Like so many, I was shocked to learn that some housing units set aside for low-income families are being occupied by people earning six-figure salaries.
The Department of Housing and Urban Development’s Office of Inspector General took a look at tenants who initially qualified for public housing but now earn more than regulations would allow first-time move-ins.
The resulting report found that more than 25,000 tenants have annual earnings that exceed HUD’s 2014 eligibility limits. Nearly half surpass their local threshold by $10,000 to $70,000. People who were initially approved have been permitted to stay in the subsidized housing even if their income has increased beyond the limit. And there has been no cap on the length of time a tenant can stay.
HUD’s defense of the situation was that allowing “overincome” people to stay helps its efforts to deconcentrate poverty in public housing developments.
I guess we can call this policy of wanting to keep wealthier residents in public housing the “Trickle Next Door Theory.”
The original idea of trickle-down economics was predicated on the notion that if you give more tax breaks to the wealthy, there’ll be an economic lift for all. The thinking was, by lowering people’s tax rates you induce them to work harder and spend more money. Their increased spending then spurs the economy and everyone prospers.
A report out this year by the International Monetary Fund found that “trickle-down” policies don’t necessarily work.
“If the income share of the top 20 percent (the rich) increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down,” according to the study.
By the way, the HUD inspector general’s report said the department didn’t provide “any quantitative evidence to demonstrate the positive social benefits from having overincome families residing in public housing.”
Here are a few cases highlighted in the review:
In Los Angeles, one household’s five-person income was about $205,000. The income threshold for 2014 was $70,450. As of last summer, the family’s rent was $1,091.
A New York family of four living in subsidized housing was making nearly $500,000 as of 2013. The income threshold that year was $67,100.
It gets worse.
The head of the household owned real estate that generated $790,000 in rental income between 2009 and 2013, according to the report. As of July 2014, the family was paying $1,574 a month for the three-bedroom unit.
By the way, this isn’t just happening in major metropolitan cities with crazy-high rents. Five years after getting subsidized housing in Oxford, Neb., (population: 766), a tenant living in a one-bedroom unit and paying $300 in rent was making $65,000, while the income threshold for such housing was $33,500. The tenant had total assets of $1.6 million, which included stocks valued at about $625,000, $470,000 in real estate, an IRA worth nearly $125,000 and a checking account balance of about $335,000.
Criticism about these and other overincome families taking advantage of the system should bring about change. Last week, a spokesman for HUD said steps are being taken “to encourage housing authorities to establish policies that will reduce the number of overincome families in public housing.”
We should be disgusted by folks who have six-figure salaries and are taking affordable housing space away from families who truly need the help. But amid our criticisms, let’s not lose focus on the bigger issue.
We don’t have enough affordable housing options in this country. And the funds allocated to help families continue to be cut by Congress.
This public housing report reminded me of a summer scene from 2010 in Atlanta. You’ve got to watch the news reports. To see one, go to https://youtu.be/VIlU2nZT_Hk.
A crowd converged in sweltering temperatures for a chance to get into public housing. Agency workers sat or stood on the hoods of cars amid throngs of people grabbing for applications just to apply. Some of them passed out and had to be treated for overheating.
Ron Mott, who was a correspondent for MSNBC at the time, reported that 13,000 applications were handed out that day.
“There are exactly zero public housing units — zero public subsidized housing units — available in East Point, Georgia,” Mott reported. “A lot of these folks will never get off that wait list.”
There are 302,079 families on the list for public housing in New York. In Boston, 117,663 families are waiting for units, and 43,488 in Los Angeles. We should be equally shocked at this situation.
How can families ever get ahead financially if their budgets are overburdened just trying to afford decent housing?
When we truly help the less fortunate, there isn’t a trickle-down effect, but a spout of benefits to us all.
