Evicted: Low-Income Tenants and Landlord Economics in Milwaukee

evicted_coverEvicted: Poverty and Profit in the American City by Matthew Desmond follows eight different families who struggled to pay rent in poor areas of Milwaukee, Wisconsin. Around the time of the 2008 financial crisis, the author lived in the same units as the other tenants and rented from the same two landlords, whom he also profiles in vivid detail. Amongst many other major awards, this book won a 2017 Pulitzer Prize.

The eviction cycle. Imagine that you are either in a low-paying job or receive government benefits, but that income isn’t enough to pay for rent, utilities, and food. So in any given month, one of those bills doesn’t get paid. That means eventually you get behind on rent, and eventually you get evicted.

After you are evicted once, your housing options instantly shrink. (Not many landlords want to rent to someone who just got evicted.) Just as payday loans specifically target folks with no other borrowing options, there is a subset of housing units that target folks with evictions. You may be surprised that the units in the poorest neighborhoods can cost just as much as a nicer unit in a better neighborhood (that does background checks). As with payday loans, you could argue lenders need to charge higher interest rates to cover more frequent defaults. You could similarly argue that landlords in low-income areas need to charge higher rents to cover unpaid rent and higher turnover costs.

After some time in shelters or crashing with relatives, you scrape together enough to make first month’s rent and a deposit. But every month, rent again takes up 70% of your income (ex. $500 rent and $700 to $800 income), so eventually you fall behind again. The sink gets clogged. Now, the landlord doesn’t want to pay a plumber $100 an hour when you are already owe them two months of back rent. But if your landlord doesnt’t fix the sink, you’re not going to treat the apartment nicely either. You’re also not going to pay any more rent. Two wrongs don’t make a right, but they do save both sides money (in the short-term). Your next eviction is only a matter of time, and cycle repeats.

Stable housing forms the core of a good community. Forced moves can hurt your employment prospects as you miss work while searching for housing. Forced moves lead to increased student absences or having to move schools entirely. Forced moves cause people to lose valuable property like furniture, appliances, clothing, and other household items.

Landlord economics. I didn’t see that much landlord “profit” when my rough calculations showed they were basically two people working full-time in a highly-leveraged business. Yes, landlords Sherrena and her husband “owned” 36 units and brought in $120,000 in gross rent annually, but that is before paying the mortgage, taxes, maintenance, and the time spent as full-time property managers. There was a constant flow of finding new tenants, fixing up damaged units, collecting partial rent payments when possible, and evicting those who fell too far behind. Every missed rent check was $500 less out of their monthly income. An Amazon reviewer stated that he followed up on the properties and found that by 2016 Sherrena no longer owned any of them (many went into foreclosure). I happened to invest $2,000 into an investor loan backed by an 6-plex in Milwaukee and it also went into foreclosure. I’m sure there are landlords doing fine, but I wouldn’t describe it as “easy profits”.

The mobile home park was a bit different. This seems to be a weird loophole where technically you are only renting a plot of land and a utility connection. The “mobile” home (which never moves) on the concrete pad is simply given free to the tenant, who then assumes the responsibility of maintaining everything inside. The landlord doesn’t have to worry about plumbing, electrical, heat, roofing, and so on. If you get evicted, you can’t afford to move your “free” home, and it gets handed off to the next tenant.

Housing assistance statistics. In 2012, 1 in 9 occupied rental households in Cleveland and 1 in 14 in Chicago were summoned to eviction court. Having an eviction can subsequently disqualify you from future public housing assistance, which led the Pulitzer committee to call this book a “deeply researched exposé that showed how mass evictions after the 2008 economic crash were less a consequence than a cause of poverty.” Here are some statistics from the book:

  • 1% of poor renters live in rent-controlled units.
  • 15% of poor renters live in public housing.
  • 17% of poor renters receive a government subsidy (rent-reducing voucher).
  • 67% of poor renters receive no federal housing assistance.

In addition to the 2/3rd of poor renters with no federal housing assistance, another of the book’s arguments is that existing housing assistance programs simply don’t do enough to help people back on their feet. It’s like if you have a broken leg and you need eyeglasses. You need both fixed to get back to work, but you are only given enough money to solve one of the problems. Even if I give you a cast, you’re still blind. If I only give you eyeglasses, you still can’t walk. Money is being spent right now, but people are still stuck in the same place as before. Perhaps more money upfront would help people get back firmly on their feet.

The author’s proposed solution is to signficiantly expand the existing housing voucher program where every family below a certain income level would be eligible for a housing voucher. The voucher could be used to pay for rent on the open market (but not too luxurious or unsafe), similar to how food stamps work. He proposes a variety of sources for the money, for example getting rid of the mortgage interest deduction.

This book reminded me of Nickel and Dimed by Barbara Ehrenreich from over a decade ago. (Here is her NYT review of this book.) Yes, bad decisions can play a role but however you arrive, it is exceptionally hard to break out of the cycle of poverty. You are sensitive to any small setback (car repair, medical bill, theft). Many things actually end up being more expensive when you are broke. Hard work is necessary but not sufficient. You need either a big dose of help (family, friends) or a long streak of avoiding bad luck.

The storytelling in this book is what stays with you. Out of all the families profiled in the book, the only ones that eventually broke the cycle got help from family. That way, they could get everything together long enough to and either land a stable job or finish education/training. The author’s solution is essentially to have the government do that same thing, but the question is whether fellow Americans (strangers) want to help out in the same way (higher taxes). I don’t know about that.

Comments

  1. What defines a “poor renter” in the percentage numbers posted here?

  2. Kimberly says:

    A great follow up on this topic is also Hillbilly Elegy by JD Vance. It’s a memoir of his experience growing up in poverty in Ohio so he talks about experiencing the cycle of poverty firsthand and what was different in his family that allowed him to escape.

  3. Steve Kohn says:

    Excellent review, thanks. Makes me think I don’t need to read the book.

    The last sentences are striking: “Out of all the families profiled in the book, the only ones that eventually broke the cycle got help from family. That way, they could get everything together long enough to and either land a stable job or finish education/training. The author’s solution is essentially to have the government do that same thing, but the question is whether fellow Americans (strangers) want to help out in the same way (higher taxes). I don’t know about that.”

    My views on government are similar to Jefferson’s, the less the better. I see so many possibilities for mismanagement, corruption, and lack of personal accountability if the government gets even more involved in this problem than now. Help from family is exactly how the problem should be fixed. And when the family won’t help, we ask? Then we sleep under a bridge and tell as many young people as we can how important it is to study in school and to nurture family ties.

    • Break the Cycle says:

      How do you suppose we tell these homeless kids to study in school when they have no roof over their heads? If all these families need is a little help to get them back on their feet, the question is not whether we as a society could afford to provide this help, but whether it is too costly not to do so. Why waste all this human potential away to live under a bridge when they could be a productive working member of society? Homelessness exacts a cost on society too in terms of public safety, hygiene, crime, etc.

      What you are essentially saying is that success in life is dictated by who your parents are, how much resource your outer families have, how generous other people are, etc. And if you are unfortunate to be deprived any of that, most of which entirely out of your control, then too bad. Be broke and homeless so you could serve as an example for others.

      • Steve Kohn says:

        Break the Cycle, you make a few good points, but not enough to persuade me that it’s society’s responsibility to be mother and father to those who won’t care for themselves. I’d reserve that help to those who are mentally or physically handicapped (really handicapped, not just a “bad back”).

        “What you are essentially saying is that success in life is dictated by who your parents are, how much resource your outer families have, how generous other people are, etc.” That’s mostly true, and what’s wrong with that? If I should have compassion for a member of my church, temple or synagogue and offer to help with groceries or rent, great. But if I don’t want to do that, don’t tax me — and then keep a large part as administrative fees, or make my children and grandchildren pay off the bond — to give help that I’ve already thought wasn’t my responsibility.

        “And if you are unfortunate to be deprived any of that, most of which entirely out of your control, then too bad.” No, it is NOT out of your control. My parents and I came here penniless, years before the Great Society handouts. Chinese, Koreans, Irish, Italians, Jamaicans, Jews, Mexicans, Swedes, Vietnamese … on and on, we came here with nothing, then we worked hard and sent our children to schools and saw them become good members of society.

        Maybe I’m too Darwinian, maybe I’m not big-hearted enough, but I see America as the land of opportunity. Those who don’t take advantage of that opportunity have mostly themselves to blame. I know luck is a factor in all success, and I can live with temporary assistance, but please don’t try to guilt me into giving people a place to live just because they’re breathing.

        “Be broke and homeless so you could serve as an example for others.” Yes, exactly right. That’s how we learn, from our own experiences and from the experiences of others.

        Sometimes I see someone on a street corner holding up a cardboard sign and I think, “There but for the grace of God go I.” But I don’t believe in fate, I believe in fighting for success. I know it’s hard to dig yourself out of a deep pit of despair. Maybe that fellow (or gal, sadly) on the corner can tell our school children not to ever get into that pit, to study hard, to honor their parent(s).

        If the children do that, maybe their parents will help them at the start of their lives, and their cycle of poverty will be broken.

        There are just too many examples in America, a countless number of examples, of people having pulled themselves up out of poverty by their own initiative and endeavors.

        Let’s put acquiring the basics — food, clothing, shelter, etc — where it belongs: on the individual. It’s just not, or currently is but shouldn’t be, a responsibility of government.

        • What you may not appreciate is that the US government gives far more in housing subsidies to the wealthy than to low-income families. Even if you don’t think we should provide assistance to families in severe poverty, perhaps you’d at least agree we shouldn’t be giving money to the wealthy for their houses when they absolutely don’t need it.

          (If you’re not sure what giveaway to the rich I’m talking about, it’s the Home Mortgage Interest Deduction – it disproportionately goes to the wealthiest Americans and is a far great cost to the US Treasury than the money spent on low-income housing. Happy to provide more data and context if anyone is interested).

    • “sleep under a bridge”

      Well thats not much of a ‘solution’.

      • Steve Kohn says:

        “sleep under a bridge”
        Well thats not much of a ‘solution’.

        What’s yours? To pay for their housing?

        That’s fine, do that.
        With your money.
        But don’t take mine, for which I’ve worked hard and denied myself in savings, and most of which I want to pass on to my children and grandchildren.

        • Steve Kohn – have you ever taken the mortgage interest deduction? If so, does that mean you’re okay with other people paying for your housing costs?

          • Steve Kohn says:

            Stuart, yes I have (taken the mortgage interest deduction).

            It lowered my income tax bill, and I assuredly was not in the 1%. Closer to the 50%.

            It never occurred to me that “other people” were paying for my housing costs. I thought of it as an effort by the government to encourage home ownership.

            Our tax laws are full of similar “encouragements.” We’ve all used one or more of them in our lives.

            After a lifetime of saving, I was fortunate to be able to to pay cash for our last (humble) home, removing the ability to take the mortgage interest deduction. Consider that when I was younger and not at all wealthy, I used the tax deduction. When I was older and reasonably well off, I didn’t.

            Doesn’t seem an indictment against the “rich” to me.

            But yes, I’ve read the articles that claim it is, so spare me the tutorial. In any event, the current Congress has mostly eliminated it. A Republican Congress, let us remember, not during the presidencies of Clinton or Obama.

          • 1. Yes, that was you getting a subsidy through the tax code for your housing. If you look at the history of that deduction, it was created by accident (meant for businesses to deduct interest, well before 30-year mortgages were created and propped up by the government).

            And yes our tax law is full of “encouragements” – and many disproportionately “encourage” people who are not in poverty and who don’t need such encouragement, at a great cost to the US Treasury. This is a form of welfare – the government putting more money in your pocket. The Joint Committee on Taxation regularly looks at them and explains exactly how much these deductions enrich individuals and how much they are costing the US Government.

            I was happy the GOP reformed the home mortgage interest, although it still disproportionately benefits the rich and they should have modified so it only benefits people who truly need the help, same with the SALT deduction. Why should Mark Cuban or Kanye West get a tax deduction if they finance their mansion with a mortgage? Do affluent individuals need help owning a home? Even if you’re not ultra-rich, why should someone making $75,000 get a subsidy from the government but not a teacher making $27,000/year who has to rent?

            This giveaway also has the effect of distorting the housing market, something the GOP and free-marketers should frown upon.

  4. One of the reasons people get stuck is because of all the regulations that make life more expensive on the low end. Yeah, no one likes the idea of people living in squaller or in an unsafe house/neighborhood, but the alternative is what we have. People who can’t make enough money to live at the level we require them to live at.

    Then we try and give them handouts to make up the difference, but that has an effect at the margin that people work less or squander away their newfound surplus. There are plenty of sympathetic stories out there that you can cherry pick all day long, but if you delve deep into the majority of cases you’ll find a lot of prioritization of the present at the expense of the future, which when you’re in this kind of cycle long enough, is basically rational, but that short time horizon continues the cycle.

  5. The person you cited had $800 income in a month. Someone making 7.25 an hour will have $1250 income per month at 40 hours per week. Minimum wage in Chicago is 10.50, so a Chicago resident working 40 hours per week will earn $1800 per month. In either case, it seems like the most important thing is to empower and facilitate people to find full-time employment. That means heavily or fully subsidized childcare and an excellent public transportation network, among other things. But I’m guessing the people profiled will be the type of people who will struggle to hold down a job, for a variety of reasons. Which leaves us at the state taking care of its weakest members.

  6. Dan White says:

    This book is pathetic in the way it portrays landlords. I am a full time landlord with 60 rentals in the Tacoma , Washington area, the amount of abuse landlords and their proprieties receive by low functioning people is enough to drive most people away from the industry and into financial ruin. At no time in this book does the author examine the condition of the property the tenant leaves the landlord or follow the landlord around while they have to clean up the vile messes left by the tenant or make countless trips to the home improvement store to repair or replace something for the fifth time. There are far too many people who maintain a lifestyle that is not compatible with living in another’s home. This month I got back homes where cleaning may have occurred once a year, grass 3 feet high, holes in the walls the size of a fist or larger, missing drawers to kitchen cabinets (its easier than packing boxes), truck loads of unwanted debris piled in the garage, yard and elsewhere… the list is numerous and I hear many stories that begin with…”I was a landlord once”… I presently serve on the board of the Washington Landlord Association and try to mentor Landlords in how to avoid problems but no matter how hard you try the world is full of serial abusers of homes and Landlords. The author invents a term “The Eviction industrial Complex” as if this a great business strategy used by Landlords… in fact the essence of an evictions is the single most expensive and stressful scenario a Landlord has to encounter and is to be minimized whenever possible. In my business evictions occur about 1 every 2 years and most times the tenant was heavily involved with substance abuse they were not functioning anymore. The time line is so long with evictions you have to be very determined to not cooperate , ignore countless legal papers even a visit from the civil deputy to advise you to start moving before the final forced move out. The book is an affront to every Landlord trying to support their own family. PS I try to select well qualified respectful tenants and most of my tenants are great, however with 60 rentals I have my share of people that disappoint me and cost tens of thousands of dollars in damage annually.

    • Agree 1000%. I regularly represent landlords and property manager as their attorney. There is no “secret sauce” in being part of the “eviction industrial complex” to magically make money as a landlord. The easiest way to make money as a landlord is to incentivize low unit/tenant turnover.

      Lower income tenants have the same incentive to care for a property they do not own (ie little to none) and even less resources to take care of basic tenant maintenance responsibilities (change air filters, lawn care, etc).

  7. Sorry but I misplaced my rose colored glasses. I’m fed up with hearing about the poor/indolent and the next handout, subsidy, silver spoon or whatever that the rest the country’s taxpayers have to put up to support these total failures in every aspect of being. They add nothing but ugliness to life and communities and never tire of taking.

    • Greg – how do you feel about the far greater amount of hand outs going to the wealthy, who don’t need it? Why isn’t that an object of your scorn?

      In the housing context, I’m talking about the billions in subsidies that go to families making over $100k/year income for home mortgage interest deduction, they cost the Treasury a far higher amount than low-income families get for affordable housing.

      • I ask you…would you rather live with or near “rich” people or poor people? Have your kids go to school with the children of rich people or poor people. Walk down a street at night in a rich neighborhood or a poor neighborhood?
        The top-earning 1 percent of Americans will pay nearly half of the federal income taxes for 2014, the largest share in at least three years, according to a study. The bottom 80 percent of Americans are expected to pay 15 percent of all federal income taxes in 2014, according to the study.

        How about you get what you pay for. Pay nothing–get nothing.

      • Stuart–
        Due to the change in the tax code (higher standard deduction + lower cap on mortgage balance interest deductibility) only around 8% of taxpayers are expected to itemize in 2018 and have the mortgage interest deduction available to them. That’s down from around 20% in previous years. And the cap means those “lost” revenues will be down significantly.

        Also, the common argument that tax deductions are equivalent to transfer payments doesn’t quite feel right to me. It relies entirely on accounting rather than economics and to me it implicitly assumes that the government has a claim on one’s entire income and any amount that goes untaxed is a subsidy from which that person benefits. That’s not how I think about the world–and I’m a lifelong Democrat.

        Top line tax rates are set as a matter of policy taking into consideration the standard and other deductions available in order to reach a suitable overall effective tax rate for various income cohorts. If the government eliminated the mortgage deduction altogether but cut tax rates to totally offset the effect, tax revenues would be unchanged but the rhetorical argument that the government subsidizes high-income housing would be gone. That’s what I mean when I say this is based more on accounting than economics.

        • Andy

          1) Tax Change – I was glad to see this deduction minimized. It still will disproportionately help affluent families, but it makes it far more likely that the entire deduction can be eliminated in the next round of tax reform, since it has a much smaller constituency fighting for it.

          2) Deduction vs Transfer payment. You wrote “it implicitly assumes that the government has a claim on one’s entire income” – I don’t think it does – the implicit assumption is that the government should be collecting the marginal rate – whether it be 15%, 25%, 35%, whatever. But no one’s marginal tax rate rate is 100% and no one is saying it should be. Say I make $100k/year and my tax rate is 25%. If the government gives me $5,000 in cash or gives me $20,000 deduction, the result is the same – I am $5,000 richer, and the government has $5,000 less in revenues. I’d argue sometimes there is a good reason to let people to deduct money, but because they are rich and bought an expensive home with a large mortgage – that’s not a great reason.

          Okay, but you say marginal rates are set with deductions in mind. I don’t think that’s true – look at the history of the home mortgage interest deduction: https://www.nytimes.com/2006/03/05/magazine/who-needs-the-mortgageinterest-deduction.html

          It came about largely by accident, and grew and grew and grew, and I haven’t seen any evidence that this evolution ever resulted in Congress taking it into account when deciding what the marginal rates would be – but I’d gladly look at any evidence you have that they did discuss its impact on the rates.

          Members of Congress put in tons of exemptions – the DC rep fights for a special DC homebuyers tax credit – and maybe they sneak it in at the last minute, or maybe not, but it’s not like after every deduction Congress recalculates what the marginal rates are going to be.

      • Right. Why can’t renters deduct their rent from their taxes?

  8. Lobbying for the government to provide greater housing subsidies to low income families is an incredibly weak solution to the poverty problem. It’s a band-aid treating the symptoms of the problem rather than the cause, like treating a cancer patient with pain killers. It might make them (and us) feel better in the short term, but in the long term, the patient is no better off.

    We as a society have been subsidizing poverty at greater and greater levels for decades, and it has gotten us no where – poverty rates remain stubbornly steady and in fact are higher today than they were in the 1970’s. It’s because we are failing to address the root causes of poverty meanwhile many of our citizens are content to keep throwing money at it because it makes them sleep better at night. If the solution to poverty was as simple as giving people more money, then lottery winners would be the paradigm of economic prosperity. Instead, 70% of lottery winners go broke in 3 years. Poverty at its core is not a matter of not having money, it’s a matter of not managing it properly – or more specifically, not managing one’s ability to develop oneself sufficiently to hold a job that provides enough money to escape poverty.

    While there are many causes of poverty down at the individual level, many of them can be tied back to a series of poor life decisions. Many have their origins in the home and get perpetuated generation to generation. Having children too early in life, dropping out of high school or college, engaging in addictive behaviors like substance abuse or gambling, squandering finances, harming their ability to become employed through criminal records, just to name a few. While there are causes of poverty beyond a person’s control, much of it could be and should be preventable through education, and it begins with the parents in the home. Until we start placing accountability for poverty back on the individual, and to an extent, their parents, their home, and their communities, nothing is going to change for the better. And giving more housing subsidies most certainly will not improve matters. In actuality, it would probably just cause rents to skyrocket even more as tends to occur anytime the government subsidizes economic activity.

    • Matt – how have we been subsidizing poverty at greater and greater levels? We cut low-income federal housing assistance by half in the 1980s, and homelessness subsequently skyrocketed, do you think there was any relationship between those two things? By contrast, when we increased efforts to end veteran homelessness through gov’t aid, we’ve dramatically reduced it (with some cities and states effectively eliminating veteran homelessness)? Was that a bad idea?

      If you don’t think giving aid to people in poverty is a good idea, what do you think about giving aid to affluent families? Because in the housing sector, we do that to a far great dollar amount and cost to the US Treasury – so why not complain about that?

      And what about the example of Utah – a red state that has almost eradicated homelessness not by just saying “tough luck” – but by the government actively helping people get back on their feet?

      • Matt Stevens says:

        Stuart – here’s how we’ve been subsidizing poverty at greater and greater levels. Since the link may not go through, search google images for “welfare spending by year”. The first chart shows that we’ve gone from welfare spending of around $2,000 per person in poverty per year in 1970 to almost $18,000 per person in poverty per year in 2016. And these numbers are properly inflation adjusted. For a family of four below the poverty line, that’s going from welfare spending of $8,000 to $72,000 for the family. Do you not consider that to be a greater and greater level?

        And your comment on “aid to the affluent” is really misleading. If the government takes a huge sum of money from you for taxes but then gives you back a few pennies (ie: the mortgage interest deduction), do you really consider that “giving you aid”? By that rationale, if the government confiscated your entire pay check then gave you a few dollars of it back, you would be seen as having received aid from the government. Thanks Uncle Sam – you really shouldn’t have.

        • Matt – I’ll try to number our disagreements so they don’t get lost or mixed up.

          1. Deductions vs direct payments. So I agree, if the government took 100% of my pay, and gave me a few dollars back, I wouldn’t see it as getting aid or a gift from the gov’t. But say I have $100k income and pay a 25% tax rate – I pay $25k/year in taxes (this is a bit more realistic than your hypothetical, IMO). Say Congress creates a new deduction for people named Stuart (me) – we can deduct up $50k from our taxes. I now pay $12,500 in taxes instead of $25,000. Is that not a financial benefit to me? If I could instead be given $50 in cash, would I take that, since the deduction isn’t really helpful to me?

          2. Welfare spending. Sure – I was just curious your sources and what you were considering as poverty spending (SS and Medicare are interesting as people pay into them, an earned benefit, yet have anti-poverty impacts).

          I can see you wish we had more to show for all the money spend on anti-poverty measures. If poverty was eradicated, maybe you’d be persuaded it was money well spent. But the key to me is, what would the poverty rate be without our spending on welfare? Columbia economists peg it would be around 26% instead of 16%. https://www.washingtonpost.com/news/wonk/wp/2014/01/08/everything-you-need-to-know-about-the-war-on-poverty/?utm_term=.4ff3632636db

          I think we could definitely do a lot more to fight poverty, and we certainly haven’t landed on the optimal policies previously or currently – but I would not want to eliminate all gov’t funded welfare spending that would likely throw millions into poverty without putting a better plan in place.

    • “[spending] has gotten us no where – poverty rates remain stubbornly steady ”

      Before the war on poverty started in 1964 the poverty rate was 20% in the 60’s. Since then the poverty rate has averaged ~13% and hasn’t exceeded 15%.

      Looking at it that way we could conclude the war on poverty has helped cut poverty by 1/3 consistently for decades.

      By comparison since the 1980’s we’ve spent $1.5 trillion on the drug war and the addiction rate in the US hasn’t budged an inch the entire time. Now thats a failure.

  9. Did the book explain how landlords supposedly profit from evictions?

    As a landlord I don’t see the math there. The only time you evict someone is if they’ve stopped paying rent or are a valid hazard or blatantly violate lease rules repeatedly. None of these situations are money makers for the landlord. Usually evictions happen after rent is delinquent for 1-2 months and the tenant has no ability to pay. The eviction also typically costs the landlord hundreds of dollars. Its also common for an evicted tenant to leave the property in need of cleaning and repair. I’m still not seeing any profit for the landlord… just lots of lost money and out of pocket costs. Its also not as if a landlord can expect to recoup the losses from the tenant.

    Evictions are a lose lose situation.

    • I forget, been a while since I read it – but I’d recommend reading the book – he spends a lot of time with the landlords and conveying their experiences, it’s not just a “here’s what tenants deal with book.”

      But unless you think the data on evictions are a hoax – the proof is in the numbers – and he picked Milwaukee not because it was the worst city for rate of evictions, but because it was pretty average, if I remember correctly.

      And he goes into detail conveying the financial calculus for landlords. It’s clear he has sympathy for them as well – he shares plenty of examples of landlords losing money by helping out tenants struck by bad circumstances.

      • I shouldn’t have to read the 400+ pages to find out how evictions = profits

        Or is it as simple as the fact that letting someone live in my rental for free destroys my profit but evicting a non paying tenant is necessary for me to not lose a fat pile of my own money?

        • “I shouldn’t have to read the 400+ pages to find out how evictions = profits”

          That’s fair about not having to read 400 pages to get an answer to your Q – normally I wouldn’t suggest reading something but this book won a Pulitzer Prize and I think for good reason.

          But in lieu of reading it, I’d say I think you’ve mistakenly presumed the argument being put forward is that evictions equal profits. I think the author would agree that these landlords would prefer not to evict anyone, as it is not by itself a profitable act, and would prefer to have all wealthy tenants who never experienced hardships that made it hard for them to pay rent.

          The argument isn’t that greed or even a for-profit housing market is fueling the eviction epidemic – rather it is a confluence of factors. Failing public schools, an economy leaving people behind, our health insurance system that creates so many medical bankruptcies, etc etc.

          When 57% of Americans have less than $1,000 in savings – any misfortune (car accident, illness, lay off, etc) can land millions of families behind on rent and likely to be evicted. The problem nor the solution is entirely with landlords. The book explains why evictions are particularly awful (I’m guessing you can already imagine that) and offers insights into how society could mitigate the problem of having so many evictions – hard for me to summarize from memory. One thing I’ve harped on elsewhere in this thread is we spend billions subsidizing the housing of affluent families who don’t need the help – if we spent that only helping families who need it, we could help many families (and landlords). We could also relax landuse regulations in cities/states – NIMBYism keeps housing supply low, which drives housing prices upwards. France has an interesting policy of basically creating an insurance fund – so landlords who get stiffed on the rent can just file a claim and get paid, rather than having to sue in court every time, which clogs up our court system.

          • Sooo… evictions does NOT equal profits and its just a misleading and badly chosen title?

          • @Jim – so I’d say the subtitle of the book is not “Evictions Equal Profits” it is a more nuanced “Poverty and Profit in the American City”. He’s exploring the role evictions play in low-income housing (where there is both profit and poverty) using Milwaukee as his field study where he goes more in-depth and to give context behind the numbers.

            Many people think there is not much money to be made off poor people (they are poor after all!), but he does show how people profit off impoverished communities. He doesn’t categorically condemn landlords for doing this, or argue there should be no profit incentive in the housing market, he just illuminates some of the problems.

            One example is a tenant who pays her rent and abides by her lease, but is a victim of domestic abuse. She has to call the police several times when her abuser comes to her home, and a landlord doesn’t like this (police calls bother him, might harm his profits if building gets a reputation), so he evicts her under nuisance laws.

            This is only one of many issues going on in low-income housing sector, and again, he points to a number of reasons of why we have so many evictions and people with housing insecurity.

  10. Matt Stevens says:

    Jim, are you aware that the US has spent almost $15T (that’s trillion with a T) through welfare as part of the “War on Poverty” since the 1960’s? And that most of that $15 trillion was spent after 1970? And that poverty rate hasn’t even budged since 1970? It was 13% that year and it’s about 13% today. Do you call spending close to $15 trillion to produce no change in the poverty rate a success? I call that a monumental failure, far more so than your statistic on the “War on Drugs”.

    • The war on poverty isn’t a war we’re going to win by driving poverty down to zero. The war is a constant battle for 50 years keeping the number below 20%. And its been successful in doing so. Before the program poverty was 20%… after and during the 50 years of the program the average has been 13%. Helping keep poverty 1/3 lower is a success. No we don’t expect it to continually go down. Unless you’re offering to spend lots more.

      Note the $15T figure is a inflation adjusted figure. So no we didn’t actually spend $15 T. (the $1.5T on drug war is probably also inflation adjusted)
      The $15T includes lots of spending like pell grants that most of us wouldn’t really consider ‘welfare’ per se.

      The largest cost in that $15T total is Medicaid. I’ll grant you that spending on medicaid hasn’t fixed poverty but its helped keep poor people alive. I don’t think “poor people are still poor” is a very logical reason for abolishing medicaid. Do you?

      • Matt Stevens says:

        Jim, your comment suggests that you view poverty like a growing plague that will rapidly overtake the world if we don’t continue to spend massive amounts of money to combat it and minimize it. That viewpoint flies completely in the face of the massive amount of economic growth that has taken place in the last 50 years both in the US and in the world. Economic growth does not create more poverty – it reduces poverty. People today (yes, including the poor) are massively better off today than they were 50 years ago.

        Also, to revisit your earlier comment attributing the “War on Poverty” to the decline in the poverty rate in the 1960’s, I would suggest you search google images for “poverty rate since 1947” to see a longer term chart of how the poverty rate has changed. You will quickly realize that LBJ’s “War on Poverty” had little to do with the rapid decline in the poverty rate. Before the “War on Poverty” even started in 1964, the poverty rate had already plummeted from 35% in 1950 to 20% in 1964. The decline from 20% to 13% that took place after that was simply a continuation of the trend that had already started – a trend caused by economic growth, not by massive welfare spending.

        The refusal of the poverty rate to budge from that 13% level even after $15 trillion (the fact it’s inflation adjusted doesn’t matter, it is still equivalent to $15 trillion in today’s money) is a testament to the fact that there are other factors at work that neither economic growth, no matter how grand it may be, nor additional welfare spending, can impact. Factors like I mentioned before: Having children too early in life, dropping out of high school or college, engaging in addictive behaviors like substance abuse or gambling, squandering finances, harming their ability to become employed through criminal records, just to name a few.

        • @Matt – you write “Economic growth does not create more poverty” – I feel you are attacking a straw man here. Jim never said economic growth was bad, or causes poverty. If he did and I missed, please let me know and I’ll take a second look.

          I think Jim is just saying poverty is not something that goes away after you spend a certain amount of money over a period of years, in the same way it’s not reasonable to think crime would go away after a period of investing in policing. (It’d be nice if this was possible, but I don’t believe this has happened anywhere in human history).

          As to your argument about poverty rate not budging, I would refer to a study by economists at Columbia showing welfare spending has reduced the poverty level.

          “The safety net has reduced the poverty rate from 26 percent in 1967 to 16 percent in 2012. The chart is using a measure of poverty developed by economists at Columbia University and elsewhere that analyzes how many people fall below the poverty line once taxes and transfers (such as food stamps) are factored in.”

          https://www.washingtonpost.com/news/wonk/wp/2014/02/19/the-best-case-that-the-war-on-poverty-has-failed/?utm_term=.7eae362f599e

          I think you can rightfully argue that we have failed in a war on poverty (as the link I cited above does argue) or that it’s not the most effective way to combat poverty, but I don’t see how you argue that is has not reduced poverty, or that poverty would not be higher but for the spending.

  11. If anyone is thinking of buying the book, note the deal offered on Amazons site :

    “Limited time offer: Get $20 off and an audiobook of your choice when you purchase this book + Audible membership ($14.95/month, cancel anytime).”

    Audible is $14.95 + the book is $11.55 = $26.50 total with $20 off its $6.50 for both

    SO you can save ~$5 and get an audio book with the deal, versus just buying the book alone.

    Of course you’d be signing up for Audible which you might then want to cancel before that month is done or you’ll be charged $14.95 /monthly.

  12. Steve Kohn says:

    Matt Stevens — You just ended the discussion as far as I’m concerned. Run for office, you’d have my vote. Thanks for expressing the right side of the argument so well. (Right as in correct, and right as in conservative.)

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