Economics Compassion and Community

A few years ago, a local nightly news channel was reporting on an innovative program for people who’d been laid off from their jobs in the regional aircraft industry. As a one-stop service center, it was designed to connect people with services that could help fill gaps in income while looking for new employment. It was new and at the time and a blessing to those caught in that economic downturn. It was this community’s effort to tie jobs, housing and economics together with its compassion for their situation.

 

It made me think back to 1968 when I was leaving high school. Larger industries had begun leaving our community.  Before then, you could graduate from high school and go directly to work at Cessna or someplace similar.  You could make a good living for yourself and your family. You would have health care, retirement benefits and a wage that would allow you to buy a home and send your children to college.  But that all changed when these jobs left, leaving a huge gap in wages offered in the community.

 

I have spent my career in the helping professions and long enough to see one, sometimes two generations of those very same workers’ children in a search of these same type of services. Their parents may have used services to fill gaps in their income and may have been successful. But in the end, the lack of permanent or higher wage employment left them with on-going holes in the family budget.  The only way to provide for the family was to continue to fill those holes with contributions from services. I am sure back then it was perceived as a temporary situation, one that would correct itself with new job opportunities …  but for many it did not. They have had to utilize the services of the many non-profits that have come into being over time to occasionally –  or –  continually make ends meet.  They have worked at jobs that could not pay the rent and lived in housing that was neither affordable nor decent. And for those who could hold onto their homes, it was difficult at best to provide for its upkeep. This situation has led to housing and family instability, long term unemployment, drug usage, and homelessness.

 EMPLOYMENT INSTABILITY

Like the 70’s and 80’s, we are currently experiencing the effects of job loss and layoffs. We are all too aware of the fallout from the 2008 economic crisis. Daily we follow the media reports about unemployment rates and layoffs, locally, regionally and nationally. We follow reports of foreclosures –  and in our area, these have been the result of job loss rather than bad loans. We see and feel the results of government cutbacks. For our families and our communities this is a continual downward spiral. It is loss of employment that leads to family instability and the possible loss of housing which leads to utilizing community services to fill income gaps. After a time, it leads to accepting a lower wage job requiring the continued dependency on community services to fill gaps. The community begins to pay more in direct and indirect costs to subsidize these services. Eventually the community loses both people and housing assets due to disinvestment, making it difficult for the community to attract higher wage employment and new people to renew its tax base.

 In the less urban and rural areas that had small manufacturing plants, there was a shrinking of the economy; small farmers who subsidized their farms with factory jobs have had to sellout; workers without the basic education for re-training have never held a good job again.

          Richard Longworth    Caught in the Middle:  America’s Heartland and Globalization

 At lower wages housing becomes a larger expense and creates what is called rent burden. With less income, less purchases are made and less sales tax is collected burdening government entities trying to maintain basic services for its citizens. With less sales both larger and smaller employers are forced to reduce their workforce. And the destructive cycle begins all over again. People without jobs create housing instability. People without housing stability create instability within the community at large. These changes, over the years, in our local and national economy, and the forces that, drive them have helped continue long term instability and crushing poverty.

 

HOUSING AND STABILITY

Loss of housing and loss of stability is the result of personal disasters, natural disasters and economic disasters creating the national crisis referred to as homelessness I am the Executive Director of New Beginnings, a Community Development Organization whose initial focus was the sheltering of people caught in this crisis.  Our organization began over 20 years ago with community members determined to develop something that would go beyond a compassionate night in a warm bed. These founding members of New Beginnings were committed to understanding the process of housing instability and how people became homeless leaving people defenseless and stuck in the continued search of services. Their hope was that this understanding would lead to solutions to homelessness and the elimination of countless untold stories of suffering.

 

A Housing Needs Assessment for our community indicated that 50% of our 5,190 renter households earned less than $25,000 annually.  Households need to earn $26,000 annually to  afford the monthly payments on an $81,500 home. You can see how far away the purchase is of the average home (which in in our town is $150,000).  Here, where it is cheaper to rent than own a home, 36% of all renter households are rent-burdened meaning they are spending more than the government recognized 30% of income for housing costs. This leads to housing and family instability.

This data offers important implications because households paying more than 30% of their income for housing are more likely to have trouble affording other necessities, such as utilities, maintenance, transportation, and food.

Development Strategies Inc. Hutchinson Housing Needs Assessment 2009

 

THE ECONOMICS OF INSTABILITY

New Beginnings had over 800 requests for shelter and services last year.  In non-urban areas, it can cost a community as much as $20,000 in direct and indirect costs for each person who loses their home. That means 800 people served by New Beginnings last year could have potentially cost our community $16,000,000.  That money is spent and/or lost in the following areas:

 Lost costs in:

Non-payment of rents and mortgages

Medical offices or emergency room write offs

Lost utility payments

Lost days at work

 

Increased costs for:

Law enforcement

Jails, community corrections and prison

Emergency shelters

Children into foster care

Public subsidy of drug & alcohol treatment

 

In some years New Beginnings has over 200 children pass through its doors. Half of those children will not graduate high school. A person without a high school education will earn $200,000 less in their lifetime. If those children stay in our community, that is a monetary loss that their families and our community, or any community, cannot afford.

CREATING HOUSING STABILITY

For too long, a housing crisis such as homelessness has been akin to entering a black hole. Without the anchor of home, people lived without knowing where they would find their next bed, their next meal or do without. However, a new paradigm is providing opportunity for communities to renew their commitment to addressing people experiencing temporary housing crisis.

  Homeless Prevention

Dr. Dennis Culhane of University of Pennsylvania & Nan Roman of the National  Alliance to End Homelessness.

 

Creating housing stability brings with it the ability for households to pay for essential items and have more disposable income. This disposable income allows the household to participate in community and contribute to the overall economy. It gives households more money to invest in homeownership and education with long term positive outcomes for themselves and their community.  Compassionately, it keeps a crisis situation from becoming a chronic one and saves a lifetime-possibly lifetimes-of struggle and suffering. It moves us from a constant negative situation in our communities to a footing of potential and forward progress that can include everyone.

 

COMPASSION AND RECOVERY

New Beginnings is an entity that finds solutions. We have created a community model that identifies the elements in communities that create instability:  economic downturns, farm difficulties, layoffs, single parent incomes, the inability to access needed resources in a timely manner, and most importantly the lack of affordable decent housing.  This “Cycle of Self-Sufficiency and Sustainability” acknowledges that difficult and tragic situations can occur in anyone’s life, but it is how people recover from these situations that is the more important focus. The ability to cycle back to stability and community is imperative. Paramount in this process is affordable housing. Housing affordability creates the basis for self-sufficiency, sustainability, community connection, and contribution. Toward these goals, our organization provides emergency housing as a platform to either transitional housing or permanent housing and connects community resources together for each person seeking help. One of the most important things we do is create decent, affordable housing as prevention for people losing their homes in the first place. We have built over 100 units of permanent affordable housing:  new apartment complexes, new single-family homes, new homes for sale, moderate income townhomes and duplexes, and affordable rehabbed houses that were once foreclosures. We have spent funds to pay back rent and overdue mortgages (if people were financially responsible) and provide ongoing financial education and advice.  By providing financial management skills we give people the tools to manage the increase in income and resources. Helping people create a liquid assets fund, along with understanding of how to borrow and repay their own loans, reduces the outlay of community dollars to social services.  By providing affordable housing we help stop the outflow our community spends in negative outcomes.

 

COMMUNITY

For the most part society has moved on. The industrial revolution is over. High paying jobs without specialized education and training are gone. The technical evolution of our lives will continue to displace people and perhaps at higher rates than we once thought. But we can and must act now to involve communities in making sure that there is a place for everyone within the community. Of course, re-training is vital and Community Colleges are playing an ever-expanding role in this process. The real requirement for local economies is:  leave no one behind. Especially now everyone is needed to participate in the local economy. The margins are just too slim. This means everyone is purchasing some local goods from other local people. It also means that there is less money spent or lost in the increased costs of instability, making more money available to the entire community. This is called community wealth building.

 

COMMUNITY WEALTH BUILDING

This means that we invest locally more dollars both private and public into micro loans for local entrepreneurs to help encourage local job development.  It also means that we allow neighborhood re-investment of people into their own neighborhoods who will then reap the dividends, both social and financial. As the Community Foundation model continues to grow in many towns they are becoming great facilitators of this.

 

The “30% solution” for housing costs redirects capital into housing for people with limited income, while still allowing the market to regulate the demand. It allows tenants to have more disposable income to spend in their local economy. It develops a sense of belonging and participation for all income levels. We must also make sure that coordinated community resources direct aid to those in crisis in a timely manner so as to not go from acute to chronic need. Instead, we move people quickly and effectively back into community as full economic participants at whatever level they are able to sustain.

 

FINALLY

If a community can invest in this model, connecting a community’s compassion with economic benefit, they can begin to reduce the personal costs of lives lost to instability and chaos and reduce the huge economic costs to the community. It will take time and investment but future generations will have a foundation for true growth and caring, knowing that we cared enough to for them to make the necessary changes when faced with huge social challenges. –simply put that we gave a damn.