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Archive for March, 2010

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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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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