More Americans than ever before are unable to afford rent. Here's a look at why the rent is too damn high and what can be done about it.
Part of the problem has to do with simple supply and demand. Millions of Americans lost their homes during the foreclosure crisis, and many of those folks flooded into the rental market. In 2004, 31 percent of US households were renters, according to HUD. Today that number is 35 percent. "With more people trying to get into same number of units you get an incredible pressure on prices," says Shaun Donovan*, the former secretary of housing and urban development for the Obama administration.
It's not just working-class folks who have been pushed into the rental market. More middle-class Americans are renting too.
Alongside the foreclosure crisis, the financial collapse and ensuing recession jacked up unemployment and squeezed incomes. Check out how rental costs compare to renter incomes over the past quarter century:
Republicans, in an effort to shore up what they say is a dangerous budget deficit (it's not, really), have pushed to cut spending on federal programs, including housing assistance. Nearly all government housing aid programs have taken funding cuts in recent years.
In 2013, about 125,000 families lost access to housing vouchers—which make up the largest share of rental assistance—due to across-the-board budget cuts. "Budget cuts were doing exactly the wrong thing," Donovan says.
Those cuts come on top of years of stagnating rental voucher aid. Even though the government increased funding for housing vouchers between 2007 and 2012, the program was not able to reach more households because that extra money was eaten up by higher rents and lower incomes.
Because federal housing assistance was not able to keep up with the growing population of low-income people created by the recession, the number of very-low-income renter households that received some form of housing assistance dropped from 27.4 percent in 2007 to less than a quarter in 2011.
What happens when you combine a shortage of rental units with lower incomes and less federal support? You get the "worst rental affordability crisis in history," and a lot of people finding it harder to get by.
The share of households spending more than a third of their income on rent has grown by 12 percent since 2000. Today, half of all renters pay more than 30 percent of their monthly income in rent. For 28 percent of Americans, more than half of their salaries go toward rent.
The rental crisis is worse in some places than in others.
And the crisis has hit people of color harder than whites.
The stimulus act Congress passed in the wake of the recession directed $1 billion into rental housing. And HUD is not sitting on its hands while the rental market goes to shambles. The department has launched severalprogramsaimed at bolstering the number of low-income and public housing units.
But these initiatives aren't enough to stem the unfolding rental crisis, Donovan says. Legislation in Congress aimed at reducing the government's role in housing finance would take a bigger bite out of the problem. It would direct nearly $4 billion a year to affordable rental housing. The bill was recently approved by a key Senate committee. And as far as its chances in the obstructionist, GOP-dominated House? "I think better than most people might think," Donovan says. "I say that because I do think there's a confluence of more and more people understanding that the status quo is unacceptable."
Correction: An earlier version of this piece misspelled Shaun Donovan's name. It is Donovan, not Donavan.
Since last fall, tens of thousands of migrant kids have streamed across the southern US border fleeing violence in Honduras, Guatemala, and El Salvador. When they arrive, many are held in overcrowded, unsanitary, and freezing-cold detention centers, and most are left to fend for themselves in immigration hearings because they lack legal representation. The US treatment of migrant kids might be better if the country had ratified an international treaty called the UN Convention on the Rights of the Child. That document that would have required lawmakers to consider the "best interests of the child" in crafting policy. But despite decades of pressure from human rights activists, the United States has refused to sign on to the treaty, largely because social conservatives believe it would force Americans to give up spanking.
This kind of conservative opposition is one reason why the United States and Somalia are the only countries in the world that haven't ratified the child-protection treaty. While conservatives' fears of UN-mandated sex ed and spanking-free childhoods are largely hypothetical, the consequences of not supporting the treaty are now becoming ever more real as the US confronts the humanitarian crisis on its southern border.
Naureen Shah, a legislative counsel at the ACLU, says that if the United States had to conform to the convention's "best interests" provision, the White House and Congress would be pressured to prioritize reuniting kids with their family members in the US, instead of rushing to deport them. Ratifying the treaty could also spur the US to improve the kids' detention conditions so "they can get rest and access to education," she says, as opposed to languishing in "detention conditions that are almost criminal." Felice Gaer, the vice chair of the UN Committee Against Torture, agrees.
US law does not require undocumented children to be provided with an attorney to help them through immigration proceedings, leaving them vulnerable to judges rushing to send them back home. (President Barack Obama did recently request $15 million from Congress to provide some of the children legal counsel.) Under the treaty, children seeking asylum are supposed to be provided with legal representation, according to the panel that oversees implementation of the agreement. That's one reason why ratifying it might "put more pressure on the State Department to take a much bigger role" to live up to these obligations, Shah says. The Obama administration has technically signed the treaty, signaling symbolic support for its child protection provisions, but the Senate has not ratified it, which would require implementing the treaty into enforceable domestic law.
Ratifying the treaty isn't a sure-fire guarantee that migrant kids would get better treatment. After all, the United States is already in violation of other international humanrightstreaties it has ratified that prohibit the country from returning immigrants to countries where they will be tortured, persecuted, or killed, says Michelle Brané, an immigration detention expert at the Women's Refugee Commission. Many of the kids crossing the US border are fleeing targeted violence. Nevertheless, "if we signed onto this [children's] treaty," the ACLU's Shah says, "it would be even more crystal clear that the US has these obligations" to protect the child migrants. Right now, though, American politicians seem more interested in spanking kids than helping some of them.
Six years after the financial crisis, the largest US banks are likely still too-big-to-fail, according to a study released Thursday afternoon by the Government Accountability Office (GAO). That means that these massive financial institutions are still so important to the wider financial system that they can expect the government to bail them out again if they are close to collapse.
Even though the GAO study found that this advantage banks enjoy dropped off significantly in 2013, "this is a continuing issue," Sen. David Vitter (R-La.), who has introduced legislation aimed at ending bank bailouts, told Bloomberg Thursday. "Too-big-to-fail is not dead and gone at all. It exists."
During the financial crisis, the government forked out $700 billion to bail out the nation's biggest banks. The 2010 Dodd-Frank financial reform act imposed new requirements on Wall Street designed to prevent this from happening again. The law gave federal Wall Street regulators more authority to dismantle failing financial institutions, mandated that banks hold more emergency funds on hand, and required banks to submit to yearly stress tests to ensure that they can withstand another crisis.
How effective these measures have been in ending too-big-to-fail is still an open question, and subject to heated debate in the halls of Congress. Otherreports have found that even after Dodd-Frank, big banks still enjoy a huge advantage over smaller, community banks in terms of lower borrowing rates, thanks largely to the perception that they can't fail. Many investors believe the government will still bail out large, systemically important banks if they are again faced with collapse, whereas the economy can afford to lose a local bank or two. As a result, the biggest US banks benefited from a $70 billion too-big-to-fail subsidy in 2012, according to a March report by the International Monetary Fund.
On Tuesday evening, the federal government dealt a huge blow to McDonald’s, which has for over a year and a half been the target of worker protests and lawsuits over its low wages and questionable labor practices.
McDonald’s has long maintained that as a parent company, it cannot be held liable for the decisions individual franchises make about pay and working conditions. On Tuesday, the general counsel at the National Labor Relations Board (NLRB) ruled that this is nonsense, saying that the $5.6 billion company is indeed responsible for employment practices at its local franchises. That means that the company is no longer shielded from dozes of charges pending at regional NLRB offices around the country alleging illegal employment practices.
"McDonald’s can try to hide behind its franchisees, but today’s determination by the NLRB shows there's no two ways about it," Micah Wissinger, an attorney who brought a case on behalf of New York City McDonald's workers said in a statement Tuesday. "The Golden Arches is an employer, plain and simple."
The Fast-Food Workers Committee along with the Service Employees International Union has filed numerous complaints against the company with the NLRB since November 2012. Most recently, workers filed seven class action lawsuits against McDonald’s corporate and its franchises in three states alleging wage theft. The NLRB consolidated all these complaints into the case it decided on Tuesday, which focused on whether McDonald's corporate can be considered as a "joint employer" along with the owner of the franchise.
Since the fall of 2012, fast-food workers at McDonald's, Burger King, and KFC franchises around the country have been striking to demand a $15 minimum wage and the right to form a union without retaliation. The strikes recently went global. Organizers say Tuesday's ruling will lend workers new momentum in their ongoing battle against the fast-food mega-chain.
If you put out a complaint box for customers of US banks and financial firms, you will get hundreds of thousands of complaints. That's what the Consumer Financial Protection Bureau—which was set up by Elizabeth Warren before she became a US senator—has discovered. And the bank that has drawn the most complaints is Bank of America. Wells Fargo, JPMorgan Chase, and Citibank were other top targets of consumer wrath.
In June 2012, the CFPB launched a consumer help center where Americans can lodge complaints against banks and financial institutions they believe are ripping them off. The information in the center's data base is public. So you can tell which Wall Street entities provoke the most gripes. Ranked by number of complaints, the top five most reviled institutions are Bank of America, Wells Fargo, Equifax, which is a credit-reporting agency, JPMorgan Chase, and Citibank. Debt collectors, mortgage servicers, and student loan servicing companies also fall within the top 20. As of this weekend, consumers had filed over 265,000 complaints. Bank of America earned 38,833 complaints, Wells Fargo drew 26,055, and JPMorgan Chase was the subject of 20,057. Check it out:
These numbers show that bigger is not necessarily better. The number of complaints largely corresponds with the size of the bank. JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are the largest four US banks by assets. All other banks on the list above are among the 20 largest.
The majority of complaints targeting Bank of America—over 27,500 of them—concern mortgage practices, including foreclosure processing. In 2012, Bank of America, Citi, Chase, Wells Fargo, and Ally Bank—the nation’s five largest mortgage servicers—entered into a $25 billion settlement with 49 states and the federal government over the banks' use of faulty foreclosure documents. (Bank of America recently agreed to pay a fine of $16.6 million to the Treasury Department to settle allegations that it processed nearly $100,000 in transactions for drug traffickers between 2005 and 2009.)
Out of the 26,055 complaints filed against Wells Fargo—which is accused of directing minority borrowers into subprime loans in the lead-up to the financial crisis—close to 6,000 concerned issues consumers had with their checking or savings accounts, including complaints over fees and charges. In 2010, Wells was ordered to pay hundreds of millions of dollars to customers for manipulating debit card transactions in order to rack up overdraft fees.
About 5,100 of the consumer complaints about Citibank concerned mortgages and foreclosures. Earlier this month, the Department of Justice slapped a record penalty on Citi for violations on the investor side of the bank's mortgage business. The DOJ fined Citi $7 billion for telling investors that the toxic mortgage-backed securities it sold in the mid-2000s were high-quality.
Over 3,700 of the complaints against JPMorgan Chase concerned problems with consumer bank accounts, including disputed fees. Last September, the Consumer Financial Protection Bureau ordered Chase to fork over $309 million to 2.1 million customers for charging them for services such as identity theft protection and fraud monitoring without obtaining consent.
Americans filed over 5,000 complaints with the consumer agency regarding debt collection, more than 27,000 over mortgage servicing practices, and north of 5,500 concerning student loan servicing.