Smart Business Decisions: Ending Poverty

Over the past few decades and especially since the onset of  the “Great Recession,” city, county, and state governments around the country have had to cope with increasingly dire budget deficits. The go-to solution for many policy makers has been to make large funding cuts to programs that address poverty and inequality.

While this may help balance some budgets in the short term, recent reports find that not addressing poverty and inequality, especially child poverty, ends up costing billions more in the long term.

In 2007 the Center for American Progress released The Economic Costs of Poverty in the United States: Subsequent Effects of Children Growing Up Poor. In it they found:

Most arguments for reducing poverty in the U.S., especially among children, rest on a moral case for doing so—one that emphasizes the unfairness of child poverty, and how it runs counter to our national creed of equal opportunity for all.

But there is also an economic case for reducing child poverty. When children grow up in poverty, they are somewhat more likely than non-poor children to have low earnings as adults, which in turn reflects lower workforce productivity. They are also somewhat more likely to engage in crime (though that’s not the case for the vast majority) and to have poor health later in life. Their reduced productive activity generates a direct loss of goods and services to the U.S. economy.

What’s more, crime often imposes large monetary costs to the taxpayer, costs associated with administering our huge criminal justice system. And their poor health generates illness and early mortality which not only require large healthcare expenditures, but also will  impede productivity and ultimately reduce their quality and quantity of life.

How much does childhood poverty end up costing the country?

The Center for American Progress’ report results suggest that the costs associated with childhood poverty  to the U.S. total about $500B per year, or the equivalent of nearly 4 percent of GDP.

In 2008 the Human Services Policy Center at the University of Washington released The Cost of Child Poverty State by State which broke down those costs by state.

The annual cost of New York’s 888,000 children growing up in poverty?

$33.4 billion.

Thanks to the New York State Community Action Association’s recently released 2010 New York State Poverty Report we can break that down by county.

The annual cost of Erie County’s 39,528 children growing up in poverty?

$1.51 billion.

This begs the question:

When running government like a business, does it not make sense to invest in ending poverty?

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Is Homeownership the Only Way?

The Buffalo News’ recent investigations into City Hall’s housing policies raised some very important issues.

How much is too much to subsidize the construction of homes in the city?

Should developers receive these subsidies? Or should homeowners receive these subsidies?

Should private developers be relied upon for the development of these homes or should non-profits?

These are important questions that City Hall should spend more time thinking about as they move forward with projects like Sycamore Village. However these types of questions do not begin to challenge the ideal upon which this kind of housing policy rests: homeownership.

There are obviously many benefits to homeownership and for many people it is probably ideal.

Unfortunately homeownership is not a very affordable option for many people in Buffalo.

Homeownership requires homeowners to have a very steady and relatively high level of income. As the UB Regional Institute’s new report Playing an Insecure Hand: Low-Wage Workers in the New Economy points out, an increasingly large number of people in Buffalo are only finding inconsistent low-wage work. This kind of an income prevents many people from getting past the high upfront costs associated with buying a home. Further, even if one is able to get a mortgage, the costs associated with maintaining a home can be high. Many home owners are thus at risk of falling into foreclosure.

The Buffalo News’ report bears this out:

“Of the 431 subsidized homes that resold among the 1,500 [that have been subsidized by the City], more than half — 231 — were foreclosed upon, with most — 184 — involving the original subsidized owner. These foreclosures basically wiped out the $4 million in publicly funded subsidies the 184 foreclosed owners received.”

Obviously homeownership is a risky proposition at best for many people in the city.

Even renting is unaffordable for most people! According to the US Census Bureau’s American FactFinder, 55.8% of renters in Buffalo spend over 30% of their household income on rent. HUD states that the “generally accepted definition of affordability is for a household to pay no more than 30 percent of its annual income on housing”.

Additionally, according to the Homeless Alliance’s statistics, roughly 2000 people cannot even afford rent on any given night and as a result are homeless.

Bearing all this in mind, should homeownership be the main focus of our housing policy?

We believe that it is time for our community to broaden its outlook on the housing situation in Buffalo beyond homeownership and begin to focus housing policy on making housing affordable to all people.

PS: For a great discussion of the development of federal housing policy and issues with its emphasis on homeownership as a guiding principle see Thomas Sugrue’s article Why the New American Real Estate Dream is Renting.

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Hotels for the wealthy, expensive jails for the rest of us.

Developer Mark Croce will be receiving a $1.35 million hand-out from New York State tax payers to turn a vacant downtown building into an “upscale boutique hotel at Franklin and West Huron streets.” Croce is “convinced there’s a market for an upscale boutique hotel that offers larger rooms with some unique amenities.”

This handout is coming in the form of a Restore NY grant which is intended to “stabilize neighborhoods and revitalize urban areas.”

Which neighborhood is being stabilized here?

Who will benefit from this kind of urban revitalization? The “upscale” market Croce is convinced is out there–we’ll say those households making more than $150,000/year–accounts for about 3% of households in Buffalo.

In other words, $1.35 million of public money will be used to provide a tiny part of the community with presidential suites, pent-houses, and “unique amenities.”

This is money that could be used to stabilize or revitalize the neighborhoods of the 30.3% of people living in poverty in Buffalo, still the third poorest city in the country. This money could even be used to provide basic housing to the hundreds of individuals and families that are homeless on any given day in Buffalo.

Instead this public money will be used to help a wealthy developer provide upscale hotel suites for wealthy travelers and community members.

The County is also looking to tear down buildings in downtown Buffalo. In an effort to avoid being held responsible to Constitutional standards for jails and prisons, the county wants to build a new multimillion dollar county lockup downtown.

Hotels for the wealthy, expensive jails for the rest of us.

Is this how the people of Buffalo and Erie County want their money spent?

Does this benefit the whole or even very much of the community?

Or does it continue to subsidize wealthy developers and their clients while a third of the city lives in poverty?

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The Green Jobs Movement: An Answer to Buffalo’s Poverty Crisis?

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HUD Secretary Shaun Donovan at the National Alliance to End Homelessness Annual Conference

Renaissance Hotel
Washington, D.C.
Thursday, July 30th, 2009

Thank you, Nan – for that introduction, for your remarkable leadership with the Alliance, and, above all, for the bedrock commitment to end homelessness you have impressed upon five different HUD Secretaries. I look forward to continuing our work together.

I want to also thank your board, particularly Co-Chairs Susan Baker and Mike Lowry. And I want to note the HUD team here helping us address homelessness – Mark Johnston, our Deputy Assistant Secretary for Special Needs, and Ann Oliva, who heads up our Office of Special Needs Assistance Programs.

And of course, many of you know Fred Karnas – Fred is a senior adviser and has been critical in our Recovery Act efforts, including working with Mark and Ann quickly distributing the Homeless Prevention and Rapid Re-Housing funds that so many of you made possible.

Will all of you stand up?

I want to also acknowledge the work of the Pete Dougherty, the interim executive director of the Interagency Council on Homelessness, and the USICH staff, many of whom are here today.

But most of all, I want to thank everyone in this room who labor day in and day out to help the millions of men, women, and children in our nation who experience homelessness.

In the best of times, it is hard work.

In times like these, it is nothing less than the work of angels.

So, thank you.

Three years ago, The New Yorker ran an article that most of you are probably familiar with.

It was called”Million Dollar Murray” and it chronicled the story of an ex-marine who, for well over a decade, was a fixture in the part of Reno, Nevada that tourists rarely see: its shelters, emergency rooms, jail cells, and backstreets.

Like too many of our nation’s homeless population, Murray Barr died while still homeless, still on the streets.

Indeed, his story reminds us that each of us is here today for the same fundamental reasons:

Because we believe that a civilized society does not allow someone to live like that.

Because a civilized society doesn’t allow someone to die like that – alone, on the streets, with no hope, no chance for a better life.

But as much as Murray’s story was a cautionary tale – it was also one of affirmation.

Today, not only do we know we can do better by the long-term homeless, like Murray – because of you, we are doing better.

I witnessed this for myself in New York City, where as Commissioner of the Department of Housing Preservation and Development, I worked with groups like Common Ground, who day-after-day systematically debunked one of the most corrosive myths that even well-meaning people have long held:

That some people want to be homeless.

It led to a twisted sort of logic – that if government couldn’t house and improve the health of those living on our streets-visibly ill and suffering-who could we help?

Well, together, we showed them. By developing the “technology” of combining housing and supportive services-delivering permanent supportive housing via a targeted pipeline of resources- we’ve “moved the needle” on chronic homelessness, reducing the number of chronically ill, long-term homeless by nearly a third in the three years since “Million Dollar Murray” was published.

The fact is, we have now proven that we can house anyone.

Our job now is to house everyone – to prevent and end homelessness.

All homelessness.

That is what the Alliance has fought for in communities across the country – and it’s time that the Federal government not only supported those efforts, but took the lead.

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The Feds are Coming!

We just got this message from our friends at PUSH:

We need volunteers!

One of PUSH’s national partners, National People’s Action, is bringing the Federal Reserve to Buffalo!

With millions of regular people caught in the grip of foreclosures, ballooning mortgages and predatory loans the Fed is traveling to cities hard-hit by the economic crisis to hear about the urgent need of reform and PUSH wants everyone there!

We need boots on the ground and people on the phones to get the turnout we need at this meeting. If you think you can canvass or phone-bank with us beginning on Monday, June 29th through July 15th, please give us a call at 716-884-0356 or shoot me an email, harrison@pushbuffalo.org

If you’d like to canvass, please show up to the office at 4 and if you’re interested in phone-banking, show up at 5.

The neighborhood needs to turn out to meet the Fed because we need access to credit, banks that invest in our communities, and green jobs that pay us a living wage! Real People have Real Power! Again, please lend us a hand canvassing or phone-banking, we would love to see you.

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The Subprime Crisis has helped force thousands of Americans into homelessness and it is hugely important that the Fed steps in to reform.  The National Coalition for the Homeless recently released  a report that details the effects of the Subprime Crisis on homelessness:

Foreclosure to Homelessness 2009: the Forgotten Victims of the Subprime Crisis

We need you to help bring people out to tell the Fed how the Subprime Crisis has affected people in Buffalo.  Volunteer to canvass or phonebank and try to bring anyone you know who has been affected by predatory lending.  The meeting is:

July 16th, 6pm
Trinity Episcopal Church
371 Delaware Ave, Buffalo

They’ll be here soon so it’s time to get moving!

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GM Bankruptcy and Poverty in Buffalo

One of the main purposes of the Poverty Challenge is to dispel myths and stereotypes about homeless and low-income people and shift our attention to the economic and social inequalities that create and perpetuate the grinding poverty in Buffalo.  A dominant message in our society is that poor people are to blame for their poverty.  That they make bad choices and do not try hard enough to get out of poverty.  Hopefully by taking the Challenge, people will be able to see how difficult it is to live in poverty, let alone move out of poverty with out any outside assistance.

Where do we focus if we shift our attention away from poor people being the cause of their own poverty?  One place that we can focus on is the very intimidating and complex issue of economic inequality.  Obviously there are a number of different sources of economic inequality and it is impossible to separate complex social inequalities from these already complex economic inequalities.

But in his second Poverty Challenge blog Aaron Bartley, of PUSH, touches on one source of economic inequality that has been a major part of Buffalo’s long term economic bottoming out:

Today’s General Motors bankruptcy is symbolic to me of the millions of industrial jobs lost in this country over the last forty years, and all the pain and suffering that continues to cause Buffalonians and others.

A recent Buffalo News article also reported the bankruptcy and what this means for GM workers in WNY.  In “Layoffs slated at GM’s Tonawanda plant”, Matt Glynn reports that the General Motors Corp. engine plant in the Town of Tonawanda will likely face layoffs of up to 261 workers.  Layoffs at this plant are not new; in 1989 the plant employed 4,350 people, in 2003 the plant employed 2,003 people, and after this latest round of layoffs the number could go down to 610 workers.

These were jobs that, through the efforts of local unions, had good wages and benefits.  The kind of jobs that helped build the modern American middle class and kept thousands of local families living comfortably with relatively secure futures.

The loss of these jobs has forced thousands of workers into unemployment and as other industries left the area, local workers were left with few options for employment.  Many of the jobs left in the Buffalo area for high school graduates (which is the highest level of education many people can complete because of financial restrictions among other reasons) are low paying, benefit-less, service sector jobs that are often times part-time.

As Bartley pointed out, the GM’s bankruptcy is symbolic.  It means the loss of even more of what’s left of the well-paying jobs that employed thousands during Buffalo’s heyday.  As made clear through the Challenge, losing income (through both unemployment and the replacement of good paying jobs with very low paying jobs) means not being able to eat and pay the bills; it means that one will be forced into poverty.

Economic changes and inequalities like the layoffs at GM plants are a large part of what has made Buffalo the third poorest city in America.  Policy and action in the area must take into considertaion the loss of  well-paying jobs like the ones that GM offered and strive to create more well-paying jobs.

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Will Yahoo! Help End Poverty in Buffalo?

According to a recent Buffalo News article the New York Power Authority is working on a deal with Yahoo!, the Internet giant, to bring them into WNY.  The speculated deal would include giving Yahoo! power discounts totaling $101.2 million over the next 15 years.  The plant Yahoo! is planning to build would create 125 jobs, which means that New York Power Authority would be spending $809,940 over the course of the contract for every job created.

A couple of quotes from the article about the potential deal:

• Referring to the amount being spent on each new job, “‘It’s exceptionally high, even for high-tech,’ said Greg LeRoy, a national expert on economic development subsidy programs.”
• “‘There are a few other deals we’ve seen over the years in that neighborhood, but it’s stratospheric. It doesn’t have much company,’ said LeRoy, executive director of Good Jobs First, a nonprofit research and advocacy group based in Washington, D.C.”
• “‘On a number basis,’ said Power Authority President Richard Kessel, ‘this doesn’t look like the greatest deal in the world, but we can’t look at the numbers alone.’”

Power Authority President Richard Kessel is correct; we can’t just look at the numbers.  We also have to look at what kinds of jobs these are and where they will be located. As far as location, Yahoo! is looking at building its plant in rural areas like Cambria, Lockport or Pembroke.  What kinds of jobs will these be?  An interviewee in the article described these jobs as “high-tech”.  This means they are sure to require at least a bachelor’s degree or some training.

A quick look at the NFTA’s website shows no public transportation to Cambria or Pembroke from Buffalo and no morning bus runs to Lockport from Buffalo. There also does not appear to be any scholarship or training programs for interested but unqualified workers associated with the deal. There will basically be no way for a low-income individual living in Buffalo to get a job at this potential plant if they do not have all the required qualifications and even if they do have the right qualifications, there will be no way for them to get to the job if they do not own a car, which is impossible for most low-income people.

If the deal goes through, this publicly subsidized plant will not create living wage jobs for the 1/3 of Buffalo that lives in poverty.  This is not to say that communities like Cambria, Lockport, and Pembroke don’t need these jobs but could that $101.2 million do more good for more people in our community if it were given to a company that agreed to locate close to the areas that need the jobs most?  To companies that will train some of the city’s thousands of unemployed workers?

If the city, county, or state ever hopes to end poverty and homelessness in Buffalo, it must make poverty its most important focus.  In deals like the one being hashed out with Yahoo!, our administrators and elected officials must ask themselves if huge deals like these will create good jobs close to the communities that need the jobs most.  Looking at the Poverty Challenge Budget it becomes clear that one of the major things that keeps people in poverty is their low-income.  Many of the jobs that are available in the city are service sector jobs that pay very little, are often part-time, and offer few if any benefits.  If the majority of jobs in a community pay poverty-level wages, then the majority of people in that community will stay in poverty.

Another aspect of the Poverty Challenge Budget that is sure to keep people in poverty is transportation.  Using private transportation (or owning a car) will automatically blow your budget and put you into debt.  But most of the decent paying jobs are outside the city, in places where there is little or no viable public transportation.  The job that may help you get out of poverty is then out of reach becasue you can’t afford the transportation to get there and you have to settle for the minimum wage jobs in your neighborhood (which are harder than ever to find becasue of the current recession).

You could go down the list of items and expenses in the Poverty Challenge Budget starting with the low-income (due to the lack of jobs or the existence of only low paying jobs in your community), the high cost of rent/utilities, the cost of transportation, the cost of cell phones (very necessary for prospective employers to call you back) and see all the expenses that keep 1/3 of Buffalo in poverty.  If our public officials ignore the poverty level budget and don’t address the need for living wage jobs, affordable rent, affordable transportation, etc. then thousands of people in Buffalo will continue to be impoverished.

The Yahoo! deal is another decision being made by public officials that does not have ending poverty as a  primary concern or even as any concern at all.  Deals that will create the kinds of jobs that will allow people to get out of poverty must be the ones we consider first if we have any desire to end poverty in Buffalo.  The $101.2 million deal with Yahoo! is a deal that is being created without any concern for the thousands of impoverished people in our community.

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Buffalo: a Cheap Place to Live?

That may seem like a ridiculous question.  Part of the reason I came to Buffalo was because I thought it was probably the most affordable place to live in the state*.  But the Center for Housing Policy‘s recently released report entitled Paycheck to Paycheck serves to remind us that for many working people, owning a home or even renting a 1BR apartment in Buffalo is unaffordable.

The report compares the wages of 60 occupations with the wages necessary to afford the cost of an average home ($100,000 including all associated costs) or the Fair Market Rent for a one-bedroom or two-bedroom apartment in different states and metropolitan areas.  Housing  is usually considered affordable if it amounts to 30% of your budget.  For example, CHP calculates the income needed for a one-bedroom apartment by multiplying the Fair Market Rent for a one bedroom apartment by 3, which would roughly give you the income needed for that month to afford the apartment.  That monthly number is then multiplied by 12 to get the yearly income necessray.

The report found that while the wage necessary to afford a home decreased (much of that having to do with declining home prices) the wages for many occupations, construction-related occupations in particular, still are not high enough to afford a home and in severe cases a two-bedroom apartment.  Fair Market Rents continued to increase in most areas, which is very troubling given the big increases in unemployment and that renting is usually the more affordable option for low-income people.

The homeownerhsip and rental information for Buffalo, a town that most people consider a very cheap place to live, is also very troubling.  Fair Market Rent for a two-bedroom apartment increased from $704 in 2008 to $723 in 2009, a 2.7% increase.  Even more disturbing are the number of service sector wages that are not high enough to afford a one or two bedroom apartment, let alone a home.

Consider these graphs which show the income needed to afford a home, one bedroom, or two bedroom apartment in Buffalo along with the incomes of a selection of service sector occupations (which represents a large portion of the employment available in Buffalo):

Annual Income Needed to Afford a Home

Other occupations that did not earh enough to afford a home included: hairdresser, home health aide, housekeeper, janitor, laundry worker, nursing aid, office clerk, packager, parking lot attendant, receptionist, retail salesperson, school bus driver, security guard, stock clerk, stock mover, telemarketer, and wait staff.

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Homelessness and Sex Offenders

James McKinney, a level 3 sex offender, is completing his prison term and needs a place to live.  A state supreme court justice was ready to send him to his mother’s home in North Tonawanda until he reconsidered and decided to send him to an apartment that houses homeless welfare clients.  He decided against sending the man to his mother’s home because “It’s the epitome of a family, suburban residential area. It’s not appropriate [for McKinney].”

Certainly this man poses a threat to whatever community he moves to.  The judge even found in his trial that this man “had a mental abnormality” but the judge “decided against committing him.”  Understandably, the judge feels it is inappropriate to allow McKinney to move back to his mother’s home.  But for this judge it is apparently more appropriate to send him to a city of Niagara Falls apartment that may be housing homeless families.  Every family, regardless of income, deserves to feel safe in the place that they live.  Just because a family lives in the suburbs and has a higher income does not mean that they should receive preferential treatment when it comes to the placement of sex offenders.

This is a very difficult and unfortunate situation.  But even so, the safety of all people regardless of income must be ensured.  Hopefully the judge will be able to work with the parole officers to find a more appropriate place for Mr. McKinney.

Beyond the safety of homeless people, this story also brings attention to how the criminal justice system deals with sex offenders like McKinney who are finishing up their sentences.

This is not just an isolated issue either.  Over at change.org’s End Homelessness blog, Shannon Moriarty is also talking about homeless sex offenders.  As Moriarty states at the end of her blog post, a more humane way of dealing with homeless sex offenders who are completing their sentences needs to be developed.

High-risk sex offender ordered to live in Falls building housing the homeless

By Thomas J. Prohaska

NEWS NIAGARA REPORTER

LOCKPORT — A sex offender regarded as likely to reoffend because of a “mental abnormality” will live in Niagara Falls, not in his mother’s North Tonawanda home, a judge ruled Wednesday.

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