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The Government’s War on Affordable Housing

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Tags U.S. HistoryEntrepreneurshipInterventionism

05/12/2016

In the current political climate, we hear again and again that the key to lessening the prevalence and effects of poverty is to raise nominal incomes. We hear it repeatedly in calls for a “living wage” and calls for a minimum wage. It is further promoted in debates over a “minimum basic income,” Social Security, and other types of taxpayer-funded social benefits.

Historically, however, the poor themselves understood that the most effective way to reduce poverty was to reduce the cost of living, and thus to increase real wages.

This strategy has long been apparent in the use of the extended family as a means of pooling resources. It’s why households historically included grandparents and other unmarried relatives within the household who could exchange domestic services for the benefit of a lower cost of living. When this strategy is not used or is unavailable, there is no Plan B, and the risk of increased poverty goes up. We find, not surprisingly, that households with single-parents — including single fathers — are worse off than two parent households. As a strategy in keeping living costs low, having multiple workers under one room — whether they work for wages or not — works.

The Economic Benefits of Rooming Houses

This also works on the commercial level, and historically, many Americans helped themselves make ends meet by either owning or renting a boarding house. This phenomenon also included “residential hotels” which were typically small no-frills operations that catered to low-income permanent residents.

A boarding house or a “rooming house” was a type of housing, popular during the nineteenth century and before, in which the owners would rent out rooms of the house to people unrelated to the owners. Residents of the house often shared bathroom facilities.

In his history of residential hotels, Living Downtown, historian Paul Groth notes that as much as half the urban population in the United States lived under these conditions in the late nineteenth and early twentieth centuries:

Especially before the 1920s, the lines were hazy between a private family house and a commercial rooming house because so many people boarded or lodged with private families. Boarders slept in the house and also took their meals with a family; lodgers slept in the house but took their meals elsewhere. Entire families boarded — often parents or single mothers in their late twenties — but the most common boarders were young unmarried men or women with slim financial resources. Boarding and lodging so pervaded American family life (along with the presence of servants and live-in relatives) that throughout the nineteenth century and early twentieth century, use of the term “single-family house” is misleading. In a conservative estimate for those years, one-third to one-half of all urban Americans either boarded or took boarders at some time in their lives.

An additional benefit of these living arrangements was safety. Within less formalized housing, there was “safety in numbers” for lodgers and boarders who preferred to live among people with whom they were familiar and who were likely to notice if other tenants were in danger from outsiders or other boarders. More formal arrangements, such as in small residential hotels, safety was even more institutionalized with desk clerks keeping an eye on entrances while, in some cases, security guards roamed the halls.

The End of the Rooming House Era

As middle-class prosperity increased over time, though, rooming houses and low-cost residential hotels became less essential to everyday life, and they became less common. As a larger percentage of the population ceased to need rooming houses, many voters then began to view rooming houses as more of a nuisance. Then came a trend in which local governments began to heavily regulate rooming houses, and in many areas they were simply outlawed, with never-before-seen regulations about how many unrelated persons could live within a single house.

This trend was also accompanied by a Progressive ideological war against rooming houses, which were branded by many Progressive reformers as “communistic.” Historian Stephanie Coontz explains in The Way We Never Were:

As a University of Chicago professor explained in 1902: “a communistic habitation forces the members of a family to conform insensibly to communistic forms of thought.” Commissioner of Labor Charles Neill declared in 1905: “There must be a separate house, and as far as possible, separate rooms, so that at an early period of life the idea of rights to property, the right to things, to privacy mall be instilled.”

For the Progressives, “private property” did not mean — as a libertarian might think today — the right to use one’s property as he or she sees fit. Obviously, if that were the case, people would be allowed to room together if they wished. Instead, the Progressives adhered to a normative vision of private-property use in which property must be used in a way that reflected the Progressive reformer’s notions of, as Coontz put it, “the Protestant, native-born, nineteenth-century middle class.”

Thus, given that “private property” did not actually mean a freedom to use property freely, the Progressives set to work tearing down boarding-house culture. Coontz goes on:

[R]eformers advocated state action ... to end the “promiscuous” socializing of the urban classes in urban tenements and streets. They grew hysterical about the dangers of boarding and lodging, once respectable middle class practices, and referred to the “street habit” as if it were a dangerous addiction, much like crack cocaine. To root out this addiction, Progressives promulgated new zoning laws and building codes prohibiting working-class families from sharing quarters.

Not surprisingly, this squeezing of the private-sector housing market led to a decline in the supply of low-cost housing in American cities, and forced many citizens to turn to government welfare programs instead. As Coontz notes, this was by design on the part of the Progressives who wanted more citizens on government assistance as a means of promoting the Progressive obsession with the one-family-per-home ideal:

[R]eformers abolished local informal institutions and agencies that had formerly been used by working class families to exercise a degree of cooperative self-regulation. Their advocacy of government aid to the poor stemmed partly from a desire to discourage social cooperation and economic pooling beyond the family.

In other words, the Progressives waged war against the market’s existing efforts to bring down the cost of living. As the cost of living rose, the Progressives substituted centralized government social benefits instead.

The destruction of rooming-house-based affordable housing was later made even more acute by the “urban renewal” movement in which Federal funds were used to promote the bulldozing and government-planned redevelopment of areas where cheap privately-owned housing still remained.

The Rediscovery of the Old Housing Models

Nowadays, with housing prices so often outpacing wages for middle-class families, even the most committed booster for “living wages” recognizes that old models of housing reform have failed to provide affordable housing for the working classes and low-income groups.

Although a large part of the answer lies simply in increased freedom for property owners, it is now usually leftists who promote an end to government regulations that make it legally onerous for a family to open a boarding house, or to even rent out a room in a suburban home.

This article by David Smith is a typical example, as is this article from Alan Durning at the Sightline Institute in which Durning writes:

A future unfettered by such rules [i.e., zoning against boarding houses] would see the re-emergence of inexpensive choices including rooming houses and other old residential forms. Such units will not satisfy those of greater means and the expectations that accompany them. They would not try to. But they can meet an urgent need for young people, some seniors, and for poor and working class people of all ages: the need for homes they can afford that are still, in UC professor Paul Groth’s phrase, “more luxuriant than those lived in by a third to a half of the population of the earth.”

Unfortunately, it will likely require a significant change in prevailing American ideologies before American voters will begin to allow basic freedoms to their neighbors who might need to rent out a few rooms to make ends meet. After all, why bother with increasing the supply of housing — and thus, lower the cost of housing — when some government program will simply subsidize rents for people who might have otherwise lived in one of those now-illegal boarding houses? The Progressive vision for housing reform lives on.

Ryan McMaken (@ryanmcmaken) is the editor of Mises Wire and The Austrian. Send him your article submissions, but read article guidelines first. Ryan has degrees in economics and political science from the University of Colorado, and was the economist for the Colorado Division of Housing from 2009 to 2014. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
Image source: Sarah Jordan Boarding House / Maia C (www.flickr.com/photos/maiac/)
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