This country has lived through a constant low-level crisis that the pandemic exposed for all to see. We have levels of inequality not seen since the late 1920s. We also see housing insecurity. Homelessness is now seen as a threat, because people who are not sheltered may spread the virus. During normal times they are mostly invisible. However, we are not living in normal times. And I expect this population to explode over the next six months. Why? We have ten million newly minted out of work Americans. This is the sharpest growth in this statistics in the history of the country. Of course, statistics are far more precise these days. Comparisons to the Great Depression are appropriate, and people fell into desperate poverty for ten years. This crisis may very well trigger a Great Depression, globally.
Moreover, we saw the growth of homelessness during the Great Depression, and we are about to get slammed with people losing their homes to no fault of their own. They already have lost their jobs, to no fault of their own.
The homeless population also grew during the Great Recession, and while it ebbed somewhat, it has never gone away. In fact, an argument can be made that it started to be a problem during the Ronald Reagan presidency after state mental hospitals were closed. This leads to one of the serious impressions. No, not all people in the streets have a mental health issue. Some do, and some have severe issues that cannot properly be treated in the streets.
There are families who end up in the streets, as well as people who regularly hold two and three very low-income jobs. Why? One of the reasons is the cost of housing. We know this problem very well. The median wage is well below the median price of rent, let alone what people can afford to buy.
In San Diego, which is representative of New York, Los Angeles, and other high rate areas, the median wage is $75,000 dollars. According to Zillow is:
The median home value in San Diego is $669,939. San Diego home values have gone up 5.3% over the past year and Zillow predicts they will rise 5.0% within the next year. The median list price per square foot in San Diego is $487, which is higher than the San Diego-Carlsbad Metro average of $390. The median price of homes currently listed in San Diego is $699,900 while the median price of homes that sold is $617,300. The median rent price in San Diego is $2,750, which is higher than the San Diego-Carlsbad Metro median of $2,700.
I expect those prices to crater since we are entering what looks like a depression. However, for the moment, these are the values we have. For a salary of 75,000, before all deductions, that is $6,250 a month. A third of your salary should ideally go to housing. Meaning that would be $1,850, but this is before all deductions, meaning that as of 2017 the Center for Pubic Initiatives found as follows:
The CPI finding was based on a self-sufficiency standard, which factors in basic family budgets without frills. Unlike the federal poverty line, it takes into account the high cost of housing in the local market.
According to the study, it takes nearly $28,000 for an individual to make ends meet in San Diego. A family with two adults and two children needs almost $89,000.
“When we calculate the actual costs to fully meet families’ basic needs, we find that fully a third of households in San Diego aren’t earning enough,” said CPI Research Director Peter Brownell. “This means that over a million people in San Diego are living in economic insecurity, are living on the edge and are worried about their next meal.”
Many of these low wage workers this is near impossible. They are at the bottom of the work scale and do not make enough money. In many cases they have to chose what bills to pay. And any hundred dollar emergency stresses then and can throw them over the edge. Right now they are unemployed. They have no cash flow, and no way to pay for rent, or even the fantasy of a house payment.
This is a reality that we have yet to face. Even though we have state-level executives, such as California Governor Gavin Newsom, giving some protection to homeowners and renters, this is only for ninety days. This will go by fairly fast. And as lockdowns continue, bringing the economy back will not be easy. For starters, we cannot expect to go from lockdown to fully open in twelve hours. That is unless we have achieved herd immunity or universal vaccines.
Short of that, we will continue to see the virus come back, and will need to lock down again. The second and third wave could be just as bad and will be as economically disruptive. There is talk of a fourth wave now, which is expected to come down into small rural towns as well.
This also means that the pressure on those who are on the edge, and those in the streets, will only increase. California has decided to tackle this by putting people in convention centers and hotels. This is a good short term solution. But if we are to avoid the increase in the numbers we have to be honest about the support people are getting in the medium to longer term. We are not doing enough and this crisis will only increase inequality.
Americans are going to get a check of $1200 dollars once. That will not support people for long. Unemployment insurance will not either. We need to think outside the box. This is the moment when other countries are leading. Canada, for example, is allocating $20000 Canadian dollars per adult for four months, however, they will see one-third of their workers fall through the cracks. Spain is rolling out what looks like a true Universal Basic Income. This ensures that people have enough money for food. This also guarantees that there will be no food riots. And when the economy restarts, people will not be desperate and will have some spending money to prime the pump.
American policymakers, even when pressed against the wall, seem, to still believe Ayn Rand is the best way to do things. However, what they are doing is guaranteeing that a lot of people, millions, over ten million, will have nothing less to lose. And it is at this point when we enter a libertarian dystopia. This is not the world we want to go into. Hungry desperate people will take the law into their own hands. And riots are quite possible. They have happened in the past. This is one reason for the New Deal, quite brutally honest. Why I keep writing that it does not matter what positions the Democratic candidate takes, circumstances will force the hand into adopting very progressive policies.
There are tools that right now could prevent this. After all, we are just talking about money, and when you control the global reserve currency you have some advantages over other countries. Yes, the two trillion package passed by Congress is a down payment to deal with the crisis. We will need at least five more before this is over. We need universal basic income, but we will also need to invest in a medical system that will emerge no longer depending on insurance status or the private sector. We will have to join the rest of the world. Partially, the medical system is already collapsing, and it’s been forced into wartime disaster medicine.
The country is going through the greatest crisis in over three generations. We just happen to be extremely divided and have people in power who are likely engaging in profiteering. We have the worst president in the history of the country at the helm, who’s leadership is missing in action. He is also engaged in political gamesmanship by assigning resources depending on how hard people kiss his ring. We will emerge with even deeper fractures in our body politic.
However, with the expected growth in poverty, this political disagreement may take on more dangerous tones. What is already baked into the cake is that the country that emerges from this crisis will be radically different from the nation that went in. The world will be very different as well. And we will need to deal with our inequalities, or they will become dangerous at this point.