Slums and Welfare - A Case Study in Cincinnati

[back2vinyl]

Below is a link to an article about a local family who's children are suffering from lead paint poisoning that I'd like to talk about:

http://news.enquirer.com/apps/pbcs.dll/article?AID=/20060625/EDIT03/606250348/-1/newslead

The first fact germane to this discussion is that they receive just over $2,154 in assistance every month. That's $25,848 a year for doing essentially nothing. Figuring combined social security, federal, state and local taxes of 20%, they would have to pull down $31,018 a year to replace that stream of money by working just to get back to where they are now, much less improve their situation. That is not going to happen. Assuming that either of them has a desire to work, no entry level job is going to provide enough to give them an incentive to work. Even if they both work, they are not going to make $16,000 each doing unskilled labor.

Something else that struck me is that a family of four with $2,154 to spend should be able to swing more than $400/month on rent. I don't have a link for this number, but I read in the WSJ recently that the USDA estimates that a family needs to budget $40 or more a week per person for food to keep a family from being at risk for missing at least one meal. Infants need less, but using this number for all six, that works out to about $1035/month. Throwing in $80 for two bus passes leaves $1,039 for shelter, clothing and sundries. Seems to me they could budget substantially more than $400 month in rent.

A quick search on the local clerk of courts site http://www.courtclerk.org/comp_name_search.asp shows that the Azel Mincy has arrests for domestic violence, drug abuse and assault. The picture is a little clearer now as his record could definitely create problems finding a better place to live. The last thing a landlord running a clean operation wants is a tenant that will bring drug and violence problems into the building. Also, I now have to wonder how much of the $1,039 is going to support Azels drug habit and did the desire for ready access to drugs affect the neighborhoods in which they looked for a place to live.

I've got some things to say about the owner of the slum in question and her role in all this when I get time.

edited to correct numbers to 4 children from the previous 2

[BigSugar]

A story that eliminates my sympathy for the "I would have to walk to work if i got a job" crowd:

In 1996, i moved my offices. About a month after moving offices, a guy came in and offered to wash our big plate glass windows every week...$1 a window. Seemed like a nice guy and he had his own equipment, etc. He did that for a couple weeks for basically a pittance. I asked him if he would like to clean the office for us, empty trash, clean the bathrooms, vacuum, etc. on a daily basis. He said sure, he'd done that for others before. We paid him $50 a week. After a while, we had recommended him to a bunch of other people and he was doing windows and cleaning offices all around N. Ky. By the time i moved to an office that had it's own cleaning service, John was making about 500-600 a week walking around N. Ky (from Covington to Park Hills, to Newport) and/or taking the bus as needed cleaning offices and windows, paying his child support, and never once complaining about working a long day or having to walk to work (he probably walked 20 miles in a given day......i used to give him rides around town sometimes when his path coincided with mine).

So, i know for a fact that a poor man with no car, no education, no place of his own, a child support payment and a 2 tour history in Vietnam can take some damn initiative, a squeegie and a bucket of rags and make $25K a year if they want to. That's the kind of story that should be told more. not the "i don't get enough welfare, please pity me" story.

btw.....i love the facts of this lead paint case! Talk about wanton behavior on the LL's part. any good attorney will eat him for lunch and have this family paid in short order.

[the happy prole]

If the guy was so capable and a hard worker, then don't you have to ask how he got in that situation in the first place?

I mean, if he was on welfare at some point prior to getting his life together that imply that people will try to get off welfare if they can, and that welfare might be helpful for keeping them going until they can do so.

And yeah, they could probably win a lawsuit against the landlord pretty easily. Actually recovering the damages is another matter. And even then, it might not ever get those kids back to normal.

[jneale]

Something else that struck me is that a family of four with $2,154 to spend should be able to swing more than $400/month on rent. I don't have a link for this number, but I read in the WSJ recently that the USDA estimates that a family needs to budget $40 or more a week per person for food to keep a family from being at risk for missing at least one meal. Infants need less, but using this number for all six, that works out to about $1035/month. Throwing in $80 for two bus passes leaves $1,039 for shelter, clothing and sundries. Seems to me they could budget substantially more than $400 month in rent.


I won't defend everything - I worked as a cashier @ bigg's when in school - 1st of the month food stamp week was awful - you'd get some people who bought TONS of food - but all stuff they had to cook - then others who bought nothing but junk & didn't get 1/3 the amount.

As for the rent - I'm pretty sure that is a subsidy & not just cash to go anywhere you please - you've gotta find a landlord who will accept Section 8 or HUD - they don't have lots of choice as where to live.

Issues of the poor are complicated & there aren't many absolutes. I don't think the government should continue just handing out cash - but it isn't as easy just cutting them off, many just don't have the skills or exposure to know how to survive - some have been kept dependent on government $ for generations.

[back2vinyl]

Slumlords

A slumlord can buy a house unfit for human habitation for $8,000 at a sheriff's auction then turn around and rent it out for $400/month. The assessed value on 1805 Dreman Ave is $10,000, which using the Hamilton County Auditor's tax estimator means that the owner pays only $170/year in property tax. There is no need for insurance or a bank loan, so taxes are the only expense for the owner unless he attempts to fix something. Even if the owner can only keep it occupied 50% of the time, the return on investment is nearly 28% a year. That's about 3 to 4 times the ROI you can get on a well maintained building.

Where is the incentive for the owner to fix the place? This would increase the value of the property and thus the annual property tax. It would possibly attract attention from various building inspectors and permit issuing bureaucracies, which is exactly what the owner doesn't want. Believe it or not, the tenant would likely complain about being disturbed every morning by the construction going on. The building is rotted out, so where would the owner even start? Fixing anything just creates expense with negative returns. It's not like anyone is going to pay extra to live in a dilapidated neighborhood just because there is a fresh coat of paint on the walls. They'll just move into the slum next door.

But why would anyone rent a place like that for anything, much less $400/month? The tenant a slumlord is looking for is a tenant who is willing to put up with extremely poor conditions as a trade off for a combination of no background checks, turning a blind eye to his anti-social behaviour and who is potentially looking avoid contact with police and/or people who might call the police. Tenants with drug problems and criminal records fit this profile since they are less likely to complain to the authorities about the negligence of an absentee slumlord or bring legal action if their rights are violated. They are also very price sensitive and thus willing to live in much worse conditions to save a few hundred dollars. By and large, these are people who couldn't get anyone else to rent to them even if they wanted to. They are also people that no working stiff wants to live near, or send their kids to school with, thus the mass migration out of the affected areas. As demand for clean rentals drops, rents go down in surrounding areas and legitimate owners cut back on maintenance or sell out to someone who will. The rot spreads until it hits some sort of geographic barrier.

The point being the creation of slums feeds on itself unless someone steps in to stop it. This is where local government has failed miserably.

[back2vinyl]

I won't defend everything - I worked as a cashier @ bigg's when in school - 1st of the month food stamp week was awful - you'd get some people who bought TONS of food - but all stuff they had to cook - then others who bought nothing but junk & didn't get 1/3 the amount.

As for the rent - I'm pretty sure that is a subsidy & not just cash to go anywhere you please - you've gotta find a landlord who will accept Section 8 or HUD - they don't have lots of choice as where to live.

Issues of the poor are complicated & there aren't many absolutes. I don't think the government should continue just handing out cash - but it isn't as easy just cutting them off, many just don't have the skills or exposure to know how to survive - some have been kept dependent on government $ for generations.

I believe this particular family has to pay the rent out of their disability or whatever government check they get. The article mentioned they lost eligibility for section 8 because they defaulted on their portion of the rent payments in the past. I doubt the house they are in would qualify for section 8 vouchers anyway. The owner would have to fix a bunch of stuff first.

I'm in basic agreement with what you've said. We've created an entire class of dependant persons who are now basically wards of the state. More of the same will only make things worse though. I find the whole situation depressing.

[the happy prole]

The price of things depends on supply and demand. You can work either side of that equation to the same effect.

If you gave poor people more money, then they'd be able to pay more rent and not have to live in slums. Which would give the landlords an incentive to fix their places. Or they might blow it on drugs and still live in shitholes.

If you gave incentives to property owners, they might fix up their places and rent them because that's cheaper now. And then because there are more places to rent the prices will fall. Or the owners might fix up their places and rent them to the middle class because who wants a bunch of druggies in their nice rentals?

That's if they're honest. If they're dishonest they simply defraud the government and continue being slum lords. After all, this slum lord was *already* breaking the law. From a moral standpoint, I'm not really sure why I should pay her not to kill people. From an economic standpoint, I don't see why giving her cash will suddenly turn her into an honest landlord when it's obvious she's a heartless, greedy bitch.

The problem here is the parents were/are addicted to drugs and have too many kids and can't take care of them. And the landlord will kids for profit. Neither side cares enough about the children, and neither does society.

Handing out money to either side will have to come with a lot of strings attached to separate the honest and hard-working from the chaff. If you do that, it doesn't matter who gets the money. And if you don't, it also doesn't matter because you're screwed either way.

It's a lack of caring on the part of society and government that's driving this-- not a faulty economic plan.

[back2vinyl]

The price of things depends on supply and demand. You can work either side of that equation to the same effect.

If you gave poor people more money, then they'd be able to pay more rent and not have to live in slums. Which would give the landlords an incentive to fix their places. Or they might blow it on drugs and still live in shitholes.

Based on my experience in Cincinnati real estate, someone living in a slum would rather blow it on drugs and still live in a shit hole. Giving them more money might allow the slumlord to charge more for his slum though.

If you gave incentives to property owners, they might fix up their places and rent them because that's cheaper now. And then because there are more places to rent the prices will fall. Or the owners might fix up their places and rent them to the middle class because who wants a bunch of druggies in their nice rentals?

If by incentive you mean boarding up/demolishing every run down building unless and until it can be made fit for human habitation, I think that is a good start. Rents need to be high enough for someone who is interested in running a well kept building to make a profit, otherwise they cede the market to the slumlords who make a profit by renting to the socially challenged and neglecting maintenance. Putting the slumlords out of business makes it easier for the legitimate owners to make a profit.

That's if they're honest. If they're dishonest they simply defraud the government and continue being slum lords. After all, this slum lord was *already* breaking the law. From a moral standpoint, I'm not really sure why I should pay her not to kill people. From an economic standpoint, I don't see why giving her cash will suddenly turn her into an honest landlord when it's obvious she's a heartless, greedy bitch.

I think more subsidies to either side of this equation is adding gasoline to the fire. I'd rather see that money go to seizing properties and demolishing them or, if the building is salvageable, rehabbing it and putting it back on the market.

The problem here is the parents were/are addicted to drugs and have too many kids and can't take care of them. And the landlord will kids for profit. Neither side cares enough about the children, and neither does society.

Yep. Unless we are willing to take children away and raise them in boarding schools, they are pretty much fucked. We could at least stop encouraging people to have more babies.

Handing out money to either side will have to come with a lot of strings attached to separate the honest and hard-working from the chaff. If you do that, it doesn't matter who gets the money. And if you don't, it also doesn't matter because you're screwed either way.

I don't think you can put enough strings on handouts to eliminate fraud without also eliminating anyone who could really put them to good use, so I think we need a different solution.

It's a lack of caring on the part of society and government that's driving this-- not a faulty economic plan.

Yep. Nobody cares.

[benway]

Fact is, most people on wellfare are single, uneducated mothers with no marketable skills with multiple kids.
SO, If they decide to go out and work minimum wage at McDonalds, who watches the kids? She can't afford daycare for 3 kids on minimum wage. Does she avail herself of schooling or local training somewhere? Same problem with daycare.

Now, if they've got nothing keeping them at home, that's another story, but it's not the norm.