Landlords Are Going to Take Away All Your Wage Gains
This is what happens when you treat housing as just another market.
Economic crises can happen fast. So can the printing of government stimulus checks to counteract those crises. But building large quantities of housing — to say nothing of affordable housing — is a slow process, beset on all sides by angry neighbors, predatory developers and a general lack of political will. And so Americans emerging from a devastating pandemic find ourselves facing a wry, ironic sort of recovery.
The good news is that wages are going up. The bad news is, you’ll have to give them all back to your landlord.
Trillions of dollars have been pumped into the economy to save us from disaster. That was the correct and, indeed, only move in the face of the Covid-19 crisis. But the boom that stimulus is fueling is being hobbled by the same mistakes that our society made for years before the pandemic.
Yes, employment demand is hot, and wages are rising, both good signs for workers. But we have also seen the prices of financial assets skyrocket after cratering briefly last year, making the rich staggeringly richer and fueling a rise in real estate costs that accrue to homeowners at the expense of everyone else. The one-third of Americans who are renters now face sharply rising rent prices across the country. Those who dreamed of becoming homeowners will now struggle just to make their rent payments, falling further and further behind as the price of real estate rises.
Landlords large and small are in a dream situation. The combination of rising wages and housing shortages means they can simply adjust rents upwards forever until they have effectively redirected every last bit of outstanding economic growth into their own pockets. Though mega-billionaires and soulless global corporations have (rightfully) replaced them as the primary moneyed villains of a democratic society, landlords are now poised to make a strong comeback as class war enemies in the public mind.
How exciting! The arcana of high finance and tax evasion can make people’s eyes glaze, but everyone can get behind some good old landlord-denigration. While many landlords certainly deserve every bit of acrimony they get — it is, after all, a field in which the will to throw an elderly person on a fixed income out onto the street gives you an advantage — it must be noted that they are merely the human face of a deep structural failure. America does not have enough housing. It is often difficult for people to believe that something as simple as supply and demand could lie at the heart of all this, but it is clearly true, and we have known it for many years. This is both a national and a local problem. In a major city like New York, for example, it would take hundreds of thousands of new housing units to make “affordable housing” a concept with any prospect of becoming a reality.
This is not a simple issue. (If you want to be humbled, start reading deeply about the financial, political, environmental, regulatory and material goods it would take to actually create hundreds of thousands of new housing units in a single city.) Even if you can overcome the enormous logistical and economic hurdles, you run up against the collective political power of homeowners, who have a common interest in keeping real estate prices high and compose the single most powerful group in municipal politics. “Let’s make housing cheaper” is a vital public policy goal for humanitarian reasons, but selling it to the members of the neighborhood homeowners association is not an easy task. Landlords are just one more segment of the “Fuck you, I got mine” market looking to jealously guard their investments. In housing, as in most things, the people with the most need have the least money and therefore the least political influence.
At the risk of oversimplifying this conundrum, however, I think that we can make at least one accurate, underlying diagnosis of America’s affordable housing crisis: It stems from our determination to treat housing as just another business, rather than as a human need. (See also: healthcare.) Subjecting basic human needs to the raw predations of American capitalism will result in people being left behind, suffering, and dying, because doing so enhances the maximization of profit. That’s how capitalism works! If we don’t want millions of Americans to be crammed into crappy apartments they can’t afford to get out of, and hundreds of thousands more to be utterly homeless with no financial path to secure housing, then we shouldn’t have treated housing as a market in which it benefits the owners to keep supply limited. That’s dumb! And yet, we do it that way.
By all means, if you desire, leave a bag of flaming poop at your landlord’s front door when they hit you with an egregious rent hike. You could even throw some eggs at the houses of the wealthy homeowners who oppose a new apartment building because it would affect the “character” of the neighborhood, while you’re at it. But recognize that all of these people are simply following the path that American capitalism has prescribed for them: To get ahead in life by bleeding other people dry.
Hamilton Nolan is a labor writer for In These Times. He has spent the past decade writing about labor and politics for Gawker, Splinter, The Guardian, and elsewhere. More of his work is on Substack.