The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Los Angeles:
The Crisis in Affordable Housing

Jul 22, 2018

Ordinary people in Los Angeles face an acute lack of decent affordable housing. Certainly, workers everywhere in the country face the same kind of crisis. In no state, metropolitan area, or county, can a minimum-wage worker working full time afford a two-bedroom apartment at the going market rent. Everywhere, the capitalist class has continuously pushed down wages, cut jobs and raised rents in its drive for ever higher profits.

But in Los Angeles, the crisis in affordable housing is worse, with the city vying for the top spot among big cities as the least affordable in the country, according to various academic surveys that come out of Harvard, NYU and UCLA. When taking housing costs into account, the highest rate of poverty in the country is not in Mississippi, West Virginia or New Mexico, but Los Angeles. Twenty-five per cent of the population in Los Angeles lives below the poverty line, according to the U.S. Census.

Gold Rents and Lead Wages

This is recognized by Los Angeles officials themselves.“The proportion of the low wage workforce in Los Angeles is bigger than many of the biggest cities in the country and endemic poverty is greater,” wrote the Los Angeles Department of Planning in an official report on the city’s housing needs.

Behind the mask of the supposedly “modern,” “glitzy” and “liberal” Los Angeles is a capitalist class that squeezes its profits from a vast low-wage workforce. About 45 per cent of the workforce, or an estimated 723,000 workers, are supposed to make the minimum wage, which is currently $13.25 an hour for large workplaces and $12 an hour for small workplaces. These include workers in restaurants and hotels, retail stores, healthcare and non-durable manufacturing – such as apparel or food. But in reality, many of those workers make much less. More than half of garment workers and one-third of janitorial, retail, and private household workers report minimum wage violations, that is, rampant wage theft. On top of that, a growing proportion of workers has been pushed into the ranks of the informal sector, that is, workers without regular jobs. This sector is growing so fast, economists at the Economic Roundtable (who regularly issue reports for city officials) say that it is Los Angeles’s real growth engine. That means the fastest-growing parts of the working class are severely underpaid, unstable and lack even the minimal protections offered by labor law.

To those in this vast low-wage workforce, the real estate sector charges rents that are among the highest in the country, only slightly lower than New York and San Francisco. Last year, the average market-rate rent for a two-bedroom, one-bath apartment was $2,400 per month. It would take four minimum-wage jobs to afford that rent. For big parts of the working class, rent often eats up 70 per cent or more of their income, crowding out all other expenses, including food, transportation, health care, clothing. Many are forced to resort to living in cheap, substandard apartments or in illegal structures, like garages and shacks. Some double up and triple up.

Most live in constant fear of losing their housing altogether.“These folks have housing, but they're a stone's throw from homelessness,” U.S. Department of Housing and Urban Development (HUD) spokesman Brian Sullivan explained at a recent news conference in Los Angeles. “A severe health crisis, any kind of economic shock, all the things people experience in life, they'd be hard pressed to find other housing.

The Homelessness Crisis

Many become homeless. Even official statistics show that in Los Angeles County homelessness increased by nearly 40 per cent since 2010. (Los Angeles County, which has a population of over ten million, includes the city of Los Angeles, which has a population of about four million.) But official statistics cover up how much homelessness there really is, since they include only estimates of homelessness on a single night in the year, an absurdly narrow criteria set by the U.S. Department of Housing and Urban Development (HUD). This count does not include people who are homeless for part of the year, or who happen to be living in motels, or who are sharing living quarters with other families. That is, the government does not count how many people have no stable place to live, tend to move often and, in reality, therefore are homeless.

Other studies come closer to the reality, but they get no public exposure. For example, according to the Los Angeles County Department of Public Health, 373,000 adults (5.2 per cent of the adult population) reported being homeless or not having a place of their own to live or sleep at some time in the past five years. The Department of Public Health calls them the hidden homeless. That is more than seven times higher than what is usually reported.

And that’s just the adults! How many homeless children and teenagers are there? The school districts in L.A. County identify 63,000 students who are homeless (out of 1.5 million students). The school districts are supposed to offer the students special services and supplies to help them cope with harsh conditions that interfere with their learning, including constant noise, lack of privacy, exhaustion and stress. But they actually cannot. Given all the budget cuts, the school districts have little or no funding for those additional necessary services and supplies.

How many more young people are homeless but not in school? Neither the school districts nor the county department of public health say.

Nonetheless, these surveys indicate that the total number of homeless people in L.A. County is close to half a million, which is the equivalent of a medium-sized city like Fresno.

This crisis and its consequences touch every neighborhood, workplace and school. Consider the fact that the Los Angeles Community College District reported that one in five of its 230,000 students are homeless.

There are certainly longstanding factors besides unaffordable rents that contribute to homelessness, such as mental illness and drug addiction. But as public health professionals point out, simply facing the threat of being thrown out on the street can be extremely debilitating and can cause physical illnesses, depression, and other serious problems.

In this supposedly “modern” and “advanced” society, which in reality is driven by the profit and interests of the capitalist class, there is no place for people with extremely serious problems and disorders, especially if they come from families with no money. Similarly, thousands of veterans, who are basically used up and thrown away by the military machine, come out of service suffering from post-traumatic stress disorders and drug addiction, also make up a big part of the homeless population.

The vast array of homeless encampments, big and small, are a return to the deplorable conditions of Hoovervilles, the shantytowns of the Great Depression, and John Steinbeck’s Grapes of Wrath. On Skid Row in downtown Los Angeles, the streets are home to 4,300 people during the day. But there are not even enough bathrooms to meet the minimum standards set by the U.N. for refugee camps. This total breakdown in basic sanitation was behind the first outbreak of Hepatitis A reported in a major American city for many decades.

Moreover, to be homeless means to be treated like a criminal. From 2011 to 2016, the LAPD increased the number of arrests of homeless people from 10,000 annually to 14,000 for minor and non-violent offenses, such as sleeping on the sidewalk. In a report issued last December, Professor Philip Alston, United Nations Special Rapporteur on extreme poverty and human rights, denounced these arrests, saying they are used to conceal this social disaster. Alston also denounced the fines of the criminal justice system, saying they further impose extreme poverty on the homeless. Thus, a $100 fine for “sleeping on the sidewalk” quickly mounts to $400 when court costs and fees are piled on, making low-level infractions immensely burdensome, a process that affects only the poorest members of society who pay the vast majority of such penalties. And when homeless people can’t pay the fines and penalties, they are thrown in jail.

This barbaric situation has such an enormous impact, it shortens homeless peoples’ life spans by 30 years compared to the general population.

The Destruction of Affordable Housing

Officials claim the problem is one of supply and demand, that is, housing construction has not kept up with population and job growth. Reverse that trend and build much more housing – politicians and experts say – and the laws of supply and demand will eventually push rents down.

That has been the official position of Los Angeles Mayor Eric Garcetti. When he took office in 2013, Garcetti told a meeting hosted by the Los Angeles Business Council: “We face a housing shortage unlike anything we've seen since World War II.” He set a goal for the construction of 100,000 new housing units by 2021, that is, by the end of his second term. Sure enough, construction cranes have sprouted up over many parts of the city. By the end of 2017, the Garcetti administration declared that it was already two-thirds of the way toward that goal, a supposed success.

Success for whom? The big real estate developers, construction companies and finance companies. Their profits have been huge. But almost everything they have built has been luxury and market rate apartments. So, it certainly has not been an answer to the affordable housing crisis.

On the contrary, this new construction has worsened the affordable housing crisis by increasingly gentrifying many working class neighborhoods, such as South Los Angeles, Highland Park, Boyle Heights, Hollywood, North Hollywood, Venice, Echo Park and Koreatown, to name a few. In the past, banks and insurance companies had starved many of these neighborhoods of everything. Food was more expensive because no supermarket chain would open a store. Banks wouldn’t open up branches, not to speak of extend loans or mortgages. Insurance companies charged their highest rates for cars and homes than anywhere else in the city. The city didn’t extend any services, repair roads, fix sidewalks, or provide decent neighborhood schools. And in many of these neighborhoods, there were no hospitals, emergency rooms or clinics.

As these properties became rundown and the property values sank, investors, developers and big financial companies scooped them up. The capitalists had plenty of ready customers to fill the apartments and condos, since the extremely high housing prices in other parts of the city had priced even big parts of the middle and professional classes out of these markets.

Working people have seen their neighborhoods taken over and their affordable housing destroyed. They have been exiled into the far suburbs, which means extreme commutes to either work or school, not to speak of further isolation from friends, family, and cultural centers.

Government’s Helping Hand ... for the Capitalists

The role of government officials at every level: federal, state and local, has been to offer up these parts of the city on a silver platter. The liberal Democratic political establishment often disguises these giveaways behind high-sounding goals. But the result is that the developers and banks get valuable publicly-owned land, tax breaks and subsidies, increasing their profits.

One set of zoning changes, subsidies and tax breaks for development is being offered along new mass transit rail lines, supposedly in order to encourage mass transit ridership, and therefore reduce traffic and pollution. This government-sponsored development is called transit-oriented development (TOD). Sometimes, along with the tax breaks and subsidies, Metro, the county mass transit agency, also hands the developers publicly owned tracts of land for the construction of massive luxury apartment buildings, store-fronts and shopping centers, which are supposed to serve as hubs for mass transit use. Metro has already handed over 17 of these publicly-owned properties to developers, acting as anchors for more development in the surrounding areas.

To give an idea of the massive scale and impact of some of this development: in late 2016, the Los Angeles City Council unanimously approved the Reef Project, a 1.2 billion dollar mega-construction project on the edge of South Los Angeles, along the Exposition Line, one of Metro’s new light rail lines. This project promises 500 apartments, condos, hotel rooms, a parking lot and retail space. Local residents won’t be able to live there, since it will be so expensive. On the contrary, the new development will drive up rents and push residents out, acting like a giant neutron bomb. According to a health and equity impact report conducted in October 2015, an estimated “84,000 residents living within 2 miles of the project could be at risk of financial strain or displacement as a result of the Reef Development Project.”

Moreover, much of this development – which is supposed to take people out of their cars and put them in mass transit – has done the exact opposite. It is emptying out the working class parts of the population that actually takes mass transit, and is bringing in the upper middle classes and wealthy who would never be caught dead on one of Metro’s buses and trains – thus making traffic congestion and pollution worse.

Another set of subsidies and tax credits is supposed to be aimed at creating incentives for real estate developers to build “affordable” housing, as well as housing for the homeless. Otherwise, the capitalists wouldn’t do it, because the profits aren’t high enough. These programs are not only small and inadequate, especially compared to the need for housing, but the developers and financial companies skim the cream off the top. All of these subsidies together have produced about 60,000 privately-owned subsidized units over the last 35 years. That’s a rate of less than 2,000 units a year – which is practically nothing. So, only a “lucky” few get a rent-subsidized apartment, while even the most vulnerable sections of the population on fixed income, such as most seniors and people with severe disabilities, have no other choice but to make do in the savage rental market. And many times they can’t.

Moreover, this batch of affordable housing is only temporary, since after a couple of decades the private owners are allowed to raise the rents up to market rate. Thus, as of 2021, the rent on about one-third of the units is expected to jump back up to market rate. At the same time, big reductions in subsidies by both the federal and state governments means that many fewer subsidized units are currently being built. So, they probably won’t come close to making up the difference, and the number of “affordable” apartments is expected to decline sharply.

One symbol of just how much capitalists’ profits from real estate development take precedence over everything else is just how much government officials have handed taxpayer money over to real estate developers in Los Angeles’s downtown – and how irrational it is. Over ten years, the L.A. City Council agreed to more than 650 million dollars in tax breaks (Los Angeles Times, July 1, 2014) for developers in Los Angeles's downtown. This has helped pay for luxury apartments that are bought by absentee owners, often from foreign countries, such as China, Saudi Arabia and Russia, solely for speculative purposes, that is, as somewhere to house not themselves, but their assets. Most properties are left vacant, simply an investment that appreciates in value until it's time to sell, in a similar trend as in New York and London. One real estate appraiser refers to such condos as “safe deposit boxes in the sky that buyers can put all their valuables in and rarely visit.

Thus, expensive tax breaks are used to turn wealthy neighborhoods into ghost towns – in a city that lacks hundreds of thousands of affordable housing units and is choking with growing homelessness.

Rent Control for the Capitalists

Faced with the dire lack of affordable housing, tenants’ rights groups and activists have been pushing for more government regulations that would limit rent increases. This year they were able to get a proposition on the state-wide California ballot in November that would repeal a state law limiting how and where cities can implement rent control. This ballot initiative will certainly draw a lot of attention this fall, given the tens of millions of dollars in attack ads on billboards, television and radio that the real estate and financial interests are getting ready to unleash against it.

But even assuming that the activists and tenants’ groups are able to get the proposition passed and new laws enacted on the local level, despite the opposition every step of the way from powerful real estate interests and financial giants, what would happen if they did get rent control?

One way to understand this is to look at what happened in Los Angeles, which has had rent control for decades. In 1979, under pressure of a lot of angry tenants and protests against conditions that sound strikingly similar as today, the City of Los Angeles passed a rent stabilization ordinance. According to the Statement of Purposes written into the ordinance back in 1979, there was “a shortage of decent, safe and sanitary housing....” Tenants were being evicted in record numbers, and were “unable to find decent, safe and sanitary housing at affordable rent levels....” Some tenants attempted to pay the rent increases, “but as a consequence must expend less on other necessities of life.” And this situation created “hardships on senior citizens, persons on fixed incomes and low and moderate income households....” In other words, big parts of the working population and poor were getting hit by sky high rents and the lack of decent living conditions.

The Rent Stabilization Ordinance (RSO) that was enacted by the Los Angeles City Council was supposed to “safeguard tenants from excessive rent increases, while at the same time, providing landlords with just and reasonable returns from their rental units.

In reality, city officials made sure to “provide landlords with just and reasonable returns” by setting rent increases at three to eight per cent annually, depending on the rate of inflation. These controls might have slightly slowed some rent increases, but the RSO still allowed rents to mount steadily. For example, between 2009 and 2015, the RSO allowed landlords to raise their rents by a total of 19 per cent. These increases came when unemployment was high and household income for working people was dropping. The rent increases were even much higher than the official rate of inflation, as measured by the Consumer Price Index.

Moreover, city officials often turned a blind eye when landlords imposed even bigger increases than what the RSO allows. The city government admits that 27 per cent of rent control tenants reported rents that were above the projected allowable increase, mainly low-income renters. And undoubtedly, the number of unreported illegal increases is much higher. Tenant rights’ organizations also reported landlords unlawfully pushing up the costs of amenities, such as parking, in order to increase the rent. Nor have any official actions stopped landlords from greatly profiting from slum housing, by not dealing with vermin infestations and by not carrying out much needed repairs. And landlords have continued to evict tenants in big numbers, when it suits their purposes, either through legal or illegal means.

In 1979, L.A. officials promised that the RSO would begin to rectify the shortage of decent, affordable housing. Today, the RSO covers two-thirds of Los Angeles’s inventory of rental units. But by the officials’ own admissions, the RSO did little to alleviate the problem.

A History of Chronic Shortages of Decent, Affordable Housing

There has never been a time when there was not an acute shortage of decent, affordable housing in Los Angeles.

Land developers might have made enormous fortunes over the last century buying up cheap land, subdividing it and building millions of homes in the Los Angeles metropolitan region. But affordable housing was another story. Because the profits were not high enough, the developers didn’t build it. This created a permanent shortage of decent affordable housing that the working population depended on.

Certainly, the government could have stepped in and done what the private sector has never done: build public housing, or, as it is called in other countries, social housing. But the various and sundry parts of the real estate sector – from the developers to the banks – opposed this out of fear that it would cut into their profits. So the government did not.

The one notable exception was in the period during and after World War II, when hundreds of thousands of workers poured into Los Angeles to work in the shipyards, aircraft factories and other defense plants. Only a minority of defense workers could afford to buy the small homes in large, new housing tracts that were being produced. The rest were forced to “double up” by staying with relatives or friends, by renting rooms in the city’s limited housing stock, or by moving into primitive accommodations.

So, for the first time, the Los Angeles city authorities began to build new apartment buildings all over the city for the workers in the defense plants. When the first public housing project, Ramona Gardens, was opened in January 1941, it was described by a local newspaper as “pleasant, healthy and secure.” What also set public housing apart was the fact that at least in the beginning, the projects were integrated. At a time of rigid segregation throughout the city in housing, schools and often at the workplace, this was unusual.

Certainly, the military contractors wanted more housing available to their workforce, especially if it was cheap. In the end, with federal dollars, the Los Angeles housing authority managed to build and operate five permanent and twenty-one temporary housing projects during and immediately after World War II. But this was a drop in the bucket compared to the demand. After the war, the housing shortage grew worse, as veterans poured into the city.

But the real estate sector, along with insurance companies, banks and construction companies, consistently opposed public housing. The private real estate sector wanted the money that the government was using to pay for public housing for themselves. During World War II, these companies were able to delay the construction of housing projects by months and sometimes years. After the war, they mounted several campaigns to completely stop the construction of any more public housing, calling them “socialist” and “communist” plots, using the Red-baiting tactics that were part of the repression and purge of the workers’ movement that came to be known as the McCarthy Period.

So, the public housing that had been built was left to wither on the vine. Deprived of funding, this housing became dilapidated and reserved for the poorer layers of the working class, especially Black and Latino workers. Instead, federal dollars flowed to subsidize the profits of such magnates as Henry J. Kaiser, who developed Panorama City in the San Fernando Valley, and Mark Taper and his partners, who developed Lakewood. At that time, house prices might have been more affordable for the more stable elements of the working class, as Los Angeles became the most important industrial center on the West Coast, fueled by military production for the Korean and Viet Nam wars. But during this boom, there wasn’t nearly enough affordable housing for the more oppressed layers of the working class, who suffered the worst unemployment and poverty ... and the worst housing conditions.

Deplorable housing was one of the root causes of the Watts Rebellion of 1965, as it was for the urban rebellions that broke out throughout the country in the 1960s. After Watts, the Governor’s Commission on the 1965 Los Angeles riots found that renters were financially over-burdened, often paying “a high proportion of their income” for shelter that “is more deteriorated than housing in the total country.” But the state commission, along with the Kerner Commission that had been appointed by President Johnson, recommended only increasing the supply of rental housing by providing low-interest loans and subsidies to developers. In other words, they recommended boosting the profits of developers under the guise of relieving the crisis – the same old thing.

By the 1980s, all over the city, the existing stock of older rental property was being depleted by the newly fashionable trend of converting apartments into condominiums that few working class families could afford. An L.A. County report published in 1980 stated that, due to inflation, rents had increased more than 150 per cent in the previous eight years, while wages had risen only 14 per cent. Black workers suffered the brunt of these conditions. One observer described that the influx of thousands of immigrant families were forced to live in “a dense, continuous ring of slum housing around downtown, with filaments and tentacles reaching out to Hollywood and the eastern San Fernando Valley in the north, the San Gabriel Valley as far as La Puente in the east, and Lynwood in the south.”

Of course, the supposed American Dream of working people owning their own home has always been presented as the alternative to being trapped in the rental market. But most workers have been shut out of the market to buy their own home, simply because they couldn’t save enough money for a down payment. But starting in the 1990s, when they were pushed to buy a home because of high rents, they were trapped by banks, financial companies and real estate developers into predatory subprime lending, which eventually blew up, resulting in high rates of foreclosure. Ten years ago, Los Angeles was one of the centers of the subprime crisis, with approximately 143,000 households losing their homes. Those who managed to hold onto their homes remain in a precarious situation because of the high mortgage payments tied to risky loans.

No, for the working class in Los Angeles, just as throughout the country, the shortage of decent, affordable housing is a permanent condition. If the situation is worse today, it is because of the worsening underlying economic crisis in which the capitalist class has not only driven down wages in order to increase its profits, but has also used those profits to speculate with, driving up the cost of land. Los Angeles is one of the prime targets of this speculation, attracting capital on an international scale, pushing up prices even further. So working people pay twice, with lower wages and higher rents.

The shortage of affordable housing is the rule throughout the history of Los Angeles, the United States ... and class society. As Frederick Engels wrote in 1872 about the deplorable housing for workers at that time, “This shortage is not something peculiar to the present; it is not even one of the sufferings peculiar to the modern proletariat in contradistinction to all earlier oppressed classes. On the contrary, all oppressed classes in all periods suffered rather uniformly from it. In order to put an end to this housing shortage there is only one means: to abolish altogether the exploitation and oppression of the working class by the ruling class.”

Those words still hold true today.