Rhode Island is a small state, both in size and in population. Its population is so small, that fears of losing a seat in Congress have routinely entered headlines. In an effort to stave off the loss of political influence, one Rhode Island politician even offered a $10,000 bounty.
A Problem of a Housing Shortage
But before resorting to such desperate measures, Rhode Island’s policymakers need to acknowledge what the real problem is. The problem is housing. According to the 2013 Annual Social and Economic Supplement to the U.S. Census Bureau’ Current Population Survey, the top reason people give for moving is housing, followed by family, followed by employment. If Rhode Island wants to attract and retain people it must start supplying housing. While there’s much to criticize about the way the State rolled over for the Amazon HQ2 proposal, it can’t be denied that the company’s assessment that Rhode Island would be unable to handle 50,000 new jobs was exactly right. We need to start producing far more units.
In 2016, HousingWorks RI predicted Rhode Island would need to add roughly 3,500 units a year to match demand; the upper estimate suggested over 40,000 units of housing in the decade following 2016. It’s important to note here that Census Bureau figures show Rhode Island hasn’t even issued permits close to that number of units since 1999. And that year was an outlier. You have to go back to the decade before 1989 to find a stretch where we reached a 3,500 average production of units.
It’s at this point that many people begin talking up the relaxation of zoning laws. And it’s fair to say that zoning causes some of the issues, and that zoning reform should be part of a host of tools for addressing the crisis. But as objections to the Fane Tower proposal so aptly demonstrate, ignoring zoning to just build housing targeting the upper class isn’t going to work. Indeed, while rents in expensive cities have decreased at the upper end of the market, the poor are facing increasing rents.
The same dynamic is taking place in Rhode Island. In a recent WPRI story the CEO of the Rhode Island Builders Association said “we build high-end housing and we build subsidized housing,” but it should be pointed out only the high end housing is meeting the demand.
A Crisis of Affordability
A National Low-Income Housing Coalition (NLIHC) report on rental housing in Rhode Island found that for every 100 renter households in the state that earned between 81 percent and 100 percent of area median income there were 103 units that were affordable and available (“affordable housing” is defined as costing a household less than 30 percent of its income on rent a utilities, “available” means the unit is either vacant or not occupied by a wealthier household); this is enough to meet demand, if not a lot of choice. Only 5 percent of such households were cost burdened or severely cost burdened (meaning they spent more than 30 percent of their household income on rent and utilities; “severely cost burdened” households spend over half of their household incomes).
But for Rhode Island households who earn less than 80 percent of area median income, there aren’t enough rental units to meet demand, dropping precipitiously as income declines. This shows in the cost burdens as well. For the lowest-income Rhode Islanders, there are only 48 affordable and available units, and over 3/4s of such households are cost burdened. Nearly 80 percent of those cost burdened households are severely cost burdened.
The homeowner side of things is better, but not too much better. A recent NPR story, relying on Census Bureau data analyzed by the Harvard Joint Center for Housing Studies suggests that only 56 percent of households in Rhode Island could afford monthly payments on homes sold in 2015.
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Simply put, the rent is too damn high.
In 2016, Pew Research found that housing was taking up a larger portion of American household spending than it had 20 years before. More recently, Pew found that wages (when adjusted to 2018 dollars) have remained essentially stagnant since 1964! When the analyzing the cost of a 2-bedroom rental, in 2017 NLIHC found that for such a unit to be affordable for a full-time worker, they would have to be paid $19.49 an hour. According to NHLIC, the average renter earned $13.27 an hour.
Even with the recent increase to $10.10, and even if calls for a $15 minimum wage were to be successful, housing will remain a severe cost of our poorest neighbors.
This is having an effect in Rhode Island. Cranston overtaking Warwick to become the second largest city in Rhode Island (according to US Census estimates) was heralded by many as evidence of its success. But looking more closely at the data shows that Cranston largely earned that place thanks to the declining population in Warwick.
The reaction to such a change should not have been self-satisfied smiles from Cranston, it should’ve been horror from Warwick and other municipalities that lost population. HousingWorks found that the loss of households with children from 2000-2013 reduced Rhode Island’s GDP by $646 million and cost the equivalent of over 7,000 full-time jobs. Meanwhile, for the first time since 2010, homelessness has increased.
The same study puts to lie the typical complaint from the outlying towns in Rhode Island: that families with children will cost them too much in school costs. Except for Lincoln and Barrington, all municipalities in Rhode Island saw large decreases in children enrolled in schools from 2003-2011. Over the same period, spending per student increased. According to the study, schools in Rhode Island are economically inefficient with their spending, and could be much more efficient by enrolling more students.
Beyond which, who will live in these towns if they have no children? As a simple matter of policy, Rhode Island should want to be an attractive place to raise a family. The hostility displayed towards new families in the letters-to-the-editor section of some of our local newspapers is short-sighted. At worst, it is sometimes thinly-veiled racism.
What is to be Done?
The solution to a housing shortage is simply to build housing. Wage increases would help the poorest Rhode Islanders, but without new housing stock targeted at them, the crisis will worsen. Normally, we would rely on the market to create housing, but while zoning issues and local hostility to new housing do present barriers, the market has never really prioritized housing for the poor. And where a market fails, this is where government must step in.
To be sure, Rhode Island spends some money on affordable housing construction, but largely ignores the operating costs (maintaining affordable housing so it’s inhabitable). This makes it an outlier compared to neighboring states, which spend far more on both construction and operation of affordable housing. For a state often treated as the little brother to Massachusetts, Rhode Island usually fails to follow its older sibling’s example. In housing this is no different.
Under the current approach, Rhode Island has been going much too slowly. The crisis, already bound to get worse, will continue to squeeze out existing residents. More radical solutions are called for.
Rent control is an obvious one, and such a movement already exists in Providence. Construction costs could be lowered by relying more on manufactured housing, as long as it’s quality; although that could take a while to get going.
Perhaps most promising is a large investment in social housing. Under this plan, Rhode Island (or any municipality) would build quality housing that would be affordable to anyone who wished to move in, regardless of income. A report released by the People’s Policy Project offers various models to produce social housing that is either profitable or cost-neutral for governments – meaning no costly subsidies. Combined with rent control, and Rhode Island can keep its people in their homes while also having plenty of space for new residents. Such an approach already works in a place like Vienna.
There are likely those who see such a plan as too ambitious, bound to be unpopular. That would be a mistake to assume, a case of our policymakers’ grasp exceeding their reach. Recent polling and modeling by Data for Progress suggests that 58 percent of Rhode Islanders would support public (not social) housing funded by a 3 percent increase in taxes on those making over $200,000 a year; even when the question was couched in explicitly partisan terms. Social housing, which is housing for all Rhode Islanders, could be much more popular.
This Election Matters
It’s been too easy for Rhode Island’s leaders to ignore this crisis, even as it’s worsened around them. Much of Rhode Island’s elite policymakers, media, and business class are insulated from the effects of housing policy. Research suggests renters simply don’t vote as often as homeowners do, which means concerns about housing are only now becoming a problem. A few years ago, a housing advocate and I were talking about a prominent political journalist who refused to cover housing issues. “He just doesn’t see it as a ‘political’ issue,” the advocate said.
Such a view is wrong. Housing is (and long has been) political. Housing is also economic development. Think of the millions of dollars that are tied up by thousands of cost burdened households. Those are dollars that could be spent on other items, in local businesses, leading to more hiring and better wages. Rhode Island is too quick by half to spend money on outside businesses who might already be looking to move here anyway, while ignoring the plight of its own residents who need housing relief now.
Voters should take note. As candidates and their canvassers come to your door or call your phone, be sure to tell them they need to address the housing crisis in the state. Rhode Island needs to be a home for everyone, not just those with cash to burn.