Asset Building News Week - July 29, 2016

Featured Story: Why Can’t We Build More Affordable Housing?

“For every 100 extremely low-income households,” according to recent research by the Urban Institute and the National Housing Conference (NHC), “there are only 29 adequate, affordable, and available rental units.” How can this be? As Emily Badger writes in the Washington Post, “the costs of building [affordable housing] outstrip[s] what the people who may live in them could afford to pay in rent.”

Those costs include the price of the land itself, paying the architects, engineers, and construction workers who design and build the buildings, and maintenance costs (just to name a few). Covering these costs ultimately adds to the final sticker price that those who buy or rent will have to pay—a price that those making below the median income of a particular area can rarely afford. Urban and NHC recently released an interactive tool that allows people to adjust the costs to see if they can break even.

“Even if you could build an entire property for free, an apartment meant for extremely low-income renters (those making 30 percent of area median income or less) probably wouldn't work at the end of the day. Those apartments could still cost more to maintain over time than the families living in them would yield in rent,” says Badger.

Badger writes that the “bottom line” solution to this issue, according to Urban and NHC, is that the government simply needs to provide more affordable housing subsidies. Patrick Clark expands on this in Bloomberg, stating that an issue is that low-income housing tax credits are typically used on housing for higher-wage earners instead of those that need affordable housing most. Additional public funding, then, is needed. Other solutions that Clark notes include “filtering,” which occurs when more luxury housing is built, which then frees up “older, lesser-quality units” to become affordable housing units. He also mentions new legislation that would “let developers tap rental vouchers to fund new projects,” in addition to “mechanisms by which local governments give builders publicly-owned land or development rights in exchange for a promise to build affordable units.” For their part, Liam Dillon and Andrew Khouri in the Los Angeles Times point to a new law in California that would allow homeowners to build secondary units in their backyards, potentially creating thousands of new homes.

Clearly, access to affordable housing will continue to be an issue in the coming years. CityLab’s Kriston Capps explains why Democrats and Republicans need to make it a priority, including in the presidential campaigns because “roughly one in five Americans lists housing as an issue on par with immigration, taxes, and entitlements reform.”

News Highlights: Millennial Savings Habits and SNAP Asset Limits

Debt Collector's Abuses Prompt Consumer Agency to Propose New Rules

“For the first time in nearly 40 years, federal regulators are preparing to significantly strengthen the rules that govern debt collection in an effort to clamp down on collectors who hound consumers for debts they may not even owe,” reports the New York Times’s Stacy Cowley. The Consumer Financial Protection Bureau’s (CFPB) proposal to reign in the debt collection agencies comes at the heels of its proposal to curb the abuses of the payday loan industry. The CFPB is considering rules that would require debt collection companies will have to more fully document the debt they are trying to collect, make it clear how a consumer can dispute the debt, and observe state statutes of limitations that bar them from legally pursuing older debt.”

The Saving-est Generation?

In the New America Weekly, Kalena Thomhave provides some context to the news that 62 percent of Millennials save at least five percent of their incomes. She argues that it’s not all about Millennials “taking up more responsibility”—Millennials are forced to save because of the changing nature of work. As employers shift away from providing benefits to reduce costs, workers can no longer rely on their employers to provide them with retirement security and health insurance. Those Millennials that do save likely have strong financial support from their families, which reduces their expenses and makes saving easier. Thomhave notes that the Millennials that receive financial assistance from their families are likely to be white and middle- to upper-class. So, “instead of shifting the story to make it about greater ‘responsibility,’ we should be promoting policy solutions that aim to make saving as well as financial stability more accessible for everyone.” She recommends portable benefits, increasing access to flexible saving, and expanding the Earned Income Tax Credit and the Child Tax Credit as ways to facilitate saving and better wealth and income equality for all generations.

The Unintended Consequences of SNAP Asset Limits

The Urban Institute’s new brief on the effects of asset limits in public assistance programs on financial inclusion confirms what we have said to be true for some time: asset limits in public benefits programs curb a household’s ability to build savings and participate in mainstream financial institutions. According to Urban’s report, “[r]elaxing Supplemental Nutrition Assistance Program (SNAP) asset limits...increases low-income households’ savings...and participation in mainstream financial markets...; it also reduces SNAP churn.... [R]elaxed asset limits [would] increase households’ financial security and stability by increasing savings and reducing benefit fluctuations, and they can decrease administrative program costs when fewer people cycle on and off the program.”

#WeSaidItFirst

News in Brief: Debt-free College Tuition, Minimum Wage, the Gender Pay Gap, and More

• Tyler Kingkade writes for the Huffington Post on how waiving tuition isn’t always enough to ease students’ debt burdens, because “if you’re going to a public college, tuition is only one part of your financial worries.”
• “Long-term unemployment isn't a story about bad personal motivation. It's a story about bad macroeconomic luck,” says Matt O’Brien in the Washington Post.
• Dean Baker, co-director of the Center for Economic and Policy Research, put together a report for the Century Foundation on the potential of financial transaction taxes to both rein the financial sector and raise revenue to defray the costs of higher education.
• The Washington Post’s Jim Tankersley reports on the run-up to the first Fight for $15 convention set to take place mid-August in Richmond, VA.
• “Whether or not a person stays in jail before going to trial often affects the outcome of his or her case,” writes the Atlantic’s Juleyka Lantigua-Williams. Not only does it affect the outcome of a case, it also impacts a person’s ability to find a job, secure a home, and get a variety of public benefits.
• Writing in the Hill, Andrew Friedman covers the sorry state of American’s retirement savings and the steps the Department of Labor is taking to improve the financial future of retirees, he argues that cities (and not just states) should be allowed to develop “Secure Choice” style retirement savings systems.  
• Retired Microsoft executive George Santino says raising the minimum wage doesn’t matter in an op-ed for the Hill. The Manhattan Institute’s Oren Cass argues that a $15 federal minimum wage “would replace a system that tailors policy to local conditions with a system that imposes a single standard from America’s most prosperous cities on less affluent areas that can ill afford it.”
• In light of Hillary Clinton’s proposal for paid family leave and affordable childcare, Slate’s Dana Goldstein outlines the waves of support the platform has received over the years.
• Writing for the Atlantic, Bourree Lam discusses a new report from the Economic Policy Institute that says part of the gender wage gap can be explained by social and cultural factors that influence women's job choices.

Events

Advancing Financial and Digital Inclusion | Brookings Institution | August 4, 2016

20 Years After Welfare Reform: What’s Next? | The Shriver Center on Poverty Law | August 18, 2016