A place to live is one of the most basic human necessities on earth. Yet for many across the country, recent economic trends have made finding an affordable place to live increasingly difficult.

Today, more than half of America’s homes are at higher prices than they were before the Great Recession. And the issue doesn’t just impact buyers – according to the National Low Income Housing Coalition, no state in America has enough affordable rental housing for the lowest income renters. In California specifically, the state faces a shortage of over 1.1 million available rental homes for extremely low income (ELI) individuals.

Source: National Low Income Housing Coalition

In somewhat rare form, this issue hurts not just those at the bottom, or ELI and homeless individuals, but also those at the top, who also have to cough up more dough in order to afford a home or luxury apartment. Alan Greenlee, Executive Director of the Southern California Association of Nonprofit Housing, says he’s sure “Dr. Dre is pissed off that he had to pay 15 million dollars for Gisele Bundchen and Tom Brady’s house in Malibu,” just like regular Americans across the country are growing progressively disheartened by and frustrated with the trend.

Luckily, a multitude of creative and ambitious tactics are already underway across the country. Some Americans are choosing to participate in the ever-growing “Yes in My Backyard” or YIMBY campaign, which seeks to convert extra living spaces in backyards into licensed and habitable areas for low-income or homeless individuals. The movement has local chapters across the United States, and just held its annual YIMBYtown conference in Boston in late September. In particular, YIMBY has aggressive goals in California, where it sets out what it calls an “Inclusionary Policy Design” to compressively address the housing crisis in the state.

Local legislators are also stepping in. In Denver, the city is subsiding luxury apartments, allowing individuals who make between 40-80% of average area incomes to pay only up to 35% of their salaries to live in expensive apartments that would otherwise sit empty. In Austin, nonprofits and grassroots organizers pushed in June for the City Council to approve a bond initiative that would dedicate $300 million to build new permanently affordable housing units. And in Los Angeles, a variety of propositions and measures have been paying special attention to affordable housing since 2016.

Although these tactics and transformations are bold and well-intentioned, are they doing enough?

At the end of the day, the housing crisis sweeping across the nation is “a pretty simple economic issue. Supply under-paces demand, and as a result, prices go up,” says Greenlee.

While the relationship between supply and demand relationship is the root cause, in Denver, which was pegged to be one of the nation’s “hottest” housing markets in 2018, “sales and construction activity have slowed,” according to Ben Cassleman at the New York Times, meaning less homes are on the market. In fact, across the US, residential investment has been falling steadily for three consecutive quarters, meaning construction and brokers fees are continually shrinking. From there, add in rising mortgage rates. Mix together all of those forces and there you have it – a deadly combination that created a slowdown in the housing economy, leaving Americans to feel the burn all across the country.

Citizens have chosen to adapt in different ways. From Greenlee’s perspective, it comes down to two options: either live in a “catastrophically overcrowded situation” in order to afford high rent in a desirable or at least tolerable place, or move further away from where you work, which in Los Angeles means that you usually subject yourself to a horrific morning commute.

In California specifically, Greenlee argues that the state is a victim of how good it was at building housing after the second World War. At that time, everyone believed that living in the coastal state meant you could get a house, a yard, and a nice green lawn. Today, that is nowhere near the case. Compound the trend of not building enough homes over the course of an entire generation, and Greenlee says you have the very simple explanation for how we arrived at where we are today.

One way to curb the higher costs that come with less supply may be through higher wages. From 2007 to 2015 in the United States, the median price of rent rose 6 percentage points, whereas the median income for renter households rose only 1%. In California in 2017, a worker would have needed to earn around $31 an hour or work 118 hours a week at minimum wage just to afford a two-bedroom apartment. Perhaps even more startling is the fact that rents over the last 10 years in California have gone up 13%, but incomes have actually gone down 6%, says Greenlee.

Source: National Low Income Housing Coalition

But of course, California just raised the minimum wage to $13.25 an hour, with a progressive system set up to continue increases for the next few years. While higher wages translate to more money in people’s pockets to spend on housing, that policy change—although certainly not intended solely to fix the housing crisis—addresses the symptom, which is expensive houses, not the cause, which is not enough homes on the market.

There’s also a notion in California that trends such as our growing technology sector—when combined with the state’s historic dominance in the entertainment industry plus boundless sunshine and lanky palm trees—have caused an influx of migration, just making the issue worse. On this topic, Dr. Benjamin Henwood, a professor at the University of Southern California and an expert on homelessness and affordable housing, notes that while creating jobs and attracting Americans towards our coast is great, “people who fill these jobs need a place to live.”

However, Greenlee says not so fast – if no one else moved to California, just by birth and death rates alone over the next 10 years we still would not have enough housing to meet demand. Thus, while our robust economy certainly draws people in, the core issue comes back to basic economics.

Given what we know about the need for more housing in Los Angeles to meet demand, how can we get people to want to do something about it? Perhaps the answer lies in a deeply correlated issue that we see firsthand in Los Angeles every day.

No matter whether you live Downtown or in West Hollywood, you’ve likely seen homeless people living on the street in your area. Even if you live in a suburb where the homeless are nowhere to be seen, you probably take the freeway to work, where you get to see first-hand the tents and makeshift shelters that our city’s massive homeless population is forced to live in. The issue is unavoidably and unquestionably visible.

Although homelessness is a function of many contributing factors, on the most basic level, “homelessness is primarily a housing issue,” says Henwood. Although not all affordable housing addresses the needs of homeless people who are out of the housing market entirely, Henwood also argues that “housing shortages will continue to undermine best efforts to address homelessness.”

A plethora of research backs up his argument. One 2017 study by a data agency based out of San Francisco found that eight of the 10 states with the largest number of homeless individuals also have the country’s highest average home prices.

In 2017, California was one of 10 states with both high homelessness and the most expensive housing (Inman)

Furthermore, Zillow researchers in 2017 found that the “relationship between rising rents and increased homelessness is particularly strong in four metro areas currently experiencing a crisis in homelessness,” one of which was—unsurprisingly—Los Angeles.

Source: Zillow

Thus, although getting the prices down for apartments for low-to-middle income Americans by building more places to live for them may seem unrelated to homelessness, in general, less expensive rent and more options for Americans will help not just those currently on the search for a home, but could potentially also have the trickle-down effect of reducing the number of homeless as well.

After voters in Los Angeles had to live and breathe in direct contact with the sprawling homeless population for a number of years due to changed regulations, they took action, and in November 2016 passed measure JJJ, which “changed fundamental land use rules around how you build in order to make sure that if developers are going to make something, it had to include housing that was available for low-income people” says Greenlee. That same year, voters also passed Proposition HHH, which funded affordable housing through a bonding program. And before that, the County in 2015 dedicated $100 million a year to support affordable housing development. Why the sudden change? According to Greenlee, “because people decided our current situation related to homelessness was intolerable.”

Thus, although housing affordability may be deeply rooted in failed city planning and put tremendous financial strain on a plethora of individuals, true visibility of the issue through the homeless is what caused Angelinos to act. And by Greenlee’s standards, while the programs in place are not an end-all solution, they are certainly steps in the right direction.

Given that a variety of measures and propositions are already in place, what more can people in Los Angeles do? First, support similar initiatives as they show up on the ballot. And second, Greenlee says that financially secure Americans can be vocal in their support for greater density and affordable housing in their areas rather than “going bananas” when they hear affordable housing is coming in. In particular, Greenlee cited a recent housing development program put forward by the Mayor of LA, in which council districts would be required to create temporary housing. In some areas – like Koreatown, Venice, and Sherman Oaks – local residents met that proposal with furry, enraged that they would have to live in close contact with the homeless. While it’s human nature for people to want to be separate from the poor, that argument ignores the fact that homeless Californians are already residents of our neighborhoods—they are just forced to sleep on the street rather than in apartments or homes.

Protestors in Koreatown, Los Angeles reacting to plans for homeless housing in their area (LA Weekly)

To more comprehensively address the issue, Angelinos—and for that matter, Americans across the country living in areas where housing prices have spiked—may need to get more comfortable with homeless and extremely low income individuals moving into their neighborhoods. Although that is sure to be an uncomfortable transition, it’s a necessary one if we are serious about addressing the crisis. In long-run, everyone from Dr. Dre to the homeless living in tents under the freeway stands to benefit.

In a medical emergency, dial 9-1-1 – it is ingrained into every American’s head from childhood. What is only realized after you call 9-1-1 and the ambulance takes you to the hospital is the hefty bill that comes with it. But what are we supposed to do in a state of emergency, not call an ambulance?

As medicine advances, more patients are being treated effectively and more lives are being saved. However, the costs associated with these advances are astronomical, and many Americans don’t even know how much they are paying for healthcare. Similar to the habit of calling an ambulance, most people don’t immediately start thinking about cost and start questioning their course of treatment – they just want to get better. This is one of the root causes of the healthcare crisis in the United States. Patients trust their doctors, and they should. However, they are increasingly being steered in more expensive directions because of new technologies and increased healthcare costs across the nation.

Of course, the healthcare crisis in the United States is multi-faceted. It involves the question of who has access to healthcare, health insurance costs, political interest, lobbying power, mergers and more. Often the topic of healthcare gets so complicated that people don’t even know what their opinions are or how to address the issue. But one thing is extremely clear, healthcare costs are rising and it is directly affecting Americans. According to The Wall Street Journal, the United States spends more per capita on health care than any other developed nation. Soon, the U.S. will spend almost 20 percent of its GDP on health. This is not because Americans are buying more healthcare overall, but because what they are buying is becoming increasingly more expensive. Health insurance costs and out-of-pocket prices are increasing. For a healthy individual, this is likely just increased costs associate with annual visits to a general physician. Although significant, this doesn’t have dramatic impacts on individuals and families. However, for individuals with life-threatening diseases, disabilities or cancer, these costs become a huge burden. As seen in the chart below, the price of prescription drugs due to pre-existing conditions and hospital care expenses have grown exponentially since 2000. Physician and clinical service prices have increased as well, but more moderately.

When looking at specific individuals plagued by horrible circumstances of health, it is easy to see how these increased prices have become a problem. For example, according to the American Diabetes Association, the total costs of diagnosed diabetes in 2017 was $327 billion, increasing by $82 billion since 2012. For a Type One Diabetic who is insulin dependent, many of these costs are associated with the insulin they must purchase in order to survive. When grouping together Type One and Type Two Diabetics, the largest components of expense are hospital impatient care (30 percent) and prescription medications to treat complications of diabetes (30 percent). These dramatic numbers are a trend seen among life-long diseases that require many doctor appointments, occasional hospital visits and a lot of medication.

A Duke study published last year, where 300 cancer patients were surveyed, revealed the financial distress a cancer diagnosis causes a household. On average, cancer patients in this study were spending 11 percent of their household income on their cancer treatments. Those who reported the most financial trouble were spending more than 30 percent of their household income on their care, even though more than 60 percent of the people surveyed were covered by private insurance. These expenses are not the first thing someone things about when they receive their diagnosis, but for many, they are very difficult to ignore and that has an impact on their health. An associate professor, oncologist and member at the Duke Cancer Institute, S. Yousuf Zafar, says, “The financial toxicity of cancer treatments is impacting patients’ ability to pay for care, and is likely impacting how well they do.” Zafar says during the recession ten years ago she started noticing patients asking for less expensive treatments and wanting to cut back on the frequency of their treatments. This is a trend that has continued even as the economy has recovered – even in privately insured patients.

Although the United States is constantly making medical advances with treatments that can dramatically increase an individual’s quality of life and life expectancy, the economic burdens are holding a lot of patients back from embracing these new technologies.

A new, advanced diabetes technology, the Dexcom G6, continuously monitors glucose levels in a revolutionary way. With insurance, most patients have to pay an out-of-pocket cost of $349 for a box of three sensors that last ten days each. That is about twelve boxes a year, for a total of over $4,000 a year spent on Dexcom supplies.

Revolutionary drugs are now also being created to treat cancer. Recently, James P. Allison and Tasuku Honjo were just awarded a Nobel Prize for their research on cancer immunotherapies. Immunotherapy treatments are seen as a beacon of hope for many people with cancers such as melanoma, lymphoma, lung, kidney and bladder cancers. It is amazing. However, when these treatments are unaffordable to most, they are not being utilized to their full potential. Ezekiel Emanuel, a professor at University of Pennsylvania’s Perelman School of Medicine, says, “What we’ve seen over the last two decades is the cost of cancer drugs go through the roof. Every year, the introductory price seems higher and higher and higher.”

According to Forbes, the cost of cancer drugs has increased from $50,000 per patient in the mid-1990s to $250,000 today – four times the median U.S. household annual income. A treatment of $850,000 for a single patient is not unheard of with immunotherapy. Not only does this mean people can’t access these medications, it means they are unsustainable in the U.S. health system as a whole. However, still, the U.S. government plans to increase its budget towards medical research for the third consecutive year.

The thought of not calling 9-1-1 because of the cost of an ambulance ride seems absurd. But people with life threatening conditions are now forced to consider limiting or withdrawing treatments and care that could have extraordinary impacts on their health conditions.

With a health system that has become unsustainable, how can the United States maintain a healthy, long-living country? The answer may be to look at preventative care, which will cost less in the long-term. Former head of the Centers for Medicare and Medicaid Services under President Obama, Dr. Donald Berwick, notes,” We put far more into hospital care than we do keeping people from having to be in the hospital.”  However, with this idea lies another problem.  Going back to the almost 20 percent of the nation’s GDP being within the healthcare sector, it is evident how the significantly the industry contributes to the country’s economy. While much of this has to do with spending, another – fairly large – part of this has to do with the employment the health care industry has brought Americans. In December 2017, the health care industry surpassed the retail industry as the country’s largest employer. It surpassed the manufacturing sector in 2008.

This points to the vast amount of power there is in the industry, which makes it such a tough issue to tackle. Healthcare is a complicated issue, and there is no easy answer. However, it is unfair to ignore the many Americans who are burdened with these costs, when they are already being burdened by a life-altering medical condition.

Amazon has revolutionized online commerce. It has created a monopoly-like business with the online sales of books and has aggressively expanded into other product categories. In addition, it has enticed countless customers with its two day prime shipping option. Recently, Amazon continues to lead the way for modern US businesses with its decision to raise the minimum wage from $11 to $15. This move was partially enacted to rectify the bad reputation it earned given Amazon’s harsh treatment of its workers. However, Amazon does not want to lose its competitive advantage by paying a higher minimum wage, and so it is now lobbying for a national minimum wage hike. Initially the rise may result in the loss of customers due to higher prices on goods, but it could help Amazon entice new employees. The increase in minimum pay will create both positive and negative effects for the company. 

Amazon has been notorious for its poor treatment of workers. In 2015, interviews with current and former employees revealed Amazon’s highly competitive and hostile work environment. Senior managers had incentives to attack one another’s ideas in meetings believing conflict creates innovation. Workers were penalized or pushed out for suffering a cancer diagnosis, miscarriage, or other personal challenges. However, it was reported that there were many opportunities to move ahead in the company. Amazon is all about growth and so it is not a good environment for a workers who are content to stay in the same position. Consequently, Amazon maxes out its pay scale after several years at each tier in an effort to promote forward momentum. In addition, the company was known for providing good benefits which contribute to total compensation. (Adams) While Amazon’s aggressive culture did have some redeeming attributes, its constant need for growth resulted in a cutthroat work environment. 

Amazon treated its lowest paid employees the most poorly. There have been numerous reports of warehouse workers who have suffered from workplace accidents/injuries and who have been fired or put on unpaid leave and so been unable to produce income. There are other cases of warehouse employees who couldn’t overcome the fatigue of the job and so were forced to quit before they got injured. (Sainato) According to the Guardian (https://www.theguardian.com/technology/2018/jul/30/accidents-at-amazon-workers-left-to-suffer-after-warehouse-injuries), “Amazon’s warehouses were listed on the National Council for Occupational Safety and Health’s ‘dirty dozen’ list of most dangerous places to work in the United States in April 2018. The company made the list due to its pattern of unsafe working conditions and its focus on productivity and efficiency over the safety and livelihood of its employees.” (Sainato) Amazon’s reputation as a power-hungry corporation with little regard for its workers has resulted drastic changes such as the change to its wage scale. 

Amazon has expanded its markets into many different regions of the US economy. According to the Forbes (https://www.forbes.com/sites/lauraheller/2016/11/30/amazons-growing-stranglehold-on-the-us-economy/#d407c09eb408), the Institute for Local Self-Reliance states, “Today, half of all U.S. households are subscribed to the membership program Amazon Prime, half of all online shopping searches start directly on Amazon, and Amazon captures nearly one in every two dollars that Americans spend online. Amazon sells more books, toys, and by next year, apparel and consumer electronics than any retailer online or off, and is investing heavily in its grocery business.” (Heller) Amazon’s tactic is to draw members in using Amazon Prime, which gives exclusive offers and better prices. Consequently, Amazon seeks to be the website that consumers look to first for the best deals. (Heller) Once Amazon had gained a substantial number of Prime Members, the company announced in April 2018 that it would raise the cost of membership from $99 to $119. This helped drastically improve Amazon’s profitability. The company’s net income for the first quarter of 2018 was $1.63 billion, compared with net income for the first quarter of 2017 of $724 million. A major factor in this jump in profit is its cloud computing and advertising businesses as well as the boost to the cost of Prime members. Profits are expected to continue to grow. (Wingfield)

Amazon’s rapid growth created the necessity to hire more employees. However, the growth in jobs came mostly at lower levels. Amazon is leading the shift in the United States’ economy to technology focused jobs. According to USA Today (https://www.usatoday.com/story/tech/columnist/2017/01/13/amazons-jobs-creation-plan-comes-amid-labor-pains/96488166/), “The impact is felt far beyond Amazon, labor and retail experts said. The breakneck growth of Amazon is ‘upending’ the retail industry, which accounts for one out of every eight jobs in the USA, says Stacy Mitchell, co-author of a recent report that concluded Amazon eliminated about 149,000 more jobs in retail than it has created in its warehouses.” (Swartz) While Amazon may be creating jobs in its own market, it exerts a downward pressure on wages as competitors that are pressured by Amazon’s low prices are forced to cut costs too. Their growth doesn’t necessarily make up for the losses it’s causing. This graphic demonstrates the rapid increase in employees that Amazon has hired from 2007 to 2018.

 

Amazon’s work force has grown by more than 6x since 2017. While the growth has been rapid, the pay for low-wage workers has not increased until 2018. 

Consequently, while Amazon is creating jobs, the type of jobs it is creating is not beneficial for the overall economy as these jobs do not provide a livable wages. This exerts pressure on government aid where costs are paid by the taxpayers. Additionally, many of the jobs that are being created are only part-time positions which cannot support an individual, let alone a family. Amazon is just one example of a major corporation trying to characterize its underpayment of workers as a boost for the American economy. Walmart is another culprit. (Picchi) According to CBS News (https://www.cbsnews.com/news/amazon-walmart-retail-hiring-wages/), “In its latest hiring plan, Walmart said it will add 10,000 retail jobs. The company didn’t immediately return a request for comment about what those jobs will pay or what types of roles they’d represent. The typical Walmart sales associate with two children earns little enough to qualify for government assistance, such as food stamps, Medicaid and home energy assistance, Making Change at Walmart said.” (Picchi) These individuals have jobs yet receive the same government assistance as an unemployed individual would receive. Amazon and Walmart are creating these jobs not to boost the economy, but to boost their profitability. Unfortunately for Amazon, this story has been analyzed and reported. Therefore, in order to boost its public image, Amazon raised the minimum wage from $11 an hour to $15 an hour. 

Amazon sought to rejuvenate its reputation with the wage boost. However, the company didn’t want to lose its competitive edge by raising wages, and so is lobbying the rest of the country to follow suit. Amazon did not lead other retail chains with this increase. Last year, Target announced that it would raise its minimum wage to $15, Costco raised its minimum pay to $14 an hour, and in January of 2018, Walmart stated that it would raise its starting wages to $11 an hour. The federal minimum wage is $7.25, however it varies from state to state. In California, it will rise to $15 on January 1st. According to Sen. Bernie Sanders, it was inevitable that Amazon would increase minimum pay levels. He is quoted in Amazon to Raise Minimum Wage to $15 for All U.S. Workers, stating, “‘I think they saw the writing on the wall. I think they saw the calculation that it was indefensible that a man whose wealth is over $150 billion be able to continue paying workers wages that are so low that they are forced to rely on federal benefits.’” (Weise) The public is feeling wealth inequality more as the gap continues to grow in the United States and, the pressure for change is growing.

Amazon may appear to be creating positive changes for its workers with this wage boost, however Amazon may in fact be cutting other benefits in this process. The minimum wage was increased to $15 an hour, but another new policy eliminated bonuses and the ability to receive stock in the company for warehouse workers. Amazon had utilized a restricted stock unit program which gives shares to workers who have stayed with Amazon for a certain amount of years. This program will now be phased out. (Pisani) Further, there are Amazon employees who are against the increase in minimum pay. According to The Washington Post (www.washingtonpost.com/business/economy/amazons-15-minimum-wage-doesnt-end-debate-over-whether-its-creating-good-jobs/2018/10/05/b1da23a0-c802-11e8-9b1c-a90f1daae309_story.html?utm_term=.2ef42b164dd0), employees voiced these concerns: “They asked why people who had been toiling in the company’s warehouse for years would now be paid similarly to new employees and temporary holiday help.” (Long) These offsets in benefits, as well as the perceived advantage for new employees over old employees, harm the positives created by a higher minimum wage. It seems clear that companies will attempt to get some concessions for raising salaries through cuts in different areas. 

Amazon is a powerhouse in terms of efficiency and profit growth. The company is revolutionizing the future and the technological shift in the American economy. With this leadership comes a responsibility and the public has begun to hold Amazon responsible for its treatment of workers. Amazon has recently announced that it will be raising its minimum wage from $11 to $15. This may be the result of a movement for livable wages in the United States. However, the impact of Amazon’s contribution to the prevalence of low wage jobs will not simply be remedied with this increase.

Sources:

 

https://www.nytimes.com/2018/04/26/technology/amazon-prime-profit.html

https://www.forbes.com/sites/lauraheller/2016/11/30/amazons-growing-stranglehold-on-the-us-economy/#d407c09eb408

https://www.forbes.com/sites/susanadams/2015/08/18/how-people-who-work-for-amazon-really-feel/#550db6343305

https://www.theguardian.com/technology/2018/jul/30/accidents-at-amazon-workers-left-to-suffer-after-warehouse-injuries

https://www.statista.com/chart/7581/amazons-global-workforce/

https://www.usatoday.com/story/tech/columnist/2017/01/13/amazons-jobs-creation-plan-comes-amid-labor-pains/96488166/

https://www.cbsnews.com/news/amazon-walmart-retail-hiring-wages/

www.washingtonpost.com/national/amazon-to-cut-bonuses-stock-benefits-as-it-raises-wages/2018/10/03/03248dc4-c757-11e8-9c0f-2ffaf6d422aa_story.html?utm_term=.d635eb0e156d.

www.washingtonpost.com/business/economy/amazons-15-minimum-wage-doesnt-end-debate-over-whether-its-creating-good-jobs/2018/10/05/b1da23a0-c802-11e8-9b1c-a90f1daae309_story.html?utm_term=.2ef42b164dd0