Two factors help account for increasing poverty: eroding employment opportunities for large segments of the workforce and the declining value and availability of public assistance.
ERODING WORK OPPORTUNITIES
Reasons why homelessness persists include stagnant or falling incomes and less secure jobs which offer fewer benefits.
Low-wage workers have been particularly have been left behind as the disparity between rich and poor has mushroomed. To compound the problem, the real value of the minimum wage in 2004 was 26% less than in 1979 (The Economic Policy Institute, 2005). Factors contributing to wage declines include a steep drop in the number and bargaining power of unionized workers; erosion in the value of the minimum wage; a decline in manufacturing jobs and the corresponding expansion of lower-paying service-sector employment; globalization; and increased nonstandard work, such as temporary and part-time employment (Mishel, Bernstein, and Schmitt, 1999). To combat this, Congress has planned a gradual minimum wage increase, resulting in minimum wage raised to $9.50 by 2011.
Declining wages, in turn, have put housing out of reach for many workers: in every state, more than the minimum wage is required to afford a one- or two-bedroom apartment at Fair Market Rent.1 A recent U.S. Conference of Mayors report stated that in every state more than the minimum-wage is required to afford a one or two-bedroom apartment at 30% of his or her income, which is the federal definition of affordable housing. Unfortunately, for 12 million Americans, more then 50% of their salaries go towards renting or housing costs, resulting in sacrifices in other essential areas like health care and savings.
The connection between impoverished workers and homelessness can be seen in homeless shelters, many of which house significant numbers of full-time wage earners. In 2007, a survey performed by the U.S. Conference of Mayors found that 17.4% of homeless adults in families were employed while 13% of homeless single adults or unaccompanied youth were employed. In the 2008 report, eleven out of nineteen cities reported an increased in employed homeless people. With unemployment rates remaining high, jobs are hard to find in the current economy. Even if people can find work, this does not automatically provide an escape from poverty.
DECLINE IN PUBLIC ASSISTANCE
The declining value and availability of public assistance is another source of increasing poverty and homelessness. Until its repeal in August 1996, the largest cash assistance program for poor families with children was the Aid to Families with Dependent Children (AFDC) program. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (the federal welfare reform law) repealed the AFDC program and replaced it with a block grant program called Temporary Assistance to Needy Families (TANF). In 2005, TANF helped a third of the children that AFDC helped reach above the 50% poverty line. Unfortunately, TANF has not been able to kept up with inflation. In 2006-2008, TANF case load has continued to decline while food stamp caseloads have increased.
Moreover, extreme poverty is growing more common for children, especially those in female-headed and working families. This increase can be traced directly to the declining number of children lifted above one-half of the poverty line by government cash assistance for the poor (Children's Defense Fund and the National Coalition for the Homeless, 1998). As a result of loss of benefits, low wages, and unstable employment, many families leaving welfare struggle to get medical care, food, and housing.
People with disabilities, too, must struggle to obtain and maintain stable housing. In 2006, on a national average, monthly rent for a one-bedroom apartment rose to $715 per month which is a 113.1% of a person’s on Supplemental Security Income (SSI) monthly income (Priced Out in 2006). For the first time, the national average rent for a studio apartment rose above the income of a person who relies only on SSI income. Recently, only nine percent of non-institutionalized people receiving SSI receive housing assistance (Consortium for Citizens with Disabilities, 2005). Most states have not replaced the old welfare system with an alternative that enables families and individuals to obtain above-poverty employment and to sustain themselves when work is not available or possible.
A lack of affordable housing and the limited scale of housing assistance programs have contributed to the current housing crisis and to homelessness. According to HUD, in recent years the shortages of affordable housing are most severe for units affordable to renters with extremely low incomes. Federal support for low-income housing has fallen 49% from 1980 to 2003 (National Low Income Housing Coalition, 2005). About 200,000 rental housing units are destroyed annually. Renting is one of the most viable options for low income people (Joint Center for Housing Studies).
Since 2000, the incomes of low-income households has declined as rents continue to rise (National Low Income Housing Coalition, 2005). In 2009, a worker would need to earn $14.97 to afford a one-bedroom apartment and $17.84 to afford a two-bedroom apartment. There has been an increase of 41% from 2000 to 2009 in fair market rent for a two-bedroom unit, according to HUD (National Low Income Housing Coalition, 2009). The lack of affordable housing has lead to high rent burdens (rents which absorb a high proportion of income), overcrowding, and substandard housing. These phenomena, in turn, have not only forced many people to become homeless; they have put a large and growing number of people at risk of becoming homeless.
Housing assistance can make the difference between stable housing, precarious housing, or no housing at all. However, the demand for assisted housing clearly exceeds the supply: only about one-third of poor renter households receive a housing subsidy from the federal, state, or a local government (Daskal, 1998). The limited level of housing assistance means that most poor families and individuals seeking housing assistance are placed on long waiting lists. Today the average wait for Section 8 Vouchers is 35 months (U.S. Conference of Mayors, 2004). Excessive waiting lists for public housing mean that people must remain in shelters or inadequate housing arrangements longer. In a survey of 24 cities, people remain homeless an average of seven months, and 87% of cities reported that the length of time people are homeless has increased in recent years (U.S. Conference of Mayors, 2005). Longer stays in homeless shelters result in less shelter space available for other homeless people, who must find shelter elsewhere or live on the streets. In 2007, it was found that average stay in homeless shelters for households with children was 5.7 months, while this number is only slightly smaller for singles and unaccompanied children at 4.7 months. (The U.S. Conference for Mayors, 2007).
In 2003, the federal government spent almost twice as much in housing-related tax expenditures and direct housing assistance for households in the top income quintile than on housing subsidies for the lowest-income households (National Low Income Housing Coalition, 2005). Thus, federal housing policy has not responded to the needs of low-income households, while disproportionately benefiting the wealthiest Americans.