Link: 411710_work_pay.pdf (application/pdf Object).
The study is entitled "Making Work Pay Enough: A Decent Standard of Living for Working Families" and it comes from the Tax Policy Institute. Like the Self Sufficiency Standard Studies, it points out that many of America's jobs simply don't pay enough to support oneself, much less to support a small family.
I found myself very disappointed by the recommendations of the study. They lack radicalism. They don't seek the root of the problem, so they don't find the root of the problem. They propose programs rather than solutions.
For example, here's what they say about housing:
Expand the Supply of Modest Housing
Raising the purchasing power of low-income working parents — and providing an extra boost to cover high housing costs — is clearly a critical first step. But if moderately priced houses and apartments are unavailable, severely dilapidated, or unsafe in the communities where low-income working families live and work, more purchasing power alone will fall short. Economic theory suggests that enhanced purchasing power will induce increased supply, but in many circumstances, regulatory and market barriers impede construction of modest housing (Glaeser et al. 2005). In these circumstances, more purchasing power might increase upward pressure on housing prices and rents, making housing even more expensive.
To address this problem, the third component of our proposal offers subsidies and other incentives to make more moderately priced housing available where it is currently in short supply. Primary responsibility for this initiative should fall at the state and local level, where land use and zoning regulations and building codes are enacted and enforced. In fact, only policymakers at the state and local level can accurately determine where more housing is needed. In many metropolitan areas, affordable housing is abundant in distressed central-city neighborhoods but scarce where job opportunities are expanding. Historically, both jobs and affordable rental housing were concentrated in central cities. But in recent decades, employment growth has become increasingly dispersed, while exclusionary zoning laws have limited development of rental housing in many suburban communities.29 In short, central cities are still where most affordable rental housing is but not where most jobs are.
Although states and localities are best suited to take the lead in determining where and how to expand affordable housing, the federal government can create incentives for them to do so. Federal incentives could encourage state and local governments to adopt land use regulations that are “affordable housing friendly” to catalyze the production of substantially more affordable housing in communities that offer access to quality jobs, not in distressed communities where subsidized housing is already overly concentrated.
The federal government already provides considerable funding to state and local governments to promote affordable housing development. The federal Low Income Housing Tax Credit (LIHTC) program works through the states to provide tax credits to investors in housing development deals, thereby increasing their effective return and allowing properties to charge lower rents. And the federal HOME Program provides block grants to cities and urban counties for many affordable housing purposes, including new rental construction. These two programs have subsidized the production (or substantial rehabilitation) of roughly 100,000 homes and apartments annually that charge rents affordable for households whose incomes are 60 percent of their local area median.30
Two specific adjustments to these programs could strengthen their effectiveness. First, the LIHTC should be expanded and retargeted. Specifically, we recommend a 20 percent increase in the program’s size—at an estimated cost of about $1 billion annually—in conjunction with revised targeting formulas that direct more tax credits to states where rental housing is in short supply (and fewer to states where the supply of rental housing is adequate) and to locations within these states where moderately priced rental housing is scarce.31 Second, to spur more affordable rental production in suburban communities, we propose a new federal incentive fund. Jurisdictions would be eligible to receive awards from this fund (to use for any housing or community development purpose) if they reduced regulatory barriers to affordable housing production and demonstrably expanded the supply of moderately priced rental housing within their borders. An annual incentive fund of $1 billion would support awards of $10 million each to the 100 top-performing jurisdictions across the country. At this point, it is not possible to estimate how many affordable housing units might be produced as a consequence of such an incentive fund. But systematic monitoring over time could identify the most effective local strategies, disseminate this information nationally, and focus incentive awards to communities adopting proven approaches.
Like other programs that don't understand the underlying problem, this will only make things worse.
It takes no account of getting the incentives right so that the private sector will be motivated to do what needs to be done. What would that consist of? Shifting taxes -- for everyone in the community, not just a selected few -- off buildings, and onto the land value. In short order, the owners of underused land will find themselves motivated to put their well-located sites to better use, and the owners of unused land, who under current property tax structures can afford to wait for the price they want, will either lower their asking price or put the land to good use promptly. Choice sites will get used intensively. Fringe sites, with little value in the current market, will remain unused.
Other good things will happen, too, which would be appealing to the authors of the study -- job opportunities would increase, wages would rise, sprawl would decrease, housing become more affordable, commutes shorter ...
Which one of those outcomes would you prefer to avoid?
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