Even before 2020, the U.S. faced an acute housing affordability crisis. The COVID-19 pandemic made it a whole lot worse after millions of people who lost their jobs fell behind on rent. While eviction bans forestalled mass homelessness – and emergency rental assistance has helped some – most moratoriums have now been lifted, putting a lot of people at risk of losing their homes.

One solution pushed by the White House, state and local lawmakers and many others is to increase the supply of affordable housing, such as by reforming zoning and other land-use regulations.

As experts on housing policy, we agree that increasing the supply of homes is necessary in areas with rapidly rising housing costs. But this won’t, by itself, make a significant dent in the country’s affordability problems – especially for those with the most severe needs.

In part that’s because in much of the country, there is actually no shortage of rental housing. The problem is that millions of people lack the income to afford what’s on the market.

Where the crisis hits hardest

Renters with the most severe affordability problems have extremely low incomes.

Nationally, about 45% of all renter households spend more than 30% of their pretax income on rent – the widely recognized threshold of affordability. About half of these renters, 9.7 million in total, spend more than 50% of their income on housing, greatly impairing their ability to meet other basic needs and putting them at risk of becoming homeless.

Nearly two-thirds of renters paying at least half of their income on housing earn less than US$20,000, which is below the poverty line for a family of three. Renters with somewhat higher incomes also struggle with housing affordability, but the problem is most pervasive and most severe among very-low income households.

For a household earning $20,000, $500 per month is the highest affordable rent, assuming the affordability standard of spending no more than 30% of income on housing. In contrast, the median rent in the U.S. in 2019 was $1,097, a level that’s affordable to households earning no less than $43,880.

And homes that rent for $500 or less are exceedingly scarce. Fewer than 10% of all occupied and vacant housing units rent for that price, and 31% are occupied by households earning more than $20,000, pushing low-income renters into housing they cannot afford.

A pervasive problem

The problem of housing affordability doesn’t affect only a few high-cost cities. It’s pervasive throughout the nation, in the priciest housing markets with the lowest vacancy rates like New York and San Francisco, and the least expensive markets with high vacancy rates, such as Cleveland and Memphis.

For example, in Cleveland, with a median rent of $725, 27% of all renters spend more than half of their income on rent. In San Francisco, with a median rent of $1,959, 18% of renters spend at least half their income on rent. And it’s even worse for the poorest residents. In both cities, more than half of all extremely low-income renters spend at least 50% of their income on rent.

In fact, there is not a single state, metropolitan area or county in which a full-time minimum wage worker can afford the “fair market rent” for a two-bedroom home, as designated by the U.S. Department of Housing and Urban Development.

Even the smallest, most basic housing units are often unaffordable to people with very low incomes. For example, the minimum rent necessary to sustain a new a 225-square-foot efficiency apartment with a shared bathroom in New York City built on donated land is $1,170, affordable to households earning a minimum of $46,800. That’s way out of reach for low-income households.

At the heart of the nation’s affordability crisis is the fact that the cost to build and operate housing simply exceeds what low-income renters can afford. Nationally, the average monthly operating cost for a rental unit in 2018 was $439, excluding mortgage and other debt-related expenses.

In other words, even if landlords set rents at the bare minimum needed to cover costs – with no profit – housing would remain unaffordable to most very-low-income households – unless they also receive rental subsidies.

The subsidy solution

Covering the difference between what these renters can afford and the actual cost of the housing, then, is the only solution for the nearly 9 million low-income households that pay at least half their income on rent.

The U.S. already has a program designed to help these people afford homes. With Housing Choice Vouchers, also known as Section 8, recipients pay 30% of their income on rent, and the program covers the balance. While some landlords have refused to accept tenants using vouchers, overall the program has made a meaningful difference in the lives of those receiving them.

[Over 115,000 readers rely on The Conversation’s newsletter to understand the world. Sign up today.]

The $26 billion program currently serves about 2.5 million households, or only 1 in 4 of all eligible households. The current version of Democrats’ social spending bill would gradually expand the program by about 300,000 over five years at a total cost of $24 billion.

While this would be the single largest increase in the program’s nearly 50-year history, it would still leave millions of low-income renters unable to afford a home. And that’s not a problem more supply can solve.

Alex Schwartz, Professor of Urban Policy, The New School and Kirk McClure, Professor of Urban Planning, University of Kansas

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Michael Chase works two jobs in southeast Ohio: one as a hotel night clerk and one as retail support – sorting through donations, setting new merchandise out, cleaning – at a nonprofit.

His schedule is not fixed in either job, and his hours are not guaranteed. Some weeks he works back-to-back eight-hour shifts. Some weeks he works fewer than 30 hours. Neither job offers sick leave, vacation time or health insurance.

Chase shares an apartment with three other people, something he finds stressful. And he is not always confident that he can make his portion of the rent. Between the two jobs, Chase earns less than US$16,000 a year. While it may not sound like a lot, that places him well above the federal poverty line for a single person: $12,760.

As a sociologist concerned with inequality, I spent one year conducting field work and interviews across the country for my recent book, which examines how Americans cope with economic struggles amid stagnant wages and rising costs of living.

Nearly everyone I interviewed worked multiple service industry jobs. Yet I didn’t meet anyone who thought of themselves as poor.

More commonly they referred to themselves as the struggling class: They struggle economically and hold an often unfounded hope that things will get better. But you can’t work your way out of poverty in low-wage jobs.

Low-wage jobs in the 21st century are not only the lowest rung on a career ladder, they are often the only rung.

Across the country, millions of low-wage workers like Chase struggle to pay their bills each month, despite holding multiple jobs.

Defining poverty

“I’m fine,” Chase told me. “I don’t consider myself poor … I guess I would say I am struggling a little bit. For me, people who don’t have food are poor. Or someone who can’t feed their kids, or you might not have running water or even electricity. You don’t have the right things you need to even survive.”

Chase was not unusual in his assessment of poverty.

The economic struggles of millions in the United States are erased by the federal definition of the poverty line and by outdated conceptions of low-wage work.

A recent study by the Brookings Institution defined low-wage work as a median hourly wage of $10.22, or $17,950 per year. By this measure, 44% of all workers in the U.S. are low-wage earners.

In 2021, according to the National Low Income Housing Coalition, a worker needs to earn $20.40 per hour to be able to afford a modest one-bedroom apartment anywhere in the country. That’s an annual salary of $40,800 – more than twice what Brookings refers to as the median wage for low-wage work.

Federal data shows that roughly 51% or workers live on less than $35,000 annually. Low wages, unreliable hours and a lack of benefits have come to dominate the U.S. economic landscape.

To understand the economic hardship that more than half of Americans face, it is critical that researchers shift their thinking away from an outdated federal measure of poverty. Instead, they should focus on measures of self-sufficiency.

Economic self sufficiency

Economic self-sufficiency is the ability to reliably meet basic needs, including food, housing, transportation, child care, medical expenses and other necessities.

The Economic Policy Institute, a nonpartisan think tank, provides a Family Budget Calculator that calculates measures of economic self-sufficiency across the country.

The organization provides a transparent estimate of what it costs to be economically self-sufficient. It is not a calculation of poverty.

The calculations are based on Department of Agriculture data such as food costs and Fair Market Rent, a measure developed by the Department of Housing and Urban Development to determine payments for housing assistance programs.

In southeast Ohio, the self-sufficiency budget for Chase provided by the Economic Policy Institute calculator is $34,545 – more than twice what he earns and nearly three times the federal poverty line.

If Chase lived in San Francisco, his economic self-sufficiency budget would be $69,072. Across the bay in Oakland, California, it would be $57,383. Keep in mind that the federal poverty line for a single person living anywhere in the U.S. is $12,760.

For families, the gap between the federal poverty line and economic self-sufficiency is even wider. Self-sufficiency for two adults with two children who live in San Francisco requires an annual income of $148,440, while the federal poverty line for this same family of four in 2020 was $25,701.

[Get The Conversation’s most important politics headlines, in our Politics Weekly newsletter.]

Self-sufficiency calculations vary by region. For example, self-sufficiency for this same family of four in Athens County, Ohio, would require an income of $72,284; in the Sioux City metro area of South Dakota, this family would need $78,935 to meet all of their basic needs.

Self-sufficiency measures are not perfect.

The Economic Policy Institute calculations do not consider debt, which can be significant. Further, the calculation relies on Fair Market Rent, which designates regional rents in the 40th percentile as fair market. This means that in any area, 60% of housing is more expensive than Fair Market Rent.

For Chase in Ohio, a livable one-bedroom apartment runs $800 to $1,300 a month, but Fair Market Rent allocates only $605 for rent.

Despite these problems, measures of self-sufficiency are more effective than the federal poverty line. By delineating the costs of basic expenses, they draw a far more accurate line of where poverty begins.

It might seem like a matter of common sense that the nation needs to calculate how much families actually need to spend on basic expenses in order to understand where poverty begins. But policymakers still rely on the federal poverty line for calculating economic safety nets. A measure of self-sufficiency would enable the nation to identify levels of economic need as they exist – and therefore to establish effective safety nets.

Celine-Marie Pascale, Professor of Sociology, American University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Consumer prices soared in October 2021 and are now up 6.2% from a year earlier – higher than most economists’ estimates and the fastest increase in more than three decades. At this point, that may be no surprise to most Americans, who are seeing higher prices while shopping for shoes and steaks, dining at restaurants and pumping fuel in their cars.

One of the big debates going on right now among economists, government officials like Treasury Secretary Janet Yellen and other observers is whether these soaring costs are transitory or permanent.

The Federal Reserve, which would be responsible for fighting inflation if it stays too high for too long, insisted again on Nov. 3, 2021, that it’ll be temporary, in large part because it’s tied to the supply chain mess bedeviling economies, companies and consumers.

Not everyone agrees – including some within the Fed itself – and there’s been a growing chorus of economists, strategists and business executives sounding the alarm that high inflation will likely be with us well into 2022 and beyond.

I study supply chains and their impact. It’s true that prices are surging largely because of the severe shortages of both goods and labor in supply chains, but based on my research, that doesn’t mean it’ll be temporary. Rather, it suggests that inflation is here to stay.

Demand is up

Inflation began to soar in early 2021 and has been hovering at above 5% or so, year on year, since May. That’s more than double the 2% pace that the Fed has set as a target.

The reasons prices are rising are complex and many. But one of the most important relates to the dynamic of supply and demand. And both are to blame.

Let’s start with demand.

Even though early in the pandemic consumer demand dropped as people hunkered down amid lockdowns and unemployment skyrocketed, it has soared over the past year – not for services like restaurants and travel, but for goods, mostly ordered online.

E-commerce activity has simply mushroomed to levels that never existed before the pandemic. Demand for products has significantly outstripped the market’s capacity to produce or ship what is ordered. Some people aren’t even going to the supermarket, hardware store or restaurant anymore because they do all their ordering online.

Many retailers, such as Macy’s, Target and others, have had to navigate this economy with scarce inventories and higher freight costs to stay alive during the pandemic.

These trends have created more demand than the delivery carriers can accommodate, stretching their ability to deliver products. For example, the holiday shopping season is predicted to have 4.7 million packages a day beyond what the system can possibly absorb or deliver. Storing these packages for even a short period costs money.

Given there is great difficulty finding drivers, containers and labor across industries, big retailers are offering generous education and other benefits to both attract and keep employees on hand as a means of adding capacity.

All these added costs – to hire, store and deliver – are usually passed on to consumers.

Supply is down

At the same time, supply chains remain a mess – and are only getting worse.

Bottlenecks have piled up all across Asia, putting great strains on the capacity of supply chains to deliver in a timely fashion. And severe global shortages of drivers and other workers are making it difficult to expand capacity or fix other problems plaguing the supply chains, so they can’t break free of the thick mud they’re in.

This creates a shortage of products getting through that limit competition, causing price increases.

There are dozens of huge container ships continually idling near ports in Los Angeles, New York and elsewhere around the world, which is tying up large quantities of merchandise waiting to be unloaded. There are over 500,000 shipping containers with about 12 million metric tons of goods near Southern California alone.

Ports have tried to lengthen their operating hours – U.S. President Joe Biden has made it a key issue and plans to spend billions of dollars fixing the problems – but there are not enough workers and drivers to unload the cargo.

Such delays cost money, because businesses choose then to carry more inventory, which they pass on to customers.

As an illustration, let’s look at Nike, which largely depends on Vietnam for much of its shoe production. It lost 10 weeks of production because of lockdowns within that country. And it’s taking an average of 80 days to get shoes from Asia to retailers in North America – twice as long as before the pandemic. As a result, shoe prices are soaring like everything else.

Or consider Malouf, a Utah-based furniture retailer, which reports that it has only 55% of its normal inventory on hand because of freight delays. Cars get stuck in garages because of the shortage of spare parts. Living room, kitchen and dining room furniture prices are up 13.1% from a year ago.

Another way to think about it is to examine one single product: Bullfrog Spa’s M9 hot tub. It requires 1,850 separate parts. Supply chain disruptions have pushed manufacturing time from six weeks to six months.

There is no industry unaffected.

Why there’s no easy fix

In other words, there’s no end to the supply chain problems. Consumer demand is only going to increase through the holiday season and beyond. And that’s why inflation isn’t going away anytime soon.

Corporate executives – who in many ways will determine whether prices keep rising at a fast clip – are already warning that all of these challenges are going to continue into 2022 at the earliest. Some say the problems will extend into 2023 as well.

Economists surveyed by Bloomberg in October expect inflation to slow to 3.4% next summer and hit 2.6% by the end of the year. While that would be encouraging, it’s still well above the pre-pandemic average of 1.8% and outside the Fed’s target. It’s unclear whether economists are recalibrating their expectations after the October Consumer Price Index report.

Regardless, consumers should get used to the higher prices. They’re the new normal.

[Over 115,000 readers rely on The Conversation’s newsletter to understand the world. Sign up today.]

Craig Austin, Assistant Teaching Professor of Logistics & Supply Chain Management, Florida International University

This article is republished from The Conversation under a Creative Commons license. Read the original article.