Out of Reach
The growing gap between wages and the cost of housing in the U.S.; Denver’s mayor announces a marijuana tax to fund affordable housing; “hidden rules of race” in the Trump tax law risk making racial inequality even more extreme; and the news of the week ICYMI. Subscribe to Off-Kilter on iTunes.
This week on Off-Kilter, a new report sheds horrifying new light on the state of the nationwide affordable housing crisis. A minimum wage worker earning $7.25 an hour would need to work a staggering 122 hours per week, literally all 52 weeks of the year — the equivalent of three full time jobs — to afford a two bedroom apartment at fair market rent. Rebecca speaks with Diane Yentel, president and CEO of the National Low-Income Housing Coalition, about the new report “Out of Reach: The High Cost of Housing.”
Later in the show, while Trump and Congressional Republicans actively seek to exacerbate the affordable housing crisis, some states and cities are taking matters into their own hands. Rebecca sits down with Denver Mayor Michael Hancock to hear how Denver’s tackling their affordable housing crisis and working to curb chronic homelessness.
And finally, it’s no secret the Trump tax law that took effect earlier this year is already worsening inequality in the U.S. But it’s also a recipe for massively exacerbating racial inequality — and even mass incarceration. Rebecca talks with Darrick Hamilton and Michael Linden, both fellows at the Roosevelt Institute, about how “hidden rules of race are embedded in the new tax law.”
But first: concentration camps for kids; how Trump’s plan to reorganize the federal government is just his latest effort to redefine everything from childcare to health insurance as “welfare”; what you’re not hearing about the Trump economy: wages FELL last year (!); momentum grows for expanding paid leave to include chosen family; and more — as Jeremy Slevin, aka your beloved Slevinator, returns with the news of the week ICYMI (and an even longer beard than last week).
This week’s guests:
- Diane Yentel, president & CEO, National Low-Income Housing Coalition
- Mayor Michael Hancock (D-Denver)
- Darrick Hamilton, professor at the New School and Roosevelt Institute fellow
- Michael Linden, Roosevelt Institute fellow
For more on this week’s topics:
- Dig into the National Low-Income Housing Coalition’s new report Out of Reach: The High Cost of Housing, see how your state or city is faring here — and get involved with the Opportunity Starts at Home campaign here
- Learn more about Denver’s plan to tax marijuana to fund affordable housing and other ways Mayor Michael Hancock is working to ensure the city’s housing costs aren’t out of reach for its residents
- Read Darrick Hamilton and Michael Linden’s report, Hidden Rules of Race are Embedded in the New Tax Law — and get up to speed on what’s driving America’s worsening racial wealth gap
For more on the headlines from this week’s ICYMI segment:
- Get caught up on Trump’s horrifying plan to build concentration camps — for children
- Tweet of the week goes to one of this week’s guests… Michael Linden, for this message to all the journos who freaked out about one-time bonuses
- Read up on Trump’s plan to reorganize the federal government and rename the Dept. of Health and Human Services to include the word “welfare”
- Good news for a change: Rep. Carolyn Maloney introduces legislation to expand paid leave to include “chosen family” (!)
This week’s transcript:
REBECCA VALLAS (HOST): Welcome to Off Kilter, the show about poverty, inequality and everything they intersect with, powered by the Center for American Progress Action Fund. I’m Rebecca Vallas. This week on Off Kilter, a new report sheds horrifying new light on the state of the nationwide affordable housing crisis. A minimum wage worker earning $7.25 an hour would need to work a staggering 122 hours per week literally all 52 weeks of the year to afford a two bedroom apartment at fair market rent. I speak with Diane Yentel, president and CEO of the National Low-Income Housing Coalition about their new report “Out of Reach: The High Cost of Housing”. Later in the show, while Trump and congressional Republicans actively seek to exacerbate the national affordable housing crisis some states and cities are taking matters into their own hands. I talk with Denver Mayor Michael Hancock about how Denver is tackling their affordable housing crisis and working to curb homelessness. And finally, it’s no secret that the Trump tax law that took effect earlier this year is already worsening inequality in the US but it’s also a recipe for massive exacerbating racial inequality. I talk with Darrick Hamilton and Michael Linden, both fellows at the Roosevelt Institute about how hidden rules of race are embedded in the new tax law. But first Jeremy Slevin, the Slevinator of the beard that keeps on growing, thanks for coming back.
JEREMY SLEVIN: It hasn’t stopped, it hasn’t stopped growing surprisingly.
VALLAS: I’m actually bringin up your beard —
SLEVIN: Waiting for the day.
VALLAS: I’m actually bringing up your beard this week mostly because I really like opportunities to say I was right. Those are the best days for me when I get to have been right about something. it’s just such a good feeling.
SLEVIN: It’s because it’s so rare.
VALLAS: No, it’s because it’s so often that it’s core to the fiber of my being.
[LAUGHTER]
SLEVIN: Ok.
VALLAS: I don’t know if you know how it feels to be right.
SLEVIN: It’s never happened to me.
VALLAS: Someday.
SLEVIN: I’ll just experience vicariously through you.
VALLAS: Someday you too will feel this feeling and you will understand why it feels so good. But the thing I was right about is that last week on this show I said I hadn’t brought up your beard every single week and it turns out Will our producer went back and checked and say I was right. I did take a week off from making fun of your beard and so there.
SLEVIN: I don’t know if this says more about the things you make Will do [LAUGHTER] Will, could you check the past four weeks’ transcripts and see how many beard mentions there were because I really want to be right.
VALLAS: It’s sort of like that moment in a courtroom drama where you’re like stenographer, read back the transcript of what the witness said. Except, I didn’t ask him to do this for the record he offered this piece of information up.
SLEVIN: Then it’s even more sad.
VALLAS: Is it?
SLEVIN: For Will.
VALLAS: Or for you because I was right.
[LAUGHTER]
SLEVIN: Yeah.
VALLAS: Anyway the beard looks great was the whole point.
SLEVIN: Thank you, thank you.
VALLAS: Did you come with news or are we just going to do this?
SLEVIN: No, I thought this was a beard only segment.
VALLAS: It was beard only, all beard all the time?
SLEVIN: Yeah, that’s what this is for, right?
VALLAS: I think that people might start to be disappointed.
SLEVIN: I think we’re just procrastinating because the world is so awful and miserable that it’s easier to talk about my beard.
VALLAS: That is 100% what I’m doing and I think that explains why I’ve brought up your beard so much. It’s not just because it has filled an ever increasingly large share of the studio that we tape in.
SLEVIN: It fills a void in our heart.
VALLAS: No, that’s right. It’s because as I look at notes for this segment the first item says concentration camps and I don’t want to get to it so I’m talking about your beard.
SLEVIN: So should we just dive right in?
VALLAS: I think we have to.
SLEVIN: Yeah so as many of our listeners may have seen, a new report from McClatchy finds that the Trump administration is looking to build what they’re calling tent cities, these are camps at military posts around Texas to shelter the increasing number of so-called unaccompanied migrant children that are being held in detention. The prime reason we’ve seen such an increase in children is because the Trump administration is now forcibly separating children from their parents at the border. This week there was a separate report from CNN about a woman from Honduras who says federal officials literally ripped her daughter of her hands while she was breastfeeding her child. This is now the norm. The tent cities as they’re calling them, which are camps would fill about a 1,000 migrant children.
VALLAS: And I think some reports are saying that they may need to build cities that hold as many as 5,000 children because they’re starting to realize that they’re reaching a point where they’re separating forcibly so many parents from their children they’ve already filled existing shelters that the Office of Refugee Resettlement at [the Department of Health and Human Services] is responsible for. And so so there’s already more than 11,000 kids being held without a parent or a guardian, being overseen by HHS but now those shelters, some 100 shelters that already exist are now 95% full.
SLEVIN: That’s right. So one solution to this would not be to have a policy where you forcibly take kids from their parents and detain them in what are effectively concentration camps but that is not the solution. I think a lot of people have pointed out once they’re willing to do this, what else — once this power is turned to other groups, there was a separate announcement this week that [the] customs agency is now looking into citizenship, people who have already earned naturalized citizenship and looking for irregularities to revoke citizenship, something that has only been used very rarely to revoke citizenship from literal Nazis who committed fraud. So we’re already seeing this creeping authoritarianism used against our own citizens in addition to immigrants.
VALLAS: And for anyone who thinks that I’m being histrionic in using the words ‘concentration camps’ make no mistake; that is what these are. And some of the news reports that broke over the course of the past week that border agents are actually lying to parents to say that they’re taking their children from them to give them a bath and then the parents realize a few hours later, it dawns on them that they’re never going to see their kids again potentially. These are not new tactics. These tactics have not just their roots but not that long ago history in the Holocaust.
SLEVIN: Yep.
VALLAS: This is all too familiar.
SLEVIN: Yep.
VALLAS: So more to come on this show in the weeks ahead I’m sure as this news continues to be horrifying by the day. But Slevs, moving onto another piece of differently worrisome news. We heard from the Trump administration, they’ve got some plans for reorganizing the federal government and people who struggle to make ends meet should be very worried.
SLEVIN: That’s right. So Politico reported that the administration is preparing a new plan for reorganizing the entire federal government, specifically with an eye towards consolidating what they call so-called welfare programs. And it turns out they are pitching renaming the Department of Health and Human Services, which oversees everything from Medicare to Medicaid to implementation of the Affordable Care Act and renaming it the Department of Welfare. They are also pushing moving SNAP, which provides food assistance to millions of people from the Department of Agriculture to this newly renamed Department of Welfare. Of course, as we’ve discussed on the show many times the term welfare itself, while it means a specific thing academically in the US it has been used time and time again in a very racialized way to stigmatized everything from health care to food assistance.
VALLAS: No, that’s exactly right. It’s pretty nakedly clear what he’s trying to do here. We talked on this show a while back about some executive actions that he’s taken, Trump, including trying to redefine nearly everything under the sun from child care to job training to health insurance all as welfare in big neon lights. He knows, it’s a dog whistle. The hope here is he’s recognizing the more that he tries to slash these program that they’re really popular and they’re really hard to cut and his best chance of being able to make them easier to cut is to rebrand them all with a word that he knows will cause people to think negative thoughts. There’s a whole social science literature we’ve talked about on this show before of where the brain goes when people hear words like assistance to the poor versus where the brain goes when people hear that word that is incredibly racially coded and has a decades long history that is very deeply racially entrenched, which is welfare. And that is exactly what he is trying to do here. Make no mistake.
SLEVIN: And this is coming from the Office of Management and Budget, which is run by Mick Mulvaney who is a ideologue who authored both of Trump’s budgets, which not only sought to cut these programs by massive amounts but sought to totally restructure many of these programs and consolidate other programs and turn them over to the states. This is part of a long line of ideological attempts to slash these programs and they’re coming at it anyway they can. It’s not like oh, we just think we should put things under one roof. No, this is by the same guy who wants to cut these programs.
VALLAS: And the dog whistling rebranding is absolutely clear and has neon lights around it. It’s probably not even fair to call it a dog whistle anymore. I’d probably say it’s more of an airhorn. So we talked a lot on this show last week about, part of my conversation with the special rapporteur from the United Nations who looks at poverty and human rights. He issued a scathing indictment of poverty in America that came right at the same time as Trump parading around town, calling the economy that he is saying he’s created with his tax law the quote “best economy ever”. But it seems like almost every day, almost every week there’s some new piece of information that doesn’t get nearly enough attention, that gets buried in the press but that paints a very different picture and I’ve decided with the power vested in me as host of this show that this will be something that we make sure we leave space for every week in ‘In Case You Missed It’. So kicking that off, what do we learn this week?
SLEVIN: So this week and it’s not the best economy ever, we learned that wages are actually down in 2018 so far. That’s right, so from last May to this May, wages for non-supervisory employees, which means not the bosses have actually dropped. They’ve dropped for the first time actually since 2011. So this is not some long term every year, this has happened under Obama and the trends continuing, since the tax cuts went into effects, wages have gone down. In 2015 for example, they ticked up 2.6%, now they’ve dropped about 0.1%. So the so-called ‘$4,000 tax cut’ that Donald Trump and Republicans kept touting during the tax debate has not only not manifested itself, wages are going down because of this tax bill.
VALLAS: And I’ll give best tweet of the week to Michael Linden, who is a guest also of this show later as I mentioned uptop, he says “Hi, are you a journalist who reported on the smattering of one time bonuses that were announced a few months ago? Please write a follow up story on the new Bureau of Labor Statistics numbers”, what you just walking through, Jeremy, “that show overall wages actually fell this past week. Thanks.” So Linden, you’re spot on and I hope the journalists listening take your advice because that’s a story that needs to be told. So closing out, Jeremy, with a little bit of good news, which would be nice to hear amid everything else.
SLEVIN: Yes, so Carolyn Maloney, U.S. Representative from New York today, I’m finally giving away the day that we’re taping on Wednesday.
VALLAS: I love how you say finally because that’s never happened before, never.
[LAUGHTER]
SLEVIN: No, I’m saying I lasted almost the whole segment this time.
VALLAS: Oh, I see.
SLEVIN: So it’s late in the segment this time.
VALLAS: Oh OK, fair.
SLEVIN: So she introduced a great bill this week to make family medical leave more accessible. So about 40% of workers are currently not covered by the FMLA, which is the Family Medical Leave Act. So she has a new bill that expands it to people who are not just your kids or immediate family member, which a lot of people have, this would help a lot of LGBT people, people with disabilities, so it includes caring for a domestic partner, a father or mother in law, aunt, uncle, sibling, grandparent, grandchild would be a huge step forward for millions of people who is part of their chosen family.
VALLAS: Slevs, I appreciate it, I do. This was a note to end on that’s not about concentration camps so thank you for that. But I’m sure we will have lots more to update folks on next week in case they missed it and thank you for coming back and doing this every week.
SLEVIN: Of course.
VALLAS: Don’t go away, more Off Kilter after the break, I’m Rebecca Vallas.
[MUSIC]
You’re listening to Off Kilter, I’m Rebecca Vallas. Last month a report from the United Way found that 43% of US households are struggling to afford basics like housing and food. But a new report released just this week piles on with equally stark findings if not even starker. A full time worker earning the federal minimum wage of $7.25 an hour would need to work approximately 122 hours a week all 52 weeks of the year, that’s approximately the equivalent of 3 full time jobs just to afford a two bedroom rental home at the typical fair market rent in the United States of America. So put differently, in no state or city can a full time minimum wage worker afford even a two bedroom apartment. To unpack the reports’ important findings and what they tell us about the nationwide affordable housing crisis, I’m joined by Dianne Yentel, he’s the President and CEO of the National Low-Income Housing Coalition who released the report. Dianne, thanks so much for joining the show.
DIANE YENTEL: Hi, thanks for having me.
VALLAS: So I teased one of the top findings from this report and it may sound a little bit wonky but it’s really shocking stuff. A minimum wage worker would have to basically work non-stop around the clock all year long at three different jobs just to afford a home for his or her family.
YENTEL: That’s right. So in “Out of Reach” what we come up with, what we call the housing wage. So that’s what one must earn an hour working full time to be able to rent a modest home as long as they’re paying no more than 30% of their income towards rent, which is what most experts agree is affordable. And definitely this year’s report continues to show the really significant gap in states and metro areas, in jurisdictions throughout the country. So the housing wage this year is $22.10 an hour just be able to afford a modest two bedroom apartment and it’s nearly $18 an hour to afford a one bedroom apartment. And of course, that’s the national wage, it really ranges from a high of around $60 an hour in San Francisco and some other communities in California. And as you said, there’s no state, no metropolitan area, no county even those where the minimum wage has been set about the federal level, where a minimum wage renter working 40 hours a week can afford that modest two bedroom apartment.
VALLAS: So people may be aware, and listeners of this show are certainly aware that we’re in the middle of a national affordable housing crisis but how did we get here? How did we get to a place where that’s the state of affairs for folks who are working incredibly hard but not able to earn even a modest home for their family?
YENTEL: That’s a great question. When you look at some of the lowest income people, which is who the National Low-Income Housing Coalition focuses most on. And we focus on them because they are the only segment of the population for which this is an absolute shortage of homes that are affordable and available to them. We’d have to go back to the late ’70s to find a time when we actually had a surplus of affordable homes for the lowest income people. And one of the main difference between them and now is chronic underfunding of federal investments that make homes affordable for the lowest income people. So around the mid ’70s President Nixon issued a moratorium on building any new affordable homes like public housing or other types of project based housing that is affordable for low income people, we stopped building any new housing of that type. Then in the early ’80s Ronald Reagan slashed [The Department of Housing and Urban Development’s] budget by more than half and although we’ve had new programs created over time since then, none have been as deeply targeted for the lowest income people and none have been funded high enough as they were back then. So we’ve had this steady loss of affordable homes for those lowest income people to a point now where we have a shortage of over 7 million homes that are affordable and available for those lowest income people. So another way of looking at that is for every 100 of the lowest income people, there’s just 35 homes that are affordable and available to them. And I say too that since the foreclosure crisis of 2007–2008 the problem has really be exacerbated for the low income people. That’s because we had this huge foreclosure crisis, we had millions of people losing their homes and reentering the rental housing market. At the same time we have the millennial generation, a huge segment of the population that’s delayed homeownership for longer, mostly because they’re saddled with crushing student loan debt and we’ve had the baby boomer generation that’s been downsizing into the rental market. So it’s huge, huge demand for rental home, supply hasn’t been keeping up with the demand. Prices are skyrocketing and at the same time we’ve had a diminishing in funding for federal solutions for affordable housing.
VALLAS: And so you can end up finding statistics in this report that are just absolutely mindboggling. Like 71% of extremely low income renters spending more than half of their incomes on housing when you’re talking about 30% being the affordable mark that housing experts and government officials point to for what would be affordable housing. A big part of that is because three out of four low-income households who need housing assistance end up being denied because those programs are chronically underfunded too.
YENTEL: Yeah, that’s exactly right. We have in our country what’s essentially a housing lottery system where just 25% are the lucky ones that get the help that they need. And three out of four people who are in need of and eligible for housing assistance don’t get any. They’re the ones who are adding their names to years or decades long waiting lists to get assistance.
VALLAS: So, Trump has proposed some policies in the housing space. We’ve talked about them on this show and you’ve talked extensively about them. And they’ve come out of the Department of Housing and Urban Development headed by Trump’s housing secretary Ben Carson. Those policies would take us in the wrong direction. Help us understand what is Trump proposing and what would it mean for the affordable housing crisis that’s already at these levels?
YENTEL: So Secretary Carson is actually looking to cut housing benefits for the people who need them the most, for seniors, for people with disabilities, for families with young kids. By increasing rents on the people who do receive housing assistance and potentially putting work requirements into place. I think one thing that’s really important to understand about these proposals is that these proposed rent increases actually target the very poorest people including those seniors and people with disabilities. People who are already living on fixed incomes and they’re already at a significant risk of homelessness. The proposal actually increases rents for those households that have high medical costs and high child care expenses by eliminating those income deductions. So by design the greatest burden would be felt by those seniors, people with disabilities and families with young kids. It’s absolutely going in the wrong direction. The reason why people are receiving housing assistance in the first place is because the housing costs are so far beyond what they can afford to pay. So this idea of actually increasing rents on the lowest income people with the greatest need is just absurd.
VALLAS: What are the solutions that you wish policymakers were talking about?
YENTEL: Well the good news about the housing crisis as opposed to some other social challenges is that it’s not by any means easy but it’s pretty simple. We have the data, we have solutions and we have resources to fund those solutions but we just don’t have the political will to fund those solutions at the scale necessary to solve the crisis. We know how to end homelessness and housing insecurity. In some markets we need rental assistance, Section 8 vouchers that help people pay their rent in the private market. In other areas we need to build and preserve actual units that are deeply targeted for the lowest income through programs like the National Housing Trust Fund Program. We need some type of cash assistance that’s available to people who aren’t receiving housing assistance but who just need help absorbing a financial shock that sometimes prevents them from being able to pay the rent and falling into eviction. So we know what the solutions are, we have lots of research proving that these programs are effective. We need to increase the political will to actually fund these programs at the scale necessary.
VALLAS: The report is called “Out of Reach: The High Cost of Housing”. It’s something you guys do every year. People need to pay attention this particular report especially because of some of the threats that you were just walking through that are incredibly timely and would send us straight in the wrong direction when what we need to be doing is listening to you and other people like you who know what solutions would actually bend the needle in the right direction. Folks can find the report on our nerdy syllabus page on Medium or they can find it and a lot of other fun tools including taking a look at what’s happening in their state and in their community at NLIHC.org, that’s the National Low-Income Housing Coalitions website. And I’d love for you to give a plug for the campaign you guys have underway.
YENTEL: Oh sure, we started the new campaign called “opportunity starts at home”. The idea behind is one, the housing crisis is increasing, it’s more negatively impacted the lowest-income people and all of our tradition advocacy tools aren’t doing enough to get more funding at the level we need it. At the same time, we benefit from increasing research that makes a really compelling case for how central housing affordability is to the outcomes of so many other sectors, increased health, increased educational attainment, better lifetime earnings, increased life expectancy. So we took this moment in time to see if leaders from these other sectors were as convinced by the research as we are that they were willing to add their capacity, their resources, their expertise, their networks to advocate with us for more federal investments in housing. And so we pulled together a steering committee that includes groups like the National Education Association, the largest teachers unions in the country, civil rights groups like NAACP and Unidos U.S., healthcare groups like Community Catalyst and National Association of Community Health Centers and more. So all of these groups that are tremendous leaders in their own fields that are now joining us for more affordable housing because they see that they can’t be successful in reaching their own goals until more people are affordably housed. So I’m really excited about this campaign. I feel like if we get this right it can be a tipping point in terms of increasing that political will that we need.
VALLAS: And where can folks learn more about the campaign?
YENTEL: They can go to the website for the Opportunity Starts at Home campaign and that website is opportunityhome.org.
VALLAS: And we’ll have that on our nerdy syllabus page as well, Diane Yentel is the president and CEO of the National Low-Income Housing Coalition and as I mentioned the report is called “Out of Reach: The High Cost of Housing”. Diane, thank you so much for taking the time to join the show.
YENTEL: Thanks so much for the opportunity.
VALLAS: Don’t go away, more Off Kilter after the break, I’m Rebecca Vallas
[MUSIC]
You’re listening to Off Kilter, I’m Rebecca Vallas. While the Trump administration actively seeks to worsen that national affordable housing crisis, some states and cities are taking matters into their own hands. One example is Denver, Colorado where Mayor Michael Hancock is making affordable housing and curbing homelessness a top priority of his administration. Mayor, thank you so much for taking the time to join the show.
MAYOR MICHAEL HANCOCK: Rebecca, I’m glad to be here with you. Thanks for having me.
VALLAS: So the problem as you have put it is that Denver and I’m using your words here, Denver has a housing market that’s responding to the greatest return on investment, not the greatest needs of our people. Denver is hardly alone in experiencing an affordable housing crisis, this is something playing out in communities across the country. How is it playing out in Denver?
HANCOCK: You’re absolutely right, Rebecca. Cities are dealing with this all over the country. I just left the conference of mayors in Boston where I sat in a meeting with west coast mayors and really just to listen in on the issues they’re dealing with. Affordable housing was number one issue that they’re focused on. And the state of California is having to find $600 million to figure out how to begin to address some of these challenges in their cities across the state. Denver, no different, we have been growing exponentially over the last ten years. We have seen a 30% increase in our population. The market does respond. It responds to growth and it responds to demand but it doesn’t respond necessarily with a very humanistic way of address its challenges and opportunities. It’s an [return on investment] (ROI). And so we’ve all seen our values, if you own property you’ve seen our values go up. And unfortunately as a result of that we’ve also had people who are priced out of the market and we begin to see neighborhoods change over. We begin to see people who have been in their neighborhoods and their homes for a long time being squeezed out of the marketplace. And we see a tremendous shortage of housing, particularly affordable housing. And it’s one of those areas that we as a mayor, my administration, city council are truly focused on trying to find diverse or unique ways in which we can address the issue.
VALLAS: One thing that I found notable about not just how you speak about the affordable housing crisis in Denver but also about the types of solution that your administration has been championing is that when it comes to conversations around affordable housing people often think either about homelessness or they think about affordable housing for me and my family and people like me. It’s sort of an ‘us’ and ‘them’ frame that often results in two separate conversations. You’ve made a real point of noting that the affordable housing crisis yes, absolutely is causing levels of homelessness not just in Denver but nationally but that it impacts people way up the income ladder and you’ve made a real point of actually sharing that your own sister found that she was priced out of the Denver housing market when she tried to move back home from the east coast.
HANCOCK: My sister lost her husband about two years ago. They were living in Alabama, Georgia right on the state boundary lines there. She, after her husband passed away, she decided she would come back home to be with family and she came back to a different Denver than she left. And you’re absolutely right. You hit it right on the nail Rebecca. The reality is this affordable housing crisis is impacting everyone across the spectrum from homelessness to middle income, and to upper middle income. These are working families, many who are we found the greatest need in Denver is our workforce housing needs. 6% of our needs are people who are going to work everyday putting 40, 45 hours a week yet cannot afford the basic, not to be overburdened by rents or mortgages. And so we find that over a third of our people are paying more than 30% of their take home in rents or mortgage. And we even have more folks who are paying over 50%.
Now if you can imagine that, you’re talking about minimizing and really cramping your ability to do a lot of other things including good nutrition, including transportation costs, including health care and other things, recreation, staying healthy and active. Those are things that are severely hampered by rising housing costs. And so what we’ve tried to do is not to bring one size fits all types of solution to the market but to bring various different types of efforts that meet people where they are based on their needs, based on their income levels, based on what they want. They can find a program hopefully that meets their needs and so we’ve got to try different ways of solving this challenge.
VALLAS: And I want to get into several of the different types of policies that your administration has been advancing because some of them really are strong models for a lot of other cities. But you just made some really exciting news actually very recently. You made a big announcement that Denver will now be earmarking 2% of marijuana tax revenue to pay for affordable housing. Would love to hear a little bit more about that new announcement.
HANCOCK: Yeah two years ago we as a city made a commitment to spend $150 million over ten years [on] affordable housing. I think the moment I signed that bill we all consciously knew one, it wouldn’t be enough and it wouldn’t be fast enough. And so we continued our efforts internally. I said to my team, I want you to go back and think about how we can accelerate this. To my finance team’s credit, to the credit of a lot of our stakeholders, they went to work, they kept their head down, they ignored a lot of the chatter on the outside and really forged a strategy that helps us to accelerate our spending but also doubles our commitment in terms of the amount of housing that we can produce in five years. And one of the things that we came back with, if we go have someone, a partner, issue bonds, we can accelerate the amount of building and expansion of our affordable housing inventory but we also will need to add taxes to it. And in order to do that we turned to a revenue source that we didn’t have six years ago and that was marijuana taxation that has been growing exponentially over the last five years.
And so we went back to council where we actually had passed a range from 3 to 15% and said if we add 2% we can add $8–10 million to this complicated financial stacking and add more affordable housing. So now instead of 3,000 in five years we’re expected close to 6,400 units in the next five years.
VALLAS: Which will be a huge step in the right direction.
HANCOCK: Absolutely.
VALLAS: You’ve also acknowledged that while all of this is underway and it can take some real time to create new affordable housing stock you’ve also announced and are actually in a process of opening a whole bunch of vacant apartments to low income and moderate income residents who are struggling to find an affordable place to live because you’ve recognized and this is kind of a cool thing you guys have done, there are all these apartments that are sitting vacant because people can’t afford them and that’s kind of a lose/lose.
HANCOCK: We’ve had a market explosion if you will in terms of construction and they’re all market rate. And that’s part of the ROI that we talked about, that this is responding to a market for the greatest return. Fortunately for us, and maybe unfortunately for some of these developers is some of these units have sat empty. At the same time, we’ve got people who are struggling to find affordable housing so through our lift program, we are creating a voucher type program where we go in and buy down some of these market rate units in partnership with employers to help their employees stay in Denver, stay close to their employment base or where they work and be able to live a little more comfortably with more affordable rents. So this is a temporary way of helping people get in and to get stabilized. We know, we learned if you can stabilize people for two years they typically turn their situation around and become a little more secure in their conditions. So hopefully this will help. But the lift program is one we’re very excited about, it’s a unique partnership that engages employers who also recognize that they don’t need to have their employees traveling an inordinate amount of miles to get to work. It certainly hurts productivity, it hurts retention and it hurts their presence on the job, absenteeism builds up.
VALLAS: Now part of your approach, particularly when it comes to low-income folks in Denver who are struggling to afford housing, explicitly recognizes that housing affordability, housing unaffordability, it doesn’t exist in a silo and your administration has put it as follows; to live a good life you need to have a good job, good health and good housing. Tell us a little bit about how you’ve been working at some of those intersections.
HANCOCK: Well I can tell you, I can take it back to my personal experience. My twin sister and I who are the youngest of ten, we went to something like six elementary schools before the third grade. That really impedes a young person’s ability one, to academically perform at the level at which they’re supposed to perform, certainly intercedes or interrupts the ability to create friendships, lasting friendships, and it takes away your sense of security. And so once we got into the fourth grade and we actually got into public housing we stabilized. We started having friends in the neighborhood, we started doing better academically, we were healthier, our absentee rates disappeared. And so what we were really doing is taking a more comprehensive approach. You’ve got to recognize that in order for people to be secure and to feel good about their condition, they must have accessible, affordable transportation, accessible affordable roof over their heads and to feel secure, access to good nutritious food or good nutrition period. Health care, good schools in the neighborhood, so we have to take an approach and an implementation of a policy that takes into account all of those things that are necessary to help people feel more secure and healthy in their life. And so we can’t just think in silos. We’re going to address homelessness; we must address mental health, health care, good nutrition, recreation, security. We’ve got to take the bold, very broad approach to every one of these challenges.
VALLAS: While you try to tackle affordable housing in Denver you’ve been very clear that you also want to prioritize combating the displacement of historic African-American and Latino communities. Obviously the flip side of the coin when it comes to gentrification and housing prices rising is many people being pushed out. What have you been doing to combat displacement?
HANCOCK: Well, nothing’s more painful and challenging when we feel historic neighborhoods, demographics feel like they’ve been squeezed out of their neighborhoods. It is a psychological battle for those communities. It is a psychological battle for the city as a whole and what we have learned to do, what we have had to do is to pause and to understand what public investment as well as private investment may mean in terms of consequences for a particular neighborhood and bring to bear to those areas of town the tools necessary to secure people in place. Whether it’s good job training, job training programs and we’re talking about people having the first hit at opportunity for jobs that are coming to the area from construction as well as new industries. We’re talking about making sure that we’re working with our small mom and pop shops and they have technical assistance to survive these changes that occur. What we’re doing is raising awareness in terms of how these projects impact communities in terms of those tools to bear. The biggest challenge of course is cultural preservation and a lot of these neighborhoods have very strong cultural norms and cultural traditions and those are disrupted. And to me, that’s one of the greatest tragedies of displacement that occurs and really creates a very emotional sense of pain and emotional anger that results from displacement. We can do a better job, we have to do a better job of making sure we have a better sense of awareness of what happens to neighborhoods when these projects take place and when we see things changing and how we move in. We have tactical teams that are prepared to move into neighborhoods to do what’s necessary to help people remain in place, good technical tools if people want them and hopefully we can help secure them more in their neighborhoods.
VALLAS: In the last minute or so that I have with you, what advice do you have for other mayors or for governors, other folks working at the state and local level to try to address the affordable housing crisis while Washington either does nothing the help or actively tries to take us in the wrong direction.
HANCOCK: Sure. I think one is exactly what we’ve talked about, there is a tendency because we are in such a public space as elected officials, a sense of urgency to try to do something and we tend to move in with a real singular focus on that one particular issue without stepping back and saying ok, what is the real cause of the housing crises. What’s the real cause of displacement and take a more broad approach to it. We cannot address housing unless we can address wage stagnation in America. You can’t address housing if you don’t address education and job skills training. If you don’t address the issues of mobility and cost of moving about a city because there is no greater predictor of poverty than a lack of mobility options to people, they’re locked, they’re stuck. And so you’ve got to be able to take a full, broad approach to solving these issues and unfortunately we have a tendency to want to do a knee-jerk reaction because we want to appease the public and with all the social media platforms, the urge is to get going so you can stop being slammed on those platforms. But the reality is if you really want to make a difference, take a comprehensive approach. Take your time, be methodical and be more effective as opposed to being fast. We like to say, do it right not fast in Denver.
VALLAS: I’ve been speaking with Denver Mayor Michael Hancock. He’s made affordable housing and curbing homelessness a top priority of his administration as you’ve been hearing. Mayor, thank you so much for this work and for taking the time to join the show.
HANCOCK: Been my pleasure, Rebecca, thanks for having me.
VALLAS: Don’t go away more Off Kilter after the break, I’m Rebecca Vallas.
[MUSIC]
You’re listening to Off Kilter, I’m Rebecca Vallas. The federal tax code houses some of the most critical rules that govern our economy. As such, it is also home to a set of hidden racial rules that through intention or neglect provide opportunities to some communities and create barriers for others. But far from addressing, fixing or improving the hidden rules of the tax cost that disadvantage people of color, the partisan tax law that Republicans jammed through congress without a single Democratic vote at the end of last year and which took effect earlier this year strengthened some of these hidden rules and even added new ones. So argued Darrick Hamilton and Michael Linden, two fellows at the Roosevelt Institute who recently teamed to author a report entitled “Hidden Rules of Race are Embedded in the New Tax Law.” I’m joined by both of them to unpack what’s in that report, Darrick and Michael, thanks so much for joining the show.
DARRICK HAMILTON: Thank you.
MICHAEL LINDEN: Thank you for having us.
VALLAS: So just to kick off because it’s a phrase that’s in your report, it’s throughout the report, what is this concept of hidden rules and in particular, what are the hidden rules of race Darrick?
HAMILTON: That’s an excellent question. The point around the hidden rules is oftentimes the way of government, the public policy structures, the ways in which distributions made, the ways in which income is generated et. cetera, it does not have to be racially explicit in its’ writing to have racially disparate impact. For example, something like slavery is not hidden. But when we think about the G.I. Bill, having the G.I. Bill distributed locally in the Jim Crow South, that’s an example of a hidden rule that has different racial impacts if at the local distribution level the people administer the policy in a racial disparate way. Another quick example is Social Security when originally legislated, it excluded domestic workers and farm laborers, which would overwhelmingly black. So there’s an example of a policy that has no race language included but obviously has racial impacts and even racial intentions.
VALLAS: So one of the things, with that out of the way that I think people understand well at this point because there has been enough media coverage for it at this point to have penetrated public opinion I’m hoping sufficiently, that it’s not news to anyone is that this tax law, some people have called it the Trump tax scam that took effect earlier this year and, which I mentioned up top was passed without a single democratic vote overwhelmingly benefits the very wealthiest people in this country as well as wealthy corporations. But your report goes one step further and looks at not just how this law will further exacerbate inequality but it looks at in particular how it will exacerbate racial inequality. Michael, what are some of the ways that you found it’s going to make disparities in income and in wealth by race even worse?
LINDEN: Right well that’s a key point here and as you said I think most people know at this point that the Trump tax law disproportionately benefits the very high income, millionaires and billionaires. And there are long-standing racial income gaps, racial income disparities. White folks are disproportionately richer and people in the top one percent are whiter on average than the overall population. So when you give a tax plan, when you design a tax plan that mainly benefits those at the top of the income distribution that almost means as Darrick said earlier, whether you did it intentionally or not that you are mainly advantaging white families and white households over households of color. But a second point, and I’m definitely going to want Darrick to jump in on this because this is his area of real expertise is that the tax law also exacerbates wealth inequality and we don’t talk enough about wealth inequality. It’s first of all wealth inequality by race is deeper than it is for income and the other key thing is that it’s intergenerational. You can’t pass along, or generally speaking, you can’t pass along your income to the next generation but you can pass along the wealth and all of the advantages that come with that and this law has huge advantages for people who already own wealth. Whether that’s in the form of corporate stocks or trust fund accounts or just massive build ups of assets that they want to pass along to their heirs, there are goodies in this tax law for those folks and there’s nothing in this tax law for people who are trying to build new wealth.
VALLAS: And there’s a number of startling statistics one could throw out here to help people understand what you mean Michael, when you say that the wealth gap by race is even more stark than an already extremely stark income gap but I throw one there, which is that for every $100 in white family wealth some estimates have found that black families hold just $5.04. Some work by the Economic Policy Institute found recently that more than 1 in 4 black households have zero or even negative net worth, which is compared to less than 1 in 10 white families who don’t have any kind of wealth. So really, really stark statistics here to help people understand what we’re talking about there. But Darrick, help us understand how did we get to a place where we have such stark disparities by race when it comes to wealth that persist even in 2018?
HAMILTON: It really fits into this narrative of the hidden rule. Another statistic to point out is that the head of households for blacks that have a college degree have less wealth than [white] families where the head of household dropped out of high school. So it really speaks to this concept of wealth being an inherited advantage. And again, that’s the hidden rule of race because wealth for the black community, not only have they not been able to generate wealth over time as a result of public policy, but there are ample examples through literal riots through cases when blacks have been able to develop business or even homeownership where it was literally taken from them through private violence as well as publically sanctioned violence. So that advantage through wealth is an inherited advantage and the tax provisions that Michael and I point out in this new bill are meant to privilege existing wealth but not generate new wealth. So if we wanted to really have a more fair system, then we would be working on avenues by which we could provide asset building for all populations and we know for the black population which virtually has not been able to accumulate wealth throughout our history then we would be thinking about a tax frame that promotes asset development.
VALLAS: And Michael, bringing you back in, another connection that you guys draw in this report is that the tax law undermines key funding sources for the public sector. And that because the public sector disproportionately employs African-American workers, that will be another way that African-American individuals in this country end up bearing the brunt of, or not enjoying the benefits of this tax law.
LINDEN: Yeah that’s exactly right. The public sector employment has been a key pathway for black families to work their way into the middle class and to break through some of the barriers that have been set up in the private sector. And generally speaking public sector jobs have done a better job at preventing discrimination and have smaller wage gaps between black and white workers and also by the way, smaller gender gaps between male and female workers. So when you attack public sector employment, you are attacking black workers and black families. And this law has I would say two stealth attacks on public sector employment. The first is very obvious, it’s a massive revenue loser and the revenue loss at the federal level will have an impact of folks that are on the state level and whether or not that actually creates real fiscal pressure is one thing but it will certainly create perceived fiscal pressure. You already hear this from conservatives, we’ve got to cut back, we’ve got to tighten our belts, the deficit’s too big. And whenever that kind of rhetoric gets put into practice, it’s public sector employees who bear a huge burden and that means black workers disproportionately. So that’s a hugely important piece of this.
And then the second way that this is an attack on black workers and on public sector employment is through the limitation on the state and local tax deduction (SALT). Now, the SALT deduction, without getting too deep in the weeds here, it is a provision that disproportionately benefits higher income families. But the other thing that it does is it acts as a revenue sharing mechanism between the federal government and state and local governments. It encourages state and local governments to use progressive income taxes to meet their revenue needs. So when you limit that it’s going to put states and localities in tough spot and they’re going to have to make choices about whether they want to continue using progressive income taxes or if they need to revenues to pay for things like libraries and social services and firefighters and roads and all of those things. Or cut back, or this is probably something we’re going to get to in a moment, use more regressive sources of income to make up for it. So those are some ways that this law is going to impact black workers.
VALLAS: That — go ahead Darrick.
HAMILTON: I’m going to jump in real quick and say we’ve been using language like ‘hidden’ and ‘hidden rules’ but in reality a lot of this is almost explicit. A lot of it was intentional.
LINDEN: Right.
HAMILTON: It is probably not a coincidence that the assault was something by which the Republicans decided that they were going to cut back on and not allow to deduct SALT and obviously it has political implications when we look at a map of blue states and red states and the ability to resist some of these changes but they’re happening at the federal level. I think we should be cognizant of that again, this language of ‘hidden’ is relevant but it’s the tax code that doesn’t use explicit language around class or race but a lot of it is pretty obvious.
VALLAS: And I want to dig more into some of the consequences that may occur and that you guys argue are likely to occur from limiting or eliminating the state and local tax deduction so called SALT deduction. And one of those is an issue we’ve covered extensively on this show over the years and which Darrick I actually talked recently with you about on this show after you were sharing a stage with Bernie Sanders and bringing in some of these issues. And that’s the issue of fines and fees which have increasingly become one of the ways that states and localities are balancing their budgets. Folks will remember from Ferguson but it is way more widespread than just Ferguson. People, the courts effectively becoming revenues centers and that being a major source of income for state and local governments. You guys argue that limiting the state and local tax deduction may actually cause some of that Ferguson-like behavior on the part of states and localities to become even worse. Darrick, how isthat?
HAMILTON: The political constraints associated with now not being able to have the SALT deductions will have revenue implications. And those revenue implications as Michael pointed out will affect public sector workers, which are disproportionately black, public sector benefits which are needed for many communities. But what’s even perhaps more pernicious is the regressive nature by which states may turn to to address their budgetary shortfalls. And that includes fines, fees and traffic stops, traffic ticketing and we know that populations that are economically and politically marginal, they become easier prey by which we can extract resources from. So there are clear racial implications associated with this and then when we link in the intersection of the criminal justice system and the ways in which blacks are treated in the criminal justice system, there is grave concern ahead as a result of that SALT deduction.
VALLAS: And this –
LINDEN: I want to add on.
VALLAS: Oh please do, Michael.
LINDEN: I was just going to add on, the ways this is going to work, imagine you’re a city or a town and you know you need more revenue. You’re revenue constrained, you’ve got more needs, you’re trying to invest and one option you have is to raise a progressive income tax. Asking your richer resident to pay a little bit more. Now that’s always a challenge politically, right, we know that richer people have more political clout; they have more levers to impact the political system. That’s always harder but at least before the locality could say listen, we’re going to raise your taxes but you can deduct that from your federal taxes so it’s not quite as big of a hit on you as you think it is. That’s gone now, or that’s definitely diminished now and so now those same local decision makers are going to decide between progressive income tax, which is even harder to do or this hidden revenue where they just encourage their police officer to make more speeding tickets. And we know that’s what happens. There is good research that shows when revenue goes down in a particular place the next year literally speeding tickets go up. It’s a direct relationship and we also know what happens when there are more police stops. That’s not race blind situation, that’s not a generic impact. Those have racialized implications.
VALLAS: And folks may remember the Department of Justice, Trump’s Department of Justice under Jeff Sessions has not been silent on this issue. They’ve actually taken us significant steps backwards by rolling back some important Obama era guidance that was directed at state and localities. Basically saying hey folks, these Ferguson like practices are actually potentially unconstitutional and there was guidance sent by the Department of Justice very clearly to state and localities during the Obama administration making clear if states and cities move forward with these types of practices and continue these types of practices, they may actually be jeopardizing certain streams of federal funding. That was a very clear message under the previous administration. Jeff Sessions decided to throw that guidance in the trash. But this is yet another potential catalyst for worsening these practices, just it’s hidden in what otherwise looks like a tax law.
HAMILTON: And Rebecca, if I may elevate a point that you made earlier which is not one Democrat voted for this bill. So we in the article talked about it in terms of the Trump tax cut, and many people call it the Trump tax cut, but it’s really the Republican tax cut. I think they own this as well, it’s not simply Donald Trump so if he’s out of office the next round or he’s out of office in the next six years or so, whenever he’s out of office this lasting bill will be the result of a Republican congress and not one Democrat and as I pointed out before it has direct political, racial, and class implications.
VALLAS: So in the last couple of minutes that I have with you both you don’t just walk through in this report, all of the ways, and we’ve discussed now some of them that this tax law is a recipe for worsen already horrific racial inequality in this country, but you also lay out a vision for what tax policy in the United States could actually take us in the right direction and make us a more fair country as well as one that has less racial inequality on income and on wealth. Michael starting with you and Darrick I want to you hear you weigh in as well, what does that vision look like. What could we actually see that could be a tax code that doesn’t reinforce these kinds of hidden rules.
LINDEN: I mean first we should start from an understanding of what actually creates shared prosperity and opportunity and it’s not let’s shower more benefits on those who already have it and hope it trickles down. It’s really about power and making sure that everyday people and everyday families and everyday workers have power over their own lives, economic power, political power and they can make choices that are right for them. And so we want to design a tax code that is conducive to that kind of thinking of how to create real growth and real opportunities. So what does that mean? That means we have to get power out of the hands of the very small number of people who have it. So a more progressive income tax, we should be thinking about ways to tax wealth. I know this is a complicated area but other countries do it and we could do it too. And what are ways that we could help people build wealth and political and economic power in their own lives as opposed to reinforcing the disparities that already exist? And that’s a good segue, Darrick has some really great ideas for how to do that.
VALLAS: Darrick you’re going to get the final word.
HAMILTON: [LAUGHTER] Well first of all, this tax bill is going to cost $2 trillion over the next decade. And we will observe that the U.S. economy is not going to collapse as a result of that. So there are lessons to be learned for the deficit hawks, particularly on the left who always constrain themselves from having big, bold ideas with the question of how can we pay for it? How can we afford it? Clearly the right didn’t ask that question when they just passed this $2 trillion tax cut. But as Michael pointed out, a concern is that the distortion of power. So by having this economic redistribution towards the wealthy, not only did they get greater economy power and might to rig rules in their favor but they also get a great deal more political power. So we want to redistribute a tax system that’s fairer that allocates both power and resources in a more reasonable and fair manner. But that’s not enough. What we also want is to have some bold ideas that offer people the ability to accumulate assets and economic resources and economic inclusion and civic engagement and social equity all together. And one political that William Darity and I have advocated a great deal is called ‘baby bonds’. The source of inequality is not behavior; it’s not that some individuals are more astute, save more. But really what happens if we think about especially middle income people in general, it’s having access to resources at a key point of their life that allows them to purchase the appreciation of an asset like a home, a debt-free college education or some capital to start a business. Basically wealth begets more wealth and if we had something like universal child trust accounts that were seeded at birth in a progressive manner based on the wealth position in which your family is born, and which you could use when you become an adult to purchase some asset and give you the economic security that the wealthy have or at least the better off in our society, that’s what we need. And we already spend that money; it’s been estimate that we spend upwards of $500 billon a year on asset promotion but the problem is to whom it’s distributed. The bottom 60% of earners receive about 5% of that allocation, whereas the top 5% get about 60% of that allocation. So simply taking what we already spend and doing it in a more progressive manner so that everybody can have an opportunity for asset creation. That’s a better way to spend $2 trillion.
VALLAS: I’ve been speaking with Darrick Hamilton, a professor at the New School and a fellow at the Roosevelt Institute as well as Michael Linden, also a fellow at the Roosevelt Institute. They joined forces on a recent report called “Hidden Rules of Race are Embedded in the New Tax Law”. You can as always, of course find it on our nerdy syllabus page on Medium. Thanks to you both for taking the time to join the show and for making the connections between what often feel like very separate conversations.
HAMILTON: As always, thank you too.
LINDEN: Thank you Rebecca.
VALLAS: And I’ll have you both back on soon I’m sure.
And that does it for this week’s episode of Off Kilter, powered by the Center for American Progress Action Fund. I’m your host, Rebecca Vallas, the show is produced each week by Will Urquhart. Find us on Facebook and Twitter @offkiltershow and you can find us on the airwaves on the Progressive Voices Network and the WeAct Radio Network or anytime as a podcast on iTunes. See you next week.
This program aired on June 14th, 2018
