Big Smoke

'cause it's hard to see from where I'm standin'

Created or Preserved

TAGS: None

Mayor de Blasio has unveiled his plan to get 200,000 units of affordable housing in this city. Like any plan from a Democrat, it’s better than any other plan offered, yet woefully insufficient to the task at hand and hamstrung before it’s even out the gates thanks to politics. It’s not even 200,000 new units of affordable housing, as was his original promise. It contains the magic words when it comes to the housing crisis of New York City, “Created or Preserved.”

What this means in a very basic sense is only 80,000 affordable units of housing are actually slated to be built over the next ten years. That doesn’t necessarily mean the remaining 120,000 is pointless and useless figure, but it does speak to a sort of “damn lies and statistics” disingenuity akin to President Obama’s bailout “creating or preserving” millions of jobs. It’s a way to get an optimistically large number, but as a “preserved job” is not a shovel-ready thing I can apply for, a preserved housing unit doesn’t represent progress on the housing front.

Mayor Bloomberg had the same issue: He “created or preserved” 165,000 units of affordable housing. Most people heard “created” but the actual units created under his signature Inclusionary Zoning program over the last ten years tally at a paltry 3470 affordable housing units. To put that in perspective, the subsidized housing development known as Co-op City has 15,372 units. Starrett City in Brooklyn has 5,881 units. During Bloomberg’s tenure, the city lost almost 400,000 affordable units to deregulation, which is the true story of his legacy.

(A new luxury building where decades of tax abatements are swapped for all of six affordable apartments)

This isn’t to say that those 80,000 units aren’t sorely needed: We still have a quarter million applicants in the housing lottery and an all-time high of 53,000 homeless people (who represent another unintended side effect of Bloomberg’s development plans). We’ll take what we can get, but it’s clear we need a whole lot more: The proposed new units wouldn’t even accommodate current demand, let alone projected demand over the next ten years, to say nothing of backsliding on existing units. The plan, however, is drawn up due to limitations in politics, not ability: As Christopher Robbins of the Gothamist reports,

Only $2.8 billion of the $41 billion is coming from Washington and Albany. Another $8.2 billion will come from the City. Private funding accounts for $30 billion of the plan’s $41 billion. While $1 billion of this will involve investment from the City’s pension funds, there is a telling section headed: “Partner with financial institutions.”

The scope of the city’s plans are limited by the lack of support from state and federal sources, and as governor Cuomo has blocked mayor de Blasio on all measures to raise taxes, the city has had to rely on private investors. The problem with this is that most of the programs suggested – the 421a tax incentive, and Mitchell-Lama – have already been criticized as giveaways to developers on the city’s dime for relatively little return.

This has resulted in a rather lopsided proposal: The Real Affordability for All coalition proposed a 50/50 division between low income tenants and tenants making up to $80,000. Mayor de Blasio’s plan is a modified one where it’s 20/30/50 between low income, moderate income and “middle income” tenants, respectively. Incongruously, according to their metrics, a “middle income” family of four starts at $100,681 and continues to $138,435, which is substantively higher than New York City’s median income of $89,000 for households of four.

New York City’s median household income overall is $51,865. Brooklyn’s is $45,215 and the Bronx brings up the rear at $34,300. The general rule of thumb for apartment affordability is 1/40th one’s annual income, and there are quite literally no available apartments for households of such means in the city, which for some has raised speculation as to how anybody can live in this city at all.

Unsurprisingly, however, the New York Times has presented a more fearful narrative as to the scope of de Blasio’s plans: They worry it’s too ambitious, and are concerned over livability:

What would the city look and feel like if builders built extrahigh and extradense? […] What would public-housing campuses be like if their open spaces were filled in? The city’s Housing Authority has a lot of “underused” land, but any development must preserve quality spaces and tenants’ dignity.

Of course, their own subscribers live in luxury apartments that just barely meet century-old tenement law, so the concern over the dignity of light and air seems a little comedic and likely indicative of ulterior motives – just as the Times’ exposé of de Blasio’s radical origins in the Sandinistas was worded with more than a little bite yet may have backfired as it gave him credence with disaffected liberals.

It remains to be seen if de Blasio can even follow through with what he’s proposed, though if nothing else it’s a start. Let us hope it’s enough of one.

Contingency Plans

TAGS: None

The jobs report came out last week. The good news: A quarter million new jobs and the unemployment rate dropped to 6.3%. The bad news: Average wages haven’t increased because during that time 800,000 people dropped out of the workforce altogether. In fact, this has been a trend for the last four years: The number of people leaving the workforce has exceeded the number of jobs the market has created.

President Obama can be credited with keeping the economy from collapsing and slowly but surely keeping things on track with anemic but positive jobs reports, but his net balance thus far since his inauguration is some 7 million jobs. During that same time, the labor force participation rate dropped from 66% to 62.8%, or approximately 7.5 million people. Being that our ‘officially’ unemployed population – those we still count as part of the workforce because they’re collecting unemployment – is 9.7 million, if the people who dropped out were still counted, we’d still be in double-digit unemployment at 10.5%, which would certainly explain why wages aren’t increasing.

Where are all these people going?

Goldman Sachs economist Jan Hatzius states that it’s largely due to worker discouragement and premature retirement – which are basically one and the same – as well as people taking advantage of federal and state programs for education and disability, which is to say they’re hiding from the problem. Joe Weisenthal at the Business Insider interpreted that to mean that this is a cyclical pattern, except labor force participation has been dropping since Clinton left office and is now matching a time when women were just entering the workforce in numbers. Similarly, downward wage pressure has been consistent since the 70s.

Both Hatzius and Weisenthal argue that the trend will reverse, but the Bureau of Labor Statistics states otherwise. While they agree that Baby Boomers are indeed reaching retirement age, they report that the labor force participation rate is dropping for all age groups except ages 55 and above: Gen Xers and Millenials aren’t matching the participation rates set by the Baby Boomers. The Fed cautions against overstating the effects of discouraged workers on the labor force participation rate but also agrees that the trend will continue for the foreseeable future.

Paul Krugman argued last December, however, that the Fed is likely understating the case about discouraged workers by pointing out how the economy looked in 1999: Simply put, it’s been a long downward spiral since then, where cyclical booms and busts have been more bust than boom. While the Great Recession prompted a lot of Boomers to retire early, Boomers have largely been hanging on long after retirement age mainly because of a paucity of retirement savings due to stagnant wages through our perennially depressed labor market. In all, the long-term problems of our consumer economy have carved deep scars in our society.

So how are these people surviving?

It’s arguable that they’re not, but James Surowiecki of the New Yorker argues that a great number of Americans are looking a lot like illegal immigrants in their home country: They exist through freelancing and taking odd jobs off the books. The “grey” or underground economy may yet account for some $2 trillion in activity, but carries with it the problems of informal work: Wages below the federal minimum, no legal recourse and no security. It’s a sad state that the American dream has reversed into something a fair bit more downwardly mobile, but without effective political recourse little can be done. That’s the problem with money dictating politics: The moment you need the government to step in to help you, you’re unable to petition the government to do so.

© 2009 Big Smoke. All Rights Reserved.

This blog is powered by Wordpress and Magatheme by Bryan Helmig.