Economic
Recovery — Fixing the Economy
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By Richard R. Troxell
President, House the Homeless, Inc. |
The Way Forward: Devising
a Plan
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| It is clear that TARP dollars
have failed to stimulate the economy as hoped. But what would also seem
clear is that the money did not evaporate. It is reported by Wall Street's
Maria Bartiromo that banks and American businesses are sitting on trillions
of reinvestment dollars. The government, with the collapse of Lehman Bank,
sent a very clear message: if banks didn't have enough reserve capital to
meet the FDIC standards, they could be closed under Fed scrutiny. |
| As a result, when the dollars
were released to stimulate the economy, the banks held on to the money instead
of releasing it to borrowers, thereby undermining the original intention,
to stimulate the Economy. |
| So now it also seems clear that
the economy still needs to be stimulated. Where the Obama Administration
failed in the execution of President Bush's TARP Plan was by not putting
in safeguards that would ensure that the dollars went directly into the
economy. |
| Therefore, it is the recommendation
of House the Homeless that any "stimulus" dollars must be attached
to a commitment to immediately reinvest the funds back into the economy
with "claw back" provisions. Simply put, if dollars are made available to
states for infrastructure development or if dollars are loaned to mortgage
companies to stimulate that part of the economy, then if at certain, time-staged
increments, anticipated monetary releases do not occur, the notes will be
called in and the money will be "clawed back." |
Universal Living Wage
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| There are certain jobs in
our economy that cannot be outsourced. One must be present to serve
the child in the school cafeteria, to clean the hotel/motel rooms, take
care of our children in daycare facilities, labor in our construction sites
and serve food in our restaurants, etc. |
| These jobs that cannot be outsourced
are the basis of our socioeconomic system. These workers are the backbone
of American business. As the base of the pyramid, the more financially stable
the worker situation, the better off business is. Henry Ford (the car guy)
learned this first hand. One day while in the plant cafeteria, while passing
through the food line extending his tray to first receive a cut of meatloaf,
and then mixed vegetables from the second server and dessert from the third,
suddenly he had a Eureka moment! He gathered his workers and raced back
to the shop where he lined up tables in a one, two, three order. Voila!
The assembly line was born! |
| But this was short-lived euphoria.
Mr. Ford soon learned that while his idea was brilliant, he kept losing
his highly trained workers to competing car companies. Time and time again,
he would find himself stuck with exorbitant retraining costs required to
replace the exiting workers. |
| He stepped back, and thought
about the dynamics of what was happening. He decided to address this worker-drain
phenomenon using wages as a means to stabilize work. Remarkably, he almost
doubled the wage to $5.00 per day. Practically, overnight, he saw a dramatic
effect. The immediate results were: |
| 1) Significant reduction in
employee turnover; |
| 2) Significant reduction in
retraining costs; |
| 3) Significant reduction in
unscheduled absenteeism; |
| 4) Almost complete stoppage
of internal theft (50 percent of theft in today's retail world is
committed by a business' own employees); |
| 5) Finally, Henry Ford's new
approach created a true economic stimulus because his workers put
discretionary funds right back into his company as purchasing consumers.
They then bought the very cars they were making by using their newfound
wages. |
| According to the last several
U.S. Conference of Mayor's Reports, a person can work a full-time,
40-hour per week job at the Federal Minimum Wage and still not be able to
afford basic rental housing anywhere throughout the United States.
With such a destabilized work force, is there any wonder that according
to the Small Business Association, 64 % of all small businesses fail in
the first four years? |
| So how can we bring all of these
diverse components together to enhance business? What if we take
a page from entrepreneur extraordinaire Henry Ford and focus on stabilizing
the work force with wages that are enough so workers can afford basic rental
housing (an efficiency apartment,) food and clothing? In this fashion, the
worker gets what they need minimally, and business is stabilized. |
| Additionally, because folks
at the basic economic level historically place 97 percent of any increase
in wages right back into the economy, and because our economy is 70 percent
consumer based, this will clearly stimulate the economy. Furthermore, there
are now 3.5 million people who have fallen out of the work force and (as
stated) cannot afford basic rental housing. Here is an opportunity to
stimulate the local housing construction industry across the nation
by responding to that need. It will also enable these people to work themselves
off of our streets. |
| In addition to all of the benefits
already cited, this approach will result in retraining cost savings in the
billions of dollars. Similarly, taxpayer savings from reduction of excess
reliance on SNAP benefits, general assistance, temporary assistance to needy
families, and TANF and Earned Income Tax Credits will also be in the billions
of dollars. By planning to make this stabilizing adjustment over a ten-year
period, business will know exactly what the economic future holds,
and how to prepare and budget for it. |
The Nation's Infrastructure
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| The Universal Living
Wage is a ten-year correction. We also need economic adjustments of intermediate
and immediate impact. These are labor light and industry intensive. They
should include: |
| — upgrading our schools
and including the creation of permanent buildings for portables or temporary
structures that have been used to teach children for 5 years or longer.
This should also include the upgrade/retrofitting of dilapidated structures. |
| — America's bridges are
in catastrophic need of repair. We can all remember Interstate 35W Mississippi
River, the eight lane bridge leading into Minneapolis, Minnesota that collapsed
in 2007 and killed about a dozen people. |
| We were warned in 1990 that
the bridge was "structurally deficient." Inspections of the rest of America's
bridges showed that one-fourth of all US Bridges to be either "structurally
deficient" or "functionally obsolete." Furthermore, the US
Society of Civil Engineers estimates that the US needs to spend $1.6 trillion
to upgrade or replace 590,000 bridges. This would be an intermediate adjustment
to the economy with a five-year time period. |
| The world's economy is going
through a readjustment period. This brings uncertainty in all economic markets.
Not isolated from the uncertainties that result from these overlapping intricacies,
the United States is facing its own downturn. The US has a declared unemployment
rate of about 9% with 17% unemployment for African-Americans. This country
experienced unprecedented upward mobility in our poor communities in the
late 1970s and early 1980s with the creation of homeownership through the
US Department of Housing and Urban Development, HUD. We are now in very
serious danger of losing all of these gains. As a nation, we must take specific
steps to address this situation now. |
Mortgage Foreclosure/HUD Assignment
Program
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| HUD is the housing arm of the
US government. In the 1980s HUD had a great assistance program (The HUD
Assignment Program) that benefited banks, lending institutions and mortgage
holders if the homeowner ever fell behind on the mortgage due to circumstances
beyond his or her control. Principally, these circumstances involved job
loss, layoffs or medical conditions that resulted in economic trauma. The
relief was termed a HUD "Assignment" which led to a temporary reassignment
of the mortgage and might entail a temporary reduction of the monthly payment
or a full recasting of the mortgage. |
| Arrearages might be amortized
for periods up to two years or in rare circumstances, attached to the other
end of the mortgage to extend the life of the payment period. The benefits
of this program are endless and have great application today. |
| The benefits include preventing
the foreclosure and reducing stress of the homeowner at a time when they
are already under financial duress. It prevents the home owner from losing
their good credit standing that in all likelihood, will knock them out of
the homebuyers market for a decade or longer. It prevents the homeowner
form falling into a new financial dilemma of needing to rent another property
that is probably 1/3 more costly than the home they just lost at foreclosure.
Clearly, they will not have the typically required rental deposit, let alone
the first and last month's rent. |
| The lender, on the other hand,
may be a bank or other lending institution that may be relatively unprepared
to foreclose on a property and then deal with that foreclosed property.
In any event, the property ceases to be an asset and now becomes a liability. |
| The maintenance of the property
now falls on the lending institution as does locating a substitute homebuyer.
If the market is glutted with other foreclosed properties, as it is now,
then resolution of this situation can be seriously protracted. This will
result in significant maintenance costs of a long-term nature. Additionally,
multiple foreclosed properties in neighborhoods across America cause the
devaluation of regional mortgage portfolios and a stagnation of the housing
market generally. |
| It has been reported that
three jobs are created for every house built. As long as the nation's
housing inventory remains bloated with foreclosed houses the housing construction
industry remains stagnated and these jobs remain hostages. Clearly, it is
to the advantage of the homeowner, the lender, the local/national housing
construction industry and the economy generally to prevent foreclosure in
the first place. The Assignment Program was so successful that when the
Federal government ceased its involvement, the State of Pennsylvania introduced
its own version to deal with an economic downturn that it faced. |
| It is worth examining the merits
of these programs today. |
Rent to Stay
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| This is the idea of converting
a foreclosed home to a rental property. The former homeowner would become
the new tenant. This would prevent a home from sitting empty for weeks,
months and in some instances years |
| The tenant/former homeowner
obviously benefits by not immediately needing to come up with move-out/move-in
dollars, which most likely include deposit and first and last months' rent,
when they are already experiencing financial and emotional distress. The
property remains occupied and protected by people who have called it home.
The new scenario continues in this fashion until economic stability returns
to the foreclosed family or until the property again becomes viable on the
market. |
| This is a slight twist on the
concept that was the Resolution Trust Corporation, a program created to
address a pool of foreclosed homes created as a result of the 1980s Savings
and Loan debacle. |
Emergency Jobs
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| The USA Job Party has an interesting
jobs proposal. They propose to lower the nations' unemployment level from
about 9.1% to 7%. Their plan is to hire a teacher's aide for every
public school teacher for one year. This immediate employment program
targets Veterans and benefits maxed-out unemployed workers, who pass the
required background checks. They would fund aides at $30 thousand per year.
Applicants would be tested to establish the best level for the aides to
assist. |
| They suggest funding from a
number of sources including bringing home about a third of the troops from
the Iraq and Afghanistan wars. Promoters believe that the program could
be up and running with the commencement of the new school year. |
Economic Dependence on Military
Spending
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| We have what we term a "waste
product economy." Our economy is based on consumables, be it toilet paper
or cars. The military economy, or as President Eisenhower put it, "The Military
Industrial Complex," operates much the same way, but with one noticeable
downside - war. Yes, people are put to work when there are guns, bullets
or the 22 million dollar military plane to be made, but if we want to meet
the true needs of "supply and demand" in this country, we must reinvest
in American infrastructure and manufacturing, the kinds of jobs that truly
grow our economy and increase our standard of living. |
| President Eisenhower warned
us of the Military Industrial Complex. We have now gone well beyond a well-armed
defensive balance but instead find ourselves feeling that we need to feed
the beast. As of 2009, the war in Iraq has passed the price of the Vietnam
war. When combined with the war in Afghanistan, not to mention what's happening
in Libya, American taxpayers are spending 160 Billion dollars a year. As
a Marine and a Vietnam war veteran who looks back at 58,000 dead brothers
and sisters, 350,000 American casualties at a cost of 133 billion dollars,
I see little gained from wars that do not end. The only ones who really
benefit are the arms dealers who continue to create the 'need for war.' |
| The point here is that it will
serve us better to find ways to bolster the individual consumer as opposed
to the military component of our economy. I've always felt space exploration
was a good alternative. It beats making bullets. |
Tax Increases
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| There are those that call for
what has been described as additional taxes against the wealthy. House the
Homeless says that the rich are entitled to their wealth and their civil
rights just as much as the next fellow. |
| A reporter called the other
day beaming with pride and enthusiasm, wanting my comments on the fruits
of a local nonprofit to build twelve housing units that would be made available
to the "poor" for $100,000 each. He sought my comments as the president
of an all-volunteer homeless organization. |
| My response was to ask him a
question. "What does this have to do with homelessness?" I
assured him that as a taxpayer, I was offended. While these may be very
good and deserving families consisting of first year teachers or firefighters
struggling economically, they are not homeless nor will anyone experiencing
true poverty benefit from the program. |
| At House the Homeless, we fight
to end homelessness through the creation of opportunity. We believe that
ending homelessness must be viewed in terms of those who can
work and those who cannot work. For those who are disabled
and unable to assist themselves, then we must step up and assist them. However,
for the other half of the homeless, those who can work, we should provide
opportunity, and a pathway for people to engage in work/society, etc. |
| Tax dollars for social supports
should be reserved for those who cannot make it on a level playing field.
The U.S. Constitution provides for the pursuit of happiness. It does not
guarantee it. In a similar vein, no one beyond the eighth grade buys the
argument that ending tax supports equates to tax increases. Corporate tax
supports or "corporate welfare," as it has been termed, for established
businesses is also unacceptable and unnecessary. |
Consumer Confidence
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| It was reported today that Consumer
Confidence is at its lowest point since April 2009. With 70% of our economy
being driven by the individual consumer, we need to build consumer confidence. |
| This begins with a national
plan and living wage jobs that afford the basics: food, clothing and shelter.
By ensuring living wage jobs for the least of our workers, they realize
that if they just put in their 40 hours of work each week, they will be
able to afford the basics. At least half of the 3.5 million folks experiencing
homelessness now will be able to support themselves. By preventing foreclosures
and devising a plan that catches people when they stumble economically,
we build their confidence. If we devise a Plan that ensures people can keep
themselves off the dole if they just put in their 40 hours of work, then
we will bolster their confidence and stimulate the economy. |
| Finally, the simple creation
of a plan - a pathway that incorporates these core tenants - will
steady American consumers and their response will be felt in the marketplace.
Taxpayers, businesses and workers alike will benefit. Their self-confidence
and self-esteem will return and even skyrocket. By breaking the logjam of
foreclosed homes we free the housing industry for growth. With stimulus
dollars guaranteed to be reinvested in the economy, small businesses and
even larger ones that rely on jobs/workers that cannot be outsourced will
become stabilized and begin to grow again. |
| The time to act is now. |
How to End Honelessness
in Austin: A Plan
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| by Richard R. Troxell
(Reprinted from CultureMap Austin, 02/08/2012) |
|
My vision for Austin is a community without homelessness.
There will be 3.5 million people experiencing homelessness again in America
in 2012. In Austin we have counted 4,000 people experiencing homelessness.
At the same time, we have only a little over 600 emergency shelter beds
for those men, women and children. We have all played musical chairs,
musical beds are no less daunting.
In response, House the Homeless, Inc., has stepped up to fill the void
left by the City of Austin. Every November now, for 20 years, we have
met on Auditorium Shores and read the names of the men, women and children
who have died while living on the streets of Austin. Last year, we read
the names of another 138 people.
For those who can work, we need to fix the Federal Minimum Wage (FMW,
currently $7.25 per hour) because as it stands now, a person can work
a full time job and still not be able to afford basic rental housing either
in Austin or any city in the U.S. At the close of the memorial service,
we launch our Thermal Underwear Drive. We scramble for the next 30 days
to raise $20,000 to outfit those failed musical bed players so they can
brace against the fast approaching winter. This year we distributed 3,500
pieces of thermal underwear and winter clothing. It seems overwhelming.
But, is it not the role of government to take care of its people?
About 12 years ago, advocates organized to create and pass housing
bonds. After about ten years, the bonds were passed and money for 350
units of housing was set aside for people experiencing homelessness. Only
about a third of this housing has been created. Do the math. How many
decades to house 4,000 people at that rate?
Recently, House the Homeless conducted a health survey interviewing
501 people experiencing homelessness. We asked if anyone had a physical
condition that was so severe that it prevented them from working. Half
of them (48 percent) said yes.
Respondents listed, diabetes, congestive heart failure, Parkinson’s
disease, Rheumatoid Arthritis, PTSD, Bipolar Disorder, Schizophrenia,
etc. The list goes on and on.
This discovery led House the Homeless to promote changes to the Austin’s
No Sit/No Lie Ordinance that fines people experiencing homelessness up
to $500 for sitting or lying down. After a year, we forced a compromise
giving people with disabilities up to 30 minute respites in deference
to their medical needs. As a result, in 2011, Austin became the first
city in the nation to bring our No Sit/No Lie ordinance in compliance
with the Americans with Disabilities Act. Perhaps now we can simply install
enough benches for folks to sit down in a civilized fashion and thereby
inch closer to becoming the world class city that we aspire to be.
The survey results caused us to think about people experiencing homelessness
in a different light. We now see that they can simply be divided into
two camps: Those who can work and those who cannot.
We quickly realized that for those who can work, we need to fix the
Federal Minimum Wage (FMW, currently $7.25 per hour) because as it stands
now, a person can work a full time job and still not be able to afford
basic rental housing either in Austin or any city in the U.S.
By simply indexing the FMW to the local cost of housing using HUD
Fair Market Rents, we ensure that anyone working 40 hours in a week will
be able to afford basic rental housing (including utilities) in Austin
or wherever that work is done throughout the U.S. Obviously, this is good
for the individual, but it is also good for business as it stabilizes
both the worker and the job by dramatically reducing the retraining costs
associated with destabilized workers.
This new wage approach, which we call the Universal Living Wage (ULW),
will also stimulate the local/national construction industry. These homeless
workers will finally be able to afford basic rental housing which the
construction industry will gladly build in response. This change will
occur slowly over ten years so as not to hurt business. Furthermore, from
a historical perspective, every minimum wage increase is spent right back
into the economy, so this will stimulate the economy generally too. The
ULW will end homelessness for over 2,000 minimum wage workers in Austin
and over 1,000,000 workers nationwide.
For those who cannot work, we need to fix the Supplemental Security
Income (SSI) support program which is $698 per month (only about half
of the FMW), and therefore clearly too little to house anyone. To this
end, we can address the SSI on a national level by indexing it to the
local cost of housing as well. But this time the onus will be on taxpayers
to foot the bill as opposed to the business community. They say a people
are judged by how we respond to our neediest citizens. Housing them is
a good start.
Many people experiencing homelessness and many people in the general
population suffer from alcoholism costing the Austin community, the State
of Texas and our nation’s economy, trillions of dollars in health care
costs, lost productivity and human and family suffering.
The alcohol industry has always been resistant to paying a percentage
of its profits to cover the lost revenues. They rightfully resist stepping
out on a “slippery slope” where this year they may be asked to pay on-half
of one percent of profit only to see that percentage increased by one
percent next year and two the next, etc.
We can help address these concerns by looking at alcoholism as a
product liability issue. When we purchase alcohol at the grocery checkout
counter, the liquor store or bar, there is no alarm that sounds indicting
that a particular purchaser will have an adverse medical reaction to their
product. However, there will be many who suffer long-term negative consequences
from the use of their product. We want to take the “slippery slope” out
of the equation and simply hold the seller of the product responsible
for only the damages incurred.
The alcohol industry grosses upwards of $120 billion dollars per
year. Alcoholism makes up one-quarter of all emergency room costs. Alcohol
is involved in one-third of all traffic fatalities. Alcohol costs American
productivity $185 billion dollars each year, but zero dollars go to substance
abuse treatment.
By simply dividing the very specific treatment costs among those
that profit from the sale of alcohol, the cost may amount to less than
one cent per item. In this fashion, there is no longer a “slippery slope,”
there is no longer a “contrived” percentage of increase in costs to the
industry beyond the actual cost to provide treatment for people who have
suffered an adverse reaction to their product.
In overview, we can see that with clear vision, new perspective and
collectively involving the city, the citizens of Austin, federal and state
governments and the business community in a fair, equitable, balanced
and profitable fashion, we can end homelessness as it exists today.
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