Life Is Getting Much Worse for the Poor: Housing, Food and Essentials Eat Up the Meager Incomes
This week, the Trump administration released a budget so severe it almost makes the House Republicans’ American Health Care Act (AHCA) appear kind. Decades of conservative hostility to the poor have been codified in this budget. It promises to “reform the welfare system” and supplant “dependency with dignity of work,” ignoring the fact that the majority of households on public assistance have at least one gainfully employed adult. In addition to echoing the AHCA’s $800 billion in cuts to Medicaid, the budget calls for funding reductions to food stamps and welfare programs and overall changes to the Earned Income Tax Credit and the Child Tax Credit. All of these programs and credits provide critical financial support to poor Americans.
By taking away sources of supplemental and sometimes total income, this budget will make life tangibly harder for financially vulnerable people, particularly those living in expensive urban city centers. Their dollars simply do not stretch far enough on their own.
The Potential for Reversed Success
Thelma Mosley knows this better than anyone.
Mosley, who is retired, is one of more than 117,800 people who lived below the poverty line in Washington, D.C., in 2016.
However, Mosley has been fortunate. Although she lives on a tightly fixed income, she insists she has everything she needs: food on the table, health care and housing, even if it is somewhat precarious. In one of the most expensive regions in the United States, with an income crisis as central to its identity as its historical monuments, every dollar counts.
Living in urban city centers like D.C. is an exercise in expensive living. A recent report from GoBankingRates found a single resident would need to earn an annual income of $80,273 in order to live comfortably in D.C. in 2017.
That means those with financial hardships are barely keeping their heads above water. A person who qualifies as “low-income" in D.C., according to the Department of Housing and Urban Development, is about $27,700 shy of that $80,273 estimate, earning only $52,550 each year. For those living in the most extreme forms of poverty, comfortable living is a pipe dream.
An annual income of $38,650 and $23,200 qualifies a single resident as “very low-income” and “extremely low-income,” respectively.
Applying a common budgeting rule, the GoBankingRates report calculated how much residents of Washington, D.C. would need to cover certain living expenses. A single resident would need to set aside $40,136 for basic necessities each year, or around $3,345 per month.
The Department of Housing and Urban Development annually determines the area median income for every metropolitan region in the United States. Washington, D.C. boasts a relatively high 2016 AMI of $108,600. HUD also divides households into three categories—extremely low-income, very low-income and low-income—in order to establish the financial guidelines for programmatic eligibility. Households that qualify as extremely low-income are defined as those who earn an annual income that falls at or below 30 percent of AMI. A family of four in Washington, D.C. who qualify as extremely low-income earn a maximum annual income of $32,600. A single extremely low-income resident, like Thelma Mosley, earns a maximum of $22,850 each year.
That translates to a maximum of $1,904 per month, far short of the $3,345 needed to live comfortably. And even that number is out of reach for some.
Thelma Mosley’s monthly income is confined to the $775 she receives in payments from her retirement pension and Social Security Disability Insurance.
Although Mosley is no longer working, many others who qualify as extremely low-income in Washington, D.C. are members of the working poor.
It’s no wonder that the extremely low-income earn so little; they tend to be concentrated in low-wage work in which wages have been stagnant for decades. Even in cities like D.C. where efforts to address low wages by increasing the minimum wage have been successful, the slightly increased wages are not enough. A minimum wage of $11.50 per hour (which is high compared to the paltry $2.77 per hour for tipped work) falls far short in getting low-income D.C. residents to comfortable living.
As a result, many turn to other means of supplementing their income. But even those are insufficient. Eligible beneficiaries for unemployment compensation receive 1/26th of their wages from their highest-earning quarter during their specific base period (the earliest four of the five complete calendar quarters before a benefits claim was filed). The maximum weekly amount is $359, while the minimum is $50.
Supplemental Security Income provides direct cash assistance to those who earn a limited income or possess limited resources and are elderly, blind or disabled. The resources of eligible participants must exceed no more than $2,000 for individuals and no more than $3,000 for couples. SSI offers a maximum of $735 each month to eligible individuals, while eligible couples receive a maximum of $1,103. Levels of earned, unearned and exempt payments determine recipients’ exact benefits.
Financially vulnerable families with dependent children can turn to Temporary Assistance to Needy Families—also known as welfare—which provides cash assistance. In Washington, D.C., TANF serves those who are unemployed, underemployed or on the brink of unemployment, but they must be participating in a “work-related” activity like community service, vocational education or on-the-job-training. A TANF participant providing for a family of three without a job in D.C. would receive $441.
In a city where the yearly amount needed to live comfortably can be, at a minimum, almost 3.5 times the amount poor residents actually earn, it can be challenging to afford even the most basic necessities like housing, food and transportation.
The average monthly rent is $1,960 in Washington, D.C. Thelma Mosley’s monthly income is $775.
The United States is facing a national affordable housing crisis. The issue is one of supply and demand: According to a recent report from the National Low Income Housing Coalition, only 35 reasonably affordable housing units are available nationally for every 100 renters who qualify as “extremely low-income.”
Stated differently, the United States has a shortage of 7.4 million affordable and available housing units for extremely low-income renters. Similar shortages exist for “very low-income” renters, those who earn between 31 percent and 50 percent of area median income, and “low-income” renters, those who earn between 51 percent and 80 percent of area median income.
Not a single state in the United States has enough reasonably affordable housing to house each of its extremely low-income residents.
Mosley has been displaced from her home since March 2016, relying on the generosity of friends for housing. After relying on some form of public housing for 24 years, she moved into a private apartment complex in 2015. The first building she occupied in the complex had a mold problem that was rivaled only by that of the second building. Discovery of a broken water heater finally forced the involvement of the Department of Consumer and Regulatory Affairs and forced Mosley out of her home.
DCRA paid for Mosley’s stay in a hotel for 17 days, during which she assumed they would be working to fix the conditions of the building or helping her find other housing options. Instead, DCRA provided her with a $100 Target gift card and some toiletries. Mosley has had no contact with DCRA since. To this day, the belongings she wasn’t able to put in storage or leave with family members are still in the moldy apartment building.
In Washington, D.C., there are only 44 available and affordable homes for every 100 extremely low-income renters. This makes for a dire situation. About a third of extremely low-income renters in D.C. cannot afford to spend more than $200 per month on rent, unable to draw out already overextended resources. Only 9 percent have such affordable housing that asks for that much or less with the rest presumably being driven into homelessness.
Such shortages have complicated life for Thelma Mosley. At 64, she goes out almost every day to look for a new place to live. She has limited her search to subsidized housing options specifically provided to seniors and low-income residents. Mosley relies on the housing assistance services provided by nonprofits like Bread for the City, which guides low-income residents through the public housing application process with customized lists of appropriate options and workshops or private consultations. She’s been unsuccessful so far, but she remains optimistic.
Even with housing, however, a renter’s financial situation can be extremely difficult, burdened by a never-ending game of robbing Peter to pay Paul.
Seventy-one percent of these 11.4 million extremely low-income renters spend more than half of their income on rent and utilities. Thirty-three percent of very low-income renter households and 8.2 percent of low-income renter households spend the same amount on such expenses. Sixty-four percent of extremely low-income renters in Washington, D.C., spend more than half of their income on rent and utilities. The number of families that spend such disproportional amounts on housing has grown by 25 percent since 2007, undoubtedly hastened by the Great Recession. This means that, although most extremely low-income renters cannot afford rent higher than $800 per month, most pay rent at such costs often to the detriment of fulfilling other needs or paying other expenses.
Indeed, extremely low-income renters who spend more than half of their income on rent and utilities spend 41 percent less than otherwise similar families on food and 74 percent less than such families on health care in order to afford housing.
At least 11.4 million extremely low-income renters qualify as living in housing poverty, in which they are unable to pay for food, transportation, medical care, and other needs after paying rent.
DeAndrea Newman Salvador of the Renewable Energy Transition Initiative has noted the existence of “energy poverty,” in which a family spends around 10 percent of its income on its energy needs. The middle-income North Carolinians Salvador observed might pay 5 percent or less, whereas lower-income North Carolinians might pay a minimum of 20 percent for theirs. After extending her research nationally beyond North Carolina, Salvador discovered that many of those with incomes that render them extremely low-income spend around 35 percent of their income on their energy needs.
Despite her housing insecurity, Thelma Mosley has been able to turn to SNAP to cover her nutritional needs. The Supplemental Nutrition Assistance Program, or food stamps, provides financial assistance to poor Americans in the form of electronic benefit transfer cards to purchase foods. SNAP eligibility for single Americans is limited to those making a net monthly income of $981. The maximum monthly allotment is $194. Thelma Mosley receives $90 per month.
Mosley is more fortunate than many food stamp recipients; her daughter helps supplement her food budget. The help is needed—food is expensive, and the $90 she receives in SNAP benefits each month is not enough to cover those expenses alone.
What’s more, the practices many use to drive down their food expenditures are out of reach for the financially vulnerable. Taking advantage of coupons and special sales requires enough excess to be able to wait to apply them. Participating in members-only warehouse clubs like Costco and Sam’s Club means paying expensive membership fees each year. Even buying in bulk is unreasonable.
Researchers at the University of Michigan illustrated this point by tracking the toilet paper purchasing habits of 100,000 American households. They discovered that poorer families, unable to offer more money upfront in order to buy toilet paper in bulk, were more likely than wealthier families to select the smaller options and less likely to wait for toilet paper sales. These choices ultimately proved costly for the poorer families, amounting to a payment differential of 5.9 percent more per sheet of toilet paper.
Without money to absorb costs upfront, financially vulnerable families pay more in the long run.
Beyond paying more for less, financially vulnerable families spend greater proportions of their annual income on food than their wealthier counterparts. Using 2015 data collected by the U.S. Bureau of Labor Statistics, compare the food expenses of a household in the second 20 percent making $28,343 before taxes to a household in the fourth 20 percent earning a comfortable $80,813. The former spends almost 18 percent on its total food expenditures, while the latter spends only 10 percent on such expenditures, despite making over $52,000 less.
Even the food items themselves, on average, are more expensive for poor families than for other families.
This analysis, of course, assumes that these families have working refrigerators to store food and consistent transportation to obtain food in the first place.
Public transportation has become just as essential to Thelma Mosley’s survival as food. Discounted rides offered to senior citizens by the Washington Metropolitan Area Transit Authority and discounted SmarTrip Cards and WMATA Metro Tokens provided by Bread for the City have empowered Mosley in her search for housing by reducing her travel expenditures.
Between the costs of fuel, maintenance and loans, possessing a vehicle is a luxury many cannot afford. Those who can attest to the high costs of doing so. Continuing with the case of the household in the second lowest quintile earning $28,343, that household spends almost 12 percent of its income on gasoline and motor oil and other vehicle related costs. And that’s when the household already has a vehicle. By contrast, the family in the fourth quintile earning $80,813 commits 7 percent of its income to those needs.
With personal transportation out of the question, many financially vulnerable Americans rely on public transportation. Such transportation can mean the difference between meeting fundamental needs and going without, thus enabling poor Americans, for whom maintaining employment is vital, to travel to work. But public transportation can be unreliable: buses run late and trains break down, putting poor Americans at risk of facing delays that could put them out of work.
It can also be expensive. To compensate for a $290 billion funding shortage, D.C.’s WMATA has pushed its shortfall off on consumers in the form of a fare hike and reduced operation hours and services. From WMATA’s perspective, it makes sense: it recovers 62 percent of its operating costs from consumers. But for low-income passengers, such increases could mean walking in the sweltering heat or forgoing breakfast a few days out of the week.
Poor families can least afford to absorb these increases in a number of senses. In 2014, a passenger on the New York City subway system earning an $8 minimum wage needed to work 13.75 hours to afford one $112 monthly fare card. How many more hours should a low-income passenger be forced to work in order to simply get to and from her job? Research exists that suggests that physical mobility is connected to socioeconomic mobility, signaling the potentially devastating effect that inaccessible and unaffordable public transportation could potentially have on gainful employment.
A 2014 New York University study discovered a correlation between the existence of public transportation deserts and higher rates of unemployment and lower income, proving that public transportation can prevent those teetering on the edge of poverty from being engulfed by it.
As if the financially vulnerable were not disadvantaged enough, there’s evidence of funding neglecting transportation projects that could serve low-income residents. A federal transportation project committed $1.7 billion to the construction of highways in Milwaukee, but nothing to public transportation thereby snubbing the needs of the public transportation system’s low-income clientele.
A similar situation presented itself in Detroit. Construction began on a streetcar project aimed at supporting the transportation needs of (presumably middle-class) business and office workers. No such relief was offered to low-income residents without cars.
In order to live comfortably, even on the rainiest days, a Washington, D.C. resident would need to maintain $16,055 in savings each year.
Thelma Mosley estimates she currently has about $1,200 in savings. She tries to save between $100 and $150 every month to prepare for the expenses of the next month and the years ahead.
If the Trump administration’s budget is successfully implemented, Mosley may not be able to prepare for her immediate future or her present. SNAP, the social safety net program Mosley uses to survive, will likely be drastically reduced. As it stands, this program, along with her pension and SSDI, only provides her with a little over $800 per month. Mosley is already housing-insecure; if she loses the critical income that keeps her afloat, the supplemental income that allows her to eat and the health insurance that provides her with medicine to alleviate her back pain, how is she supposed to survive?
What the architects of this budget fail to understand is that poor Americans are already struggling to make ends meet. James Baldwin once wrote, “Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.” Apparently, the Trump administration does not know.