Recession Increases Homelessness In Los Angeles Economics Essay

The entire United States is feeling the pinch during the current economic recession. In particular, Los Angeles, California is struggling to keep families off the streets. At the same time, developers are trying to attract new clientele to the downtown area by demolishing homes and building outrageously expensive condos. With unemployment rising and the affordable housing depleting, more and more families are becoming homeless. The continuous effort to help families maintain a stable environment is becoming harder. Los Angeles is not receiving the proper amount of funding it needs. Therefore, many families are left to try and survive on their own.

A group of 44 settlers named the Los Pobladores and Spanish governor Felipe de Neve founded Los Angeles in 1781. During this time period, the city was called “The Town of Our Lady the Queen of the Angels on the Porciúncula River.” Originally, Los Angeles was part of Mexico. It was not until1848 that California became part of the United States, after being bought as part of the Treaty of Guadalupe Hidalgo (Los Angeles, n.d.).

Los Angeles, California ranks as the second largest city in the United States. Spanning over 498.3 miles, Los Angeles is the largest city in the state of California. Home to 3.8 million people, including many famous movie stars, it is the 13th largest metropolitan area in the world. Forbes.com named Los Angeles the world’s eighth most economically powerful city, passing Shanghai and Toronto (para.1-3).

Nearly half of the people living in Los Angeles were born in another country; this makes the city very diverse. In Los Angeles alone, 224 different languages are spoken. Currently, a majority of the population residing in Los Angeles are minorities, with the Hispanic and Latino race being number one (para. 61-65).

Known for being one of the sunniest and most tourist-conscious cities, Los Angeles offers many attractions for visitors (Archibold, 2006). They hold many sports venues as well, including the Staples Center, which houses the L.A. Lakers and many award shows, like the Grammys. This city is said to be the “Entertainment Capital of the World.” Over the years Los Angeles developed nicknames for its city, such as L.A., Southland, Lalaland, and The City of Angels (Los Angeles, n.d.).

While some people might call it The City of Angels, others could not disagree more with the nickname. During the daytime Los Angeles is a place of business, upper-class citizens roam the streets and movie producers are filming their next big hit. On the other hand, at nighttime it’s nothing more than a nightmare you cannot wake up from; thousands of people are left roaming the streets searching for a place to sleep.

What we do not typically hear about or see is Los Angeles’s Skid Row, which hides in the shadows of the downtown skyline. This fifty block section of downtown L.A. holds the largest concentrated area of homeless people in the entire United States (Valle, 2005). The section of Fifth Street is also referred to as “the nickel.” It is said that Skid Row is America’s only third world city (Skid row, n.d.). Skid Row is nothing more than a result of the neighborhood’s gentrification (Valle, 2005).

“Gentrification and urban gentrification denote the socio-cultural changes in an area resulting from wealthier people buying housing property in a less prosperous community.” This can cause the price of taxes, homes, and rental homes to increase. Commercial businesses also tend to change their cliental base and cater more towards the upper-class society. As a result lower-income families are forced to move out of the area because they cannot afford to pay the prices (Gentrification).

These horrifying streets are home to the unwanted. Many police officers from other jurisdictions have been seen dumping homeless people in the area; they cannot provide correct services to them, so they dump them in the most undesirable area. Already overwhelmed with the abundance of homeless people, the county is facing a major problem with social service organizations being short-staffed. They are also experiencing a shortage of funds to help the homeless families who are in severe need of assistance. All services that a homeless person might be offered are located in the downtown area of Los Angeles. No other areas in Los Angeles provide services to accommodate their needs, such as shelter, food, and medical assistance.

The Chief of the Los Angeles Police Department thought he had found a solution to help local businesses and real estate developers dispose of the site of homeless people. He would have anyone arrested for minor infractions, littering, sleeping on sidewalks, and public urination. Unfortunately, his strategies were only wishful thinking. Soon after his rules were put into effect the city jails were overpopulated with homeless people and filled to capacity. It was also costing the city more to keep them in jail than it did to help house them for the night (Valle, 2005). These laws still remain in effect in the county, but are rarely acted on due to the lack of space.

Recent plans for Skid Row have been to build condos and lofts that sell for $700,000. This would completely gentrify the area and push homeless people further away. Without anywhere else in the county offering assistance for the homeless, they have nowhere and no one to turn to for help. Los Angeles Homeless Service Authority could not afford the new rent; they were forced to move because the building was being renovated into condominiums.

The downtown area is being renovated to attract new businesses, but the downfall of it all is that it’s causing rental prices to become unaffordable. New homes and condos are priced at an average of $2,000 to $3,000 per month. Even though it is not number one, Los Angeles has one of the most expensive rental markets in the state of California, and it is still rising (Martinez and Pitkin, 2007). The Center for Housing Policy has reported that Los Angeles ranks in 10th with the most expensive rental market in the United States. This 2010 report was based on the rent of a two bedroom apartment (Jeremy, 2010). With housing costs on the rise and the supply of affordable housing falling, many people are struggling to keep a roof over their head. Due to the renovations and demolitions, the 28,000 affordable homes L.A. produced from 2001 to 2006 meant nothing (Martinez and Pitkin, 2007).

Los Angeles is demolishing perfectly good homes during the middle of the current housing crisis. Coalition for Economic Survival and Housing LA have both been fighting to stop renovations and demolitions. Thankfully, the City Planning Department has recently started to deny some requests for demolition. They are also making it a requirement that some of the residences have to be affordable. Unfortunately, previous renovations have already caused damage. If the City Planning Department started denying requests sooner, then many family’s homes could have been saved and fewer people would be found wondering the streets homeless.

To restore Los Angeles’ middle class society the city must provide and create enough affordable housing units. Affordable housing is the ratio of housing costs to household income. Families should not pay more than 30% of their income, but in L.A. most moderate to low income families pay 50%. For someone to live in a one-bedroom apartment in L.A. they must make a minimum of $48,000 a year (Livable Places, n.d.). “An average family of four with two working parents must make $70,000 a year, just to skim by.” If a family experiences any kind of unexpected expense–an illness, injury, or car wreck, it could send them straight to the verge of homelessness (Valle, 2005).

In 2007, only 3% of homes sold in Los Angeles were affordable for median income families (Woolsey, 2007). As the need for housing grows larger the number of homeless people also increases. Not only are developers building new condos, but they are evicting residents as well. These families who are being evicted or who cannot afford the new pricing are left without a home.

Due to the lack of affordable housing, the Hollywood Community Housing Corporation formed a lottery for people to have a chance to secure a spot in a new fifty-eight unit subsidized apartment. Lines formed seven hundred people deep waiting for an application. Even though they might have received an application, that did not mean they were accepted. The housing corporation’s executive director said that subsidized projects similar to this one were becoming more and more difficult to finance (Garrison, 2009).

Families who do not win “the lottery,” they are left on the streets and shooed away. Because of the increase and widespread development of unaffordable housing, homelessness is at an all time high. What used to be a designated area for the homeless in Los Angeles, Skid Row, is now a widespread community epidemic. Homelessness is no longer designated to the poorer areas of Los Angeles; the entire county is now experiencing, what was once an isolated phenomenon. All eight of the Service Planning Areas have been heavily affected.

On an average night in Los Angeles 73,000 homeless people roam the streets without a place to sleep. Around 40% of the homeless have been this way for less than a year. About half the residents living in L.A. are housing a family member or friend to keep them off the streets. Los Angeles County supplies 17,000 emergency beds for the homeless. This low amount does not even come close to the demand. Shelter Partnership did a study that showed how L.A.’s shelters and agencies only accommodate a quarter of homeless families (Martinez and Pitkin, 2007).

The Los Angeles Unified School District has reported a 35% increase of homeless students. Recent data have revealed that the number of homeless families with children is rising. Between 2006 and 2007 the United States Department of Housing and Urban Development (HUD) data reported that public schools were teaching an estimated 680,000 children who were either homeless or living in an unstable environment. Studies have shown that homelessness can lower a child’s academic performance and reduce high school completion. Homeless children are nearly three times more likely to suffer from emotional or behavior problems, thus in the long run affecting their education.

An estimated 10,000 people were found living in uninhabitable areas (the medical news). Not only has the lack of affordable housing caused homelessness, but the economy as well. The recession has impacted the job market greatly. It has been projected by Goldman Sachs that unemployment will continue to rise throughout 2010. This would cause nearly 10 million Americans to live in poverty. The United States is dealing with the highest amount of unemployment rate it has ever seen (Homelessness declines in Los Angeles; recession pave way for affordable housing, 2009).

Los Angeles is one of the nation’s hardest hit regions for unemployment. Though unemployment rates fell 0.2% in November and December of 2009, the rate is still sitting at 13.2%. Surprisingly, Michigan topped out at a 14.6% unemployment rate in December. This means that the people of Michigan lost their jobs in 2009 faster than California residents did (Modesti, 2010).

The current economy is the worst downturn our nation has seen since the Great Depression. Nearly 8.4 million people have lost their job due to the recession. In January 2010, the Bureau of Labor Statistics found that 20,000 jobs were lost in that month alone. When the recession began in 2007, U.S. payrolls immediately shrank 6%, double the contraction during the 1981 recession. The rate that companies are cutting jobs is faster than the last three recessions.

To keep up with the growing population, the economy must create 100,000 to 125,000 jobs a month. Most unemployed workers will typically be waiting an average of six months before returning to work. Even if job growth increases at a high rate, it will take years to bring employment back to pre-recession levels (Schoen, 2010).

It is likely that the nation will face a higher increase in severe poverty than it has in the last 30 years. The current recession is more likely to cause the risk of homelessness. Unlike previous recessions that provided safety nets to protect jobless families, the assistance for families now is weaker than ever (Sard, 2009).

Chrysalis Enterprises is one of Los Angeles’ non-profit organizations. The organization provides employment opportunities to help families prevent homelessness. Each year, they help over 2,500 people avoid the risks of poverty and homelessness. They provide yearly assistance for transitional jobs to 600 men and women every year (Chrysalis Announces New CEO, Vice President and 2 additions to its Board of Directors, 2009). Even though Congress is expected to try and restore several million jobs, an unbelievably high number of people will still be at the risk of becoming homeless

Local and state jurisdictions have arranged inter-agency plans to prevent homelessness. This has helped reduce the number of unsheltered people in the past, and if proper resources are used than it could lessen the increase of homelessness during the current recession. Adequate funding must be provided in order for the inter-agency plans to function effectively. However, states and localities are dealing with budget shortfalls. The recession has caused them to cut programs and raise taxes to try and keep their budgets balanced. Homelessness prevention will without a doubt struggle to maintain, let alone increase proper funding (Sard, 2009).

Between 2007 and 2008 Los Angeles County has reported a 12% increase in welfare assistance for families who are homeless. More families will fall into deep poverty if the unemployment rate keeps rising. An estimated 900,000 to 1.1 million families with children will reach the level of severe poverty if this happens, leaving them with the risk of homelessness and housing instability.

Despite falling incomes and rising unemployment, rents are still being driven through the roof. Home foreclosures constantly keep pushing home owners into the rental market. The severe problems with home foreclosures only help boost the increase of homeless families. The demand for rental units will continually grow even though the prices of homes are falling. Families who previously would have purchased homes are now renting; they are waiting for the economy and prices to stabilize. Homelessness will continue to rise during the recession as long as the housing market maintains its downward spiral.

One way Los Angeles can help try to prevent homelessness is by offering housing vouchers. These vouchers can be used for families to pay past due utility bills or rent. Families dealing with foreclosure can be assisted with relocation funds, a one-time cost associated with moving into a new home. Unfortunately, the only way these short-term assistance programs will work is if families can continue to pay rent on their own after receiving assistance.

A recent five year study has proven that housing vouchers are effective in preventing homelessness. The national government needs to grant a substantial number of additional vouchers in the economic recovery package. In an economic crisis, such as now, voucher programs work the best. As a family’s income changes the amount of subsidy they receive will also change. Costs will also decline as the participants gain employment and their earnings increase.

In 2008, Congress provided 15,000 more housing vouchers to Los Angeles. Only 2,840 of the new vouchers were given to families with children; the families also had to be connected to the foster system. The rest of the vouchers were set aside for disabled people and homeless veterans. If no special restrictions on eligibility for new vouchers are set by Congress, then state and local agencies that receive the funds will be responsible for disbursing them. It is likely that more than half of the vouchers will be given to poor families with children.

If 200,000 new housing vouchers were given throughout 2010, including administrative fees, it would cost $2.1 billion. These additional vouchers could strain HUD’s 2011 budget. Subsequent budget pressures could be avoided if the recovery package stated that agencies could reissue vouchers after a family has left the program. By not allowing agencies to reissue vouchers, roughly 30% of the new vouchers will be retired by the ending calendar year of 2010.

Because of the recession, it is unlikely that families will leave the program, but there is still a chance that some families might leave the program for non-economic reasons. The possibility of fewer people leaving the program than anticipated could result in a need for additional funding in 2011 to sustain new vouchers that were not offset. The proposed funding of $2.1 billion is only meant to cover a 16 month period. If Congress provided a 20 month program, than agencies could accept a higher number of vouchers and further help prevent homelessness in their community.

With the new proposal, families would be able to spend more money on food, clothing, and health care. The benefits of trying to eliminate and reduce homelessness would be immediate and long-term. New vouchers would help pump funds back into local economies within a four to six month period. When comparing Michigan to California with the estimated state shares of recommended increases in housing vouchers and the Emergency Shelter Grant (ESG) homelessness prevention funding, California will receive 26,962 more vouchers and $182,507,187 more new ESG funds than Michigan (Sard, 2009).

After the Government’s stimulus spending starts to fade at the end of 2010, it will remain uncertain whether or not the economy will make any forward progress. With the economy still in

a recession, hopes of employment are still uncertain. Families could remain poor and jobless for years to come. If the government does not set regulations on demolitions and reconstructions, families will remain without a home. It will keep costing residents of Los Angeles County nearly half of their wages to keep a roof over their family’s heads. Without affordable housing, Los Angeles will continuously spend unnecessary money to help the poor. The amount of homeless people in Los Angeles is on the rise and shows no sign of slowing down.

The economy is at its worst, affordable housing is at its lowest, and homelessness is at an unbelievable all time high. It is time for Congress and Los Angeles County to step up and take control of the situation; they simply cannot afford for anyone else to become homeless. “The size of homelessness population in Los Angeles County, which is more than any other in the country, has sold itself to the rest of the world as the Promised Land of endless opportunity, underscores the depth of the social crisis that racks the state of California and the entire country (Valle, 2005, 27).”