Facing the Recession

I ran into Eric Belsky last summer at a Millennial Housing Commission hearing in New York, a few weeks after the Joint Center for Housing Studies released its annual State of the Nation’s Housing report. I asked Eric to take the trends the Joint Center has been following, along with the demographic changes occurring in the country, and try to project what the future had in store for those of us concerned about housing affordability and the health of neighborhoods. The product of his efforts begins on page 8 of this issue.

Of course, neither of us had any idea back in July that the future was going to change in a flash one morning in September. In fact, Eric was well into his article by the time of the terrorist attacks. So you might imagine that we had to do some quick rethinking about an analysis of what the future held. Not so. The trends Eric cites – the growing gap between incomes and prices, the aging of the population, outmigration from the cities – are well-established and likely to continue in times of war and peace, want and prosperity. Save the article, read it again a year from now, and Eric’s thoughtful analysis will still ring true.

That’s not to say that things haven’t changed in recent months, but it’s important to understand how and why. While everyone has been blaming 9/11, the dismal scientists at the National Bureau of Economic Research (NBER) recently decreed that the recession, officially defined, started back in March. (That it really started months earlier is a matter of common sense, but that’s not part of the NBER model.) True, calls for Washington to ameliorate the pain of this economic downturn must now compete with war and new demands for security, not to mention another round of irresponsible tax cuts. But the homeless and the jobless were already competing (rather unsuccessfully) with the revival of Star Wars and the desperate cries for help emanating from the nation’s millionaires, so the current federal indifference to the plight of the nation’s families and neighborhoods is just a matter of degree.

Nonetheless, this recession is particularly troubling in light of the broad prosperity that preceded it. After decades of falling behind, real wages grew for the poorest Americans in the second half of the 1990s, and unemployment among minorities and the unskilled fell dramatically. That’s changed in the last year, and when this recession ends, it will take time to recover those earlier gains.

The recession also comes at the worst possible time for those families still struggling to cope with welfare-as-we-now-know-it. Long-term recipients of cash assistance face the five-year limit on aid at a time when state and federal governments are more concerned with balancing their precarious budgets than with providing the extra lift up that these struggling families need. In New York City alone, 30,000 were cut off the first weekend in December. And those who have found their way into the workforce are suddenly vulnerable again. Some – but only some – can fall back on unemployment insurance. Others will find themselves back in the welfare system, but that system now offers only temporary help.

If there’s a silver lining here, it’s that the fiscal problems facing the states will make it harder for Congress to cut the TANF block grant that now pays for welfare benefits and other services to low-income families. But having as much money next year as you had this year is little consolation when needs are rising.

There’s an old saying that the best cure for poverty is a job. Well, the best cure for a recession is lots of jobs. Tax cuts for the executives and shareholders of the nation’s largest corporations might produce some jobs, eventually. But the reason corporations are not investing in job creation right now is not that they lack the cash; it’s that no one is buying their products. Any tax cuts should go to those at the bottom, those with both the greatest need and the greatest willingness to spend. That, in combination with government spending initiatives, offers the best chance to bring us out of our economic doldrums. (In that regard, kudos to whoever thought to recast the National Housing Trust Fund proposal as a fiscal stimulus package.)

There’s a natural tendency to focus on the various supports that low-income families need, especially in hard times. Supports are important, but so is a vibrant, growing economy that can provide jobs that make those supports less necessary. Congress already hears from those big corporations about what kind of a fiscal stimulus they’d like to see. It should be hearing from us as well.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.