The Big Squeeze

Skyrocketing rents by real estate developers and stagnant wages by employers equal pauperized workers and displacement to low-income suburbs. How do we reclaim our city?

If you’ve lived in Seattle for more than a few years, the city you know is disappearing. It’s being replaced by the “Lords of Concrete” – an alliance of real estate developers, construction firms, law firms and lobbyists who are deliberately creating a new Seattle. Their Seattle is a city of high rents, low wages, and runaway development, a combination that is displacing both working class people and the businesses that employ them.

Here’s how it’s happening.

Skyrocketing Rents

In the Seattle Times of August 30, 2012, there was news of rent increases, that are by some accounts, rising faster than almost any other metropolitan region in the country. They reported that “in the last two years, the median rent for Seattle studio apartments has gone up $434 in Wallingford, $419 in Capitol Hill, and $306 in Ballard.” As an example they report that the average monthly rent for all unit types on Capitol Hill is now $1,395. Go to the Craigslist rental section and type in “Ballard” and you’ll realize the same is true for what used to be a sleepy little corner of Seattle. $1395 would be a good price – most rents you’ll see are $1500 and up.

The rent increases are shocking, blind-siding tenants with huge increases of hundreds of dollars at a time, as with just 60 days’ notice, Seattle landlords can legally increase rents to whatever they want.

The official story is this is just the law of supply and demand in action. It’s “the market” that mysterious but impersonal force. But a quote from the Seattle Tenants Union in the Times article points out what – and who – to blame.. “What’s fueling rent increases most is development itself”, said Jonathan Grant, the Tenant Union’s executive director. If almost all new units cater to wealthier tenants, he said, increasing supply is no path to getting rents to go down or even level off. “The reality is that these units are high-cost, and often these were taken out of affordable-housing stock,” Grant said. “That’s why you see this theory of supply and demand being turned on its head.” Bingo. In the name of “density,” giant concrete blocks are going up all over the city, made up of $1500 – 2000/month apartments and/or condos. These units act as magnets for driving rents up in older units. Landlords of these units calculate that your only choice is between their $1000/month cramped studio and some penthouse in the sky, then you’ll pay whatever they ask.

And doubling up in a two – bedroom unit doesn’t save that much money either. Here’s a rent map shows the average price for a two-bedroom in a Seattle neighborhood:

Falling Wages

A recent report from the Economic Policy Institute on wage stagnation gave some grim statistics:

According to every major data source, the vast majority of U.S. workers…have endured more than a decade of wage stagnation…During the Great Recession and its aftermath… wages fell for the entire bottom 70 percent of the wage distribution…”. The losses tended to be larger further down the wage distribution; wages at the 80th percentile were essentially flat … the median … worker saw a decline of 2.6 percent, and the 20th percentile worker saw a decline of 5.5 percent over this period. This is typical; high unemployment hurts wage growth across the wage distribution, but its impact is more negative further down the wage distribution.

But higher education is no guarantee of good wages either. The report points out “Wages of workers with a bachelor’s degree were lower in 2012 than in 2002, 10 years earlier. Real wage gains have eluded the vast majority over the last 10 years, including those with college degrees. This has even been true for those in science, technology, engineering, and mathematics occupations and for those in business occupations.” Great, collect your sheepskin, apply at the unemployment line, and wait the student loan lenders to show up for their pound of flesh.

Job creation skewed towards low-wage Jobs

Secondly, from the National Employment Law Project, we have this report on job creation:

During the recession, employment losses occurred throughout the economy, but were concentrated in mid-wage occupations. By contrast, during the recovery, employment gains have been concentrated in lower-wage occupations, which grew 2.7 times as fast as mid-wage and higher-wage occupations. Specifically:

  • Lower-wage occupations were 21 percent of recession losses, but 58 percent of recovery growth.
  • Mid-wage occupations were 60 percent of recession losses, but only 22 percent of recovery growth.
  • Higher-wage occupations were 19 percent of recession job losses, and 20 percent of recovery growth.

So what types of low-wage jobs are we talking about? Nearly 40 percent of the jobs gained since the recovery began — about 1.7 million — have come from three low-wage sectors: food services, retail, and employment services…”

This kind of pauperization has rightly produced promising signs of a struggle by low-wage workers. Fast food workers have walked out of MickeyD’s, Wendy’s, Burger King and more in half a dozen cities, including our own on August 26th, to demand a $15.00/hr. living wage.

This is significant as these employees have no union, and many were threatened with termination. The truth is that these employees, many put on part-time 25-30 hours a week, are unable to make it in this high cost economy. As one worker taking part in the protests said, “If people can’t make it working full time or need to have multiple jobs to live, I don’t think that’s right.”

In fact, many minimum wage workers, especially in the retail sector, aren’t full time anyhow, but subsist on 25-30 hour work weeks. As local economist and writer Jon Talton points out, “Part-time and temporary employment have become standard practice. Companies benefit from flexibility and lower costs. The downside: These workers tend to make less money and get few, if any, benefits. In July, 8.2 million Americans were counted as “involuntary part-time workers.”

Meanwhile, political leaders express hypocritical support, while actually taking their stand with the 1% business leaders. When local mayoral candidates showed up at a rally for fast food workers, they were asked if they’d push for a law mandating a $15/hour minimum wage, McGinn, Murray and a spokeswoman for Inslee “all expressed caution.” This echoes the stand of 1%ers like investment banker Maud Daudon, president of the Seattle Metropolitan Chamber of Commerce. “I think it would be really important to have a bigger-picture conversation about what is the issue we are trying to fix and what are all the strategies to fix it before jumping to a solution.” In other words, let’s study the problem, while doing absolutely nothing while they wait for these struggles to fade away. Fat chance!

Poverty Displacement

As rents rise and incomes fall or stagnate, working people, many who are being thrust into poverty, have no choice but to relocate. Seattle is the 13th wealthiest metropolitan area in the country – mainly because Seattle’s wealthiest neighborhoods continue to gentrify, pushing poorer residents southward. For the wealthy residents of Queen Anne, Capitol Hill, and Ballard, the daily struggles of the poor in Tukwila, Renton, and Kent are worlds away.

An article in the UW Daily back in May reviewed a recent book “Confronting Suburban Poverty in America,” by authors Elizabeth Kneebone and Alan Berube who pinpointed South King County. In 2000, there were 155,000 people living under the poverty line in Seattle’s suburbs; in 2011, there were 277,000. That means poverty grew a staggering 79 percent in just 11 years. In 2011, two out of every three Seattle-metro-area residents who were below the poverty line lived in the suburbs, earning the Puget Sound region the unfortunate distinction of being the region with the 23rd fastest poverty growth among the 100 largest metropolitan areas.

How to Fight Back

This kind of situation is not inevitable. The article above quotes an amazing statistic. In 1964, when Lyndon B. Johnson began his “War on Poverty,” nearly one in five Americans lived below the poverty line. By 1970, Johnson’s campaign helped reduce the poverty rate to just 12 percent. That means in the span of six years, the Johnson administration helped 11.5 million people escape poverty.

So it’s not inevitable. But it is a fight. How do we wage that fight? Four suggestions:

  • Vote for Kshama Sawant. Not only is she the only candidate with a serious campaign platform directed towards raising wages to $15.00/hr, she is the only candidate that will serve the working people of Seattle, and not the downtown business crowd.
  • Vote for public financing of campaigns. Anything we can do to even the playing field against big money is worth supporting.
  • Next year, work and vote for a $15.00/hr. minimum wage in Seattle.

But most of all, start fighting, in whatever way you can. Kshama is right when she states that electing her is not going to solve all our problems – we need a movement of people that can press for a proactive agenda of making Seattle a sustainable city where working people can be employed and live. That’s a long term struggle. But it’s winnable, if we begin now.

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