Housing Squeeze

A Double Housing Squeeze

A big focus on unaffordable housing is on the price of homes and the cost of rent. However, wage stagnation is another important factor that contributes to unaffordable housing. In $2.00 A Day, Kathryn Edin and H. Luke Shaefer write, “rising rents are certainly a big part of the problem, but the concurrent fall in renters’ incomes has outstripped the rise in prices by a factor of more than two to one.” There is a double housing squeeze being felt across the nation as the price of housing increases while wages either stagnate or decrease, especially when considered relative to general inflation indexes.
Rising home costs are often attributed to zoning regulations the prevent building sufficient housing to meet the needs of a city or population. Zoning laws restrict the building of duplexes and apartment complexes. Some zoning laws require ample parking space, cutting down on potential living space. And some zoning prevents infilling with more high density housing that would allow more people to move to the area. The results are limited housing options and higher prices for sought after units.
As wages stagnate, this becomes a serious problem. People search for sectors with higher wages and more opportunities for advancement. Such opportunities are often found in cities, however that is where the highest competition for housing exists. So individuals seeking higher wages have to contend with higher housing prices. The alternative is often accepting a stagnant wage and living further away from work than one would like, because that is the only place affordable housing can be found.
This double squeeze creates a lose-lose situation for low income individuals. If they¬† move to a city they may find better work opportunities, but they will pay more for less space. But if they don’t move, they will either face a very long commute or a job closer to their home that pays less and has no opportunities for advancement. Housing is a major issue, and unaffordable housing has a whole cascading series of negative consequences.